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Feb. 4, 2015, 2:05 PM
- In a fresh monetary easing move, the PBOC has cut its reserve requirement ratio for banks by 50 bps to 19.5%, its first cut since 2012. Many Chinese Internet and mobile stocks are posting healthy gains on a day the Nasdaq is near breakeven.
- Carriers China Mobile (CHL +2.3%), China Unicom (CHU +4.5%), and China Telecom (CHA +1.9%) are among the gainers. As are online retailers Vipshop (VIPS +4%) and Dangdang (DANG +5.1%).
- Other notable gainers include online video giant Youku (YOKU +3.9%), mobile game publishers Sky-mobi (MOBI +7.8%) and China Mobile Games (CMGE +2.6%), chat app/social network owner Momo (MOMO +4.1%), microblogging leader Weibo (WB +2.7%), online/mobile game developer NetEase (NTES +2.4%), online classifieds leader 58.com (WUBA +2.3%), and #2 online travel agency Qunar (QUNR +3.4%).
- ETFs: KWEB, CQQQ, QQQC
- Previously covered: SouFun, E-House
Jan. 16, 2015, 2:59 PM
- AT&T's (T +1.6%) $2.5B purchase of Mexican mobile carrier Iusacell is officially on the books. Ma Bell has used the occasion to reiterate the merger will allow it to offer cross-border mobile services. "It won't matter which country you're in or which country you're calling it will all be one network, one customer experience."
- AT&T has also announced Thaddeus Arroyo, formerly the president of AT&T's Technology Development unit and before that its CIO, will run Iusacell. Adrian Steckel, until now Iusacell's CEO, will "assist Arroyo with the integration of Iusacell into AT&T."
- Separately, Reuters reports China Telecom (CHA -2.2%) is "preparing a possible bid" to build and run a Mexican wholesale mobile network expected to cost $10B over 10 years. The network, mandated by Mexico's 2013 telecom reform bill, aims to allow America Movil's (AMX -0.6%) rivals (such as Iusacell) to provide better coverage without having to rely on AMX, which is still looking for a buyer for the Mexican assets it's shedding to bring its share below 50%.
Dec. 23, 2014, 6:08 PM
- China Mobile (NYSE:CHL) ended November with 803.6M mobile subscribers, up 2.4M from October and still #1 globally. 4G subs rose by 16.8M to 71.2M - CHL has an early Chinese 4G deployment lead - while 3G subs fell by 700K to 242.2M due to 4G cannibalization.
- China Unicom (NYSE:CHU) had 298.3M subs at the end of November, up 554K M/M. 3G & 4G subs - they're not broken out individually - rose by 1.1M to 148M. China Telecom (NYSE:CHA) ended the month with 184.1M subs, an increase of 1.3M. 3G subs grew by 2M to 184.1M; CHA's hybrid FDD/TD-LTE 4G network remains in trial mode.
- Rosenblatt Securities forecast today CHL will procure 200M 4G phones next year, up from 75M-80M in 2014. CHU and CHA are expected to collectively procure 80M 4G phones next year.
Dec. 5, 2014, 6:15 PM
- China Tower, a newly-created company that will own and operate cell towers on behalf of China Mobile (NYSE:CHL), China Unicom (NYSE:CHU), and China Telecom (NYSE:CHA), will take over RMB100B ($16.3B) worth of the carriers' tower assets within a year.
- China Tower was set up in July - CHL has a 40% stake, CHU a 30.1% stake, and CHA a 29.9% stake. The company plans to build 1M new towers over the next two years, and should do so more efficiently than the carriers could own their own by creating a common infrastructure for carrier base station cards and antennas.
- The JV could give China's carriers a way to monetize their tower assets that doesn't involve selling them to a foreign company (something regulators could frown upon). Many non-Chinese carriers have monetized their towers by selling them to independent, U.S.-based, tower owners.
Dec. 1, 2014, 10:38 AM
- Chinese Internet and telecom names are among the biggest tech decliners as the Nasdaq registers a 0.9% drop. A soft November PMI print isn't helping.
- Giants Alibaba (BABA -4.3%) and Baidu (BIDU -2.8%) are among the casualties. As is Qunar (QUNR -5.8%), which reports after the bell.
- Other Internet decliners: BITA -12%. QIHU -4.4%. CTRP -4.3%. SFUN -7.2%. LEJU -7.5%. RENN -6.3%. SINA -3.8%. WB -3%. YY -3.9%. VIPS -3.8%. SOHU -3.5%. MOBI -4.3%. CMGE -8.6%.
- Telecom decliners: CHL -3.6%. CHU -3.9%. CHA -4%.
- ETFs: KWEB, CQQQ, QQQC
Oct. 24, 2014, 11:30 AM
- The number of global pay-TV subscribers will rise 19.6% to 1.1B in five years, according to a forecast from ABI Research.
- The research firm thinks global pay-TV revenue could top $323B by the end of the period.
- Related stocks: DISH, DTV, LBTYA, CHA, T, TWC, OTCPK:BSYBF, OTC:SKDTF, OTCPK:KBDHY, OTCQX:DTEGY, AMX,
Oct. 24, 2014, 10:42 AM
- A Chinese paper reports China Unicom (CHU +0.9%) and China Telecom (CHA +1%) plan to launch (through a JV) a local content delivery network. The JV, which would aim to profit from China's rapid mobile data and online video traffic growth, would be run by CHA's cloud services unit.
- Leading Chinese CDN owner ChinaCache (CCIH -5.1%) isn't responding well to the news, which comes two weeks after CHA announced a CDN partnership with Akamai. Alibaba launched its own CDN services last year.
Oct. 8, 2014, 1:36 PM
- Under a "strategic partnership agreement," China Telecom's (CHA +0.9%) cloud services unit will resell Akamai's (AKAM +0.1%) CDN, performance acceleration, and cloud security services. In addition, the companies plan to cooperate "in the areas of technology and network access."
- Akamai already offers CDN services in China. Its local rivals include ChinaCache (CCIH -3.4%), which is selling off today, and Alibaba.
- Separately, Akamai has updated its Ion service - it optimizes content delivery based on device, location, and other situational factors - to include faster domain name resolution, more self-service tools, and more advanced reporting features.
- Ion is one of a slew of value-added services Akamai is relying on to lower its dependence on low-margin media delivery services.
Aug. 27, 2014, 3:53 PM
Aug. 15, 2014, 12:19 PM
- David Einhorn took some Apple (AAPL -0.4%) profits in Q2: Greenlight Capital owned 9.4M Apple shares at the end of June, down from a split-adjusted 14M at the end of March.
- On the other hand, Leon Cooperman's Omega Advisors bought 1.3M shares during the quarter; Cooperman had bailed out of Apple in Q3 of last year. Adjusted for the split, Carl Icahn's position is roughly steady at 52.8M shares.
- IDC estimates the iPhone accounted for 11.7% of Q2 smartphone units, down from 13% a year ago. Android's (NASDAQ:GOOG) share rose to 84.7% from 79.6%, and industry shipments grew an estimated 25.3% (down slightly from Q1's 28.6%) to 301.3M.
- At the same time, IDC notes over 80% of iPhone shipments ($561 Q2 ASP) involved a $400+ unsubsidized price, with the remainder in the $200-$400 range. Nearly 60% of Android shipments involved sub-$200 phones, with the remainder split almost evenly between $200-$400 and $400+ devices.
- Following government pressure, China Mobile has cut its 2014 phone subsidy budget to $3.4B from a prior $5.5B. With the carrier having spent $2.5B on subsidies in 1H14, its fall iPhone 6 subsidies will likely be light.
- Meanwhile, Apple has begun storing some of its iCloud data for Chinese users on local servers provided by China Telecom (CHA -0.3%). Apple insists the move, which comes amid ongoing NSA-related tensions, was partly made to improve local iCloud performance/reliability.
Jul. 16, 2014, 12:35 AM
- VMware (NYSE:VMW) is forming a JV with SoftBank (OTCMKTS:SFTBF) to offer its vCloud Hybrid cloud infrastructure (IaaS) service in Japan. VMware will build and run the service, and SoftBank will provide the data centers and network it runs on. Both companies will offer the service through their sales channels.
- Over in China, VMware is partnering with China Telecom (NYSE:CHA) to offer vCloud Hybrid. In this case, China Telecom will operate the service, and VMware will simply provide the underlying software. The arrangement could appeal to Chinese firms hesitant to use a public cloud run by a U.S. company (say, Amazon) following the NSA uproar.
- Until now, vCloud Hybrid (launched in 2013) was only available at U.S. and U.K. sites. The service has won praise for the way it lets users jointly manage and quickly migrate public and private cloud workloads, but it continues facing tough competition from Amazon, Microsoft (the hybrid cloud leader), Google, IBM, and Rackspace, among others.
- Separately, parent EMC's RSA unit has bought technology assets from Symplified, a provider of cloud identity management services that enable single sign-on and automatic user provisioning for a variety of cloud apps/services. Symplified is shutting down its operations.
- EMC/RSA says it will add Symplified's IP to its Identity solutions portfolio. The purchase follows RSA's 2013 acquisition of Aveksa, a provider of tools for managing access to corporate apps and data.
- VMware reports on July 22, and EMC the following morning.
Jul. 8, 2014, 12:16 PM
- The Chinese government has told China Mobile (CHL -0.4%), China Unicom (CHU +1.3%), and China Telecom (CHA -0.3%) to slash phone subsidies and advertising by a combined RMB40B ($6.4B) in 3 years, Bloomberg reports.
- The government came to its decision after concluding carriers are spending too much to promote the iPhone (AAPL -1.8%) and other high-end hardware. While a large chunk of Chinese phone sales are unsubsidized, subsidies have been growing as carriers try to sign up higher-income subs to 3G/4G postpaid plans.
- A possible motivation: Apple and Samsung control much of the high-end Chinese phone market, while local firms (both OEM and white-label) control much of the mid-range and low-end.
- China Mobile, which began selling the iPhone in January, has forecast its subsidy spend will rise 29% in 2014 to RMB29B ($4.7B). China Telecom says it has already been "implementing stringent control on [its] selling expenses to ensure operating profitability.”
- UBS, generally upbeat about Apple this year, thinks subsidy cuts and Samsung price cuts could slow Apple's Chinese momentum. The company's Greater China sales rose 13% Y/Y in FQ2 to $9.3B.
- The Bloomberg report comes as Samsung says it expects to report soft Q2 smartphone/tablet sales. Among other things, the company blames tough low-end/mid-range phone competition, and weak tablet market demand caused by phablet cannibalization and low upgrade rates. CIRP has observed iPad upgrade cycles are notably longer than iPhone upgrade cycles.
May 23, 2014, 4:04 PM
- The recent rally in shares of Chinese carriers isn't justified given their earnings are likely to decline over the next 2-3 years, says HSBC's Tucker Grinnan, cutting shares of all three to Underweight. China Mobile (CHL -1%), China Telecom (CHA -1.5%), and China Unicom (CHU -1.3%) have slipped in response.
- Grinnan's downgrade comes shortly after CHL, just given more freedom (along with peers) to set its own prices, announced plans to cut 4G data prices by up to 50%, and to also slash 2G/3G data prices.
- Goldman upgraded CHL and downgraded CHA on Monday. China's carriers are expected to benefit from tower-sharing deals that will lower capex, but also have a list of challenges that includes SMS traffic declines, rising phone subsidies, and the pending arrival of MVNO competition.
May 19, 2014, 12:53 PM
- Goldman's Donald Lu has upgraded China Mobile (CHL +1.9%) to Conviction Buy, and simultaneously downgraded rival China Telecom (CHA -2.7%) to Neutral.
- Lu thinks 3G/4G adoption will boost CHL's data ARPU, and help reverse the decline in its total ARPU in 2015. He adds the arrival of cheaper 4G smartphones (eventually reaching $100 unsubsidized price points) and potentially strong iPhone 6 demand will act as catalysts.
- As for China Telecom, Lu believes a decent amount of good news, including steady earnings growth (wireline-driven) and a tower-sharing deal (will lower capex) has been priced in. He's also worried about possible share loss to CHL as the latter's 4G subscriber base grows.
- Previous: Chinese carriers allowed to set their own prices
May 9, 2014, 5:21 PM
- Starting tomorrow, China's state-run carriers - China Mobile (CHL), China Unicom (CHU), and China Telecom (CHA) - will be able to set their own service prices without having to first clear them with the government (as has been the case thus far). The policy change covers voice, text, and broadband services.
- Nonetheless, the carriers will still be prohibited from offering "excessive" discounts. The regulatory change is part of a broader effort by the Chinese government to let market forces determine prices.
- It follows two moves from regulators that could pressure the carriers' bottom lines: The imposition of a telecom VAT, and the issuing of MVNO licenses to Alibaba and ten other firms.
Mar. 5, 2014, 6:06 PM
- After growing ~60% in 2013 (and fueling global shipment growth of 39%), IDC expects Chinese smartphone shipment growth to slow to ~20% in 2014 and just ~10% in 2015.
- Though only 40% of China's 1B+ mobile users now use a smartphone, IDC's Kiranjeet Kaur notes most users who can comfortably afford a smartphone have already bought one. Plunging low-end Android prices could expand the addressable market in a country whose nominal per capita GDP is around $6K.
- India, which has a sub-10% smartphone penetration rate, still presents a major growth opportunity. But with a nominal per capita GDP of ~$1,500, the country is even more cost-sensitive than China.
- With China slowing down and developed markets living up to their name, IDC expects global smartphone growth to slow to 19% in 2014; that still spells total volumes of 1.2B. Tough competition and the ongoing mix shift towards emerging markets is expected to lead the industry's ASP to fall $27 to $308.
- Smartphone OEMs with strong Chinese exposure: AAPL, SSNLF, LNVGY, ZTCOY
- Chip suppliers: QCOM, BRCM, CRUS, SWKS, RFMD, MRVL
- Chinese carriers: CHL, CHU, CHA
China Telecom Corp Ltd along with its subsidiaries is an integrated information service company. It offers telecommunications services, including wireline voice services, mobile voice services, Internet access services, value-added services.
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