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
Mar. 5, 2014, 9:19 AM
- The imposition of a value-added tax (VAT) , part of a broader tax reform push by the Chinese government, is expected to hurt the bottom lines of China Mobile (CHL), China Unicom (CHU), and China Telecom (CHA).
- The announcement comes less than three months after the government issued MVNO licenses to 11 companies (inc. Alibaba) looking to offer mobile services using the networks of incumbents, and at a time when voice/SMS revenue streams are already being pressured by mobile messaging apps (most notably Tencent's WeChat).
- Bernstein's Chris Lane thinks China Mobile's net profit could be hurt by 7%, and Unicom and Telecom's net profit by 25%, assuming an 11% VAT replaces a current 3% business tax.
Jan. 17, 2014, 4:59 AM
- Apple (AAPL) has finally launched the iPhone on China Mobile's (CHL) massive network, but despite the carrier's 763M subscribers, skepticism exists about how much the companies will benefit.
- "You need to consider the cannibalization of (iPhone) sales from China Unicom (CHU), China Telecom (CHA) and the grey market," says Gartner analyst CK Lu. "So even though there's an addition from China Mobile, it will also impact sales from other channels as well."
- As for China Mobile, there are concerns about subsidies it might have to pay. "I don't see a price war coming where Apple is engaged in the war, but I do think you're going to see a subsidy war coming," says Michael Clendenin of Shanghai-based RedTech Advisors.
Dec. 26, 2013, 2:54 PM
- The Chinese government has issued licenses (translation) to 11 companies looking to offer mobile services via MVNO arrangements with incumbents China Mobile (CHL -0.2%), China Unicom (CHU -0.7%), and China Telecom (CHA). Chinese e-commerce giant Alibaba is among the companies receiving a license.
- Though the incumbents will receive service fees from MVNOs, the licenses set the stage for China's mobile services market to see its first major jolt of new competition in years. The market's last major shakeup arguably happened in '08, when China Telecom (originally focused on wireline services) struck a deal to purchase China Unicom's 2G CDMA network.
- The licenses arrive shortly after the Chinese government slashed the interconnection fees China Unicom and Telecom have to pay China Mobile (by far the market's biggest player). All three carriers have seen their voice/text revenues pressured by the rise of mobile messaging services, particularly Tencent's WeChat.
Dec. 26, 2013, 7:06 AM
- China has approved a pilot scheme that will allow 11 private "virtual carriers" to sell mobile phone services using the infrastructure of the country's dominant operators, China Mobile (CHL), China Telecom (CHA) and China Unicom (CHU).
- "It's a milestone," says the Ministry of Industry & Information Technology. "It will draw private investment, and stimulate competition and innovation in the telecoms sector," giving "consumers greater choice and better service."
- The 11 companies to receive permits include Net.cn, a unit of online retail giant Alibaba.
- ETFs: CHIQ, CQQQ, QQQC, KWEB
Dec. 4, 2013, 6:57 PM
- The Chinese government has finally issued 4G licenses (long anticipated) to China Mobile (CHL), China Unicom (CHU), and China Telecom (CHA), paving the way for commercial service launches to start.
- China Mobile, which has already built out a giant "trial" 4G network, is set to have a 4G partner conference in two weeks that will reportedly feature an iPhone announcement. China Telecom says it will launch 4G services in Q1.
- Notably, the licenses only cover 4G networks relying on the TD-LTE standard (allows for more capacity to be allocated to downlinks than uplinks, if carriers wish). China Unicom and Telecom both want to run networks using the FDD LTE standard, which is far more popular internationally, and say they still plan to request FDD LTE licenses in the future.
- In addition to Apple, Chinese 4G launches are likely to benefit Qualcomm (QCOM). Whereas Qualcomm faces tough competition in the Chinese 3G baseband chip market (particularly on the low-end) and has had royalty collection issues for sales of phones running on China Mobile's TD-SCDMA 3G network, it has a dominant share of the global 4G baseband market, and hasn't had any major 4G collection issues.
- Many think the Chinese government's anti-monopoly probe of Qualcomm is a bargaining tactic aimed at securing 4G royalty rate concessions.
Oct. 28, 2013, 4:12 AM| Oct. 28, 2013, 4:12 AM
Oct. 9, 2013, 9:43 AM
- Marbridge Consulting reports Alcatel (ALU -0.1%) was the only Western telecom equipment provider to receive a large share of a China Telecom (CHA +0.2%) 4G equipment tender.
- Local equipment giants ZTE (ZTCOY.PK) and Huawei are received 32% and 28.9% of the order, respectively. Alcatel came in at #3 with 16.6%, and was followed by China's New Postcom (6.4%) and Datang (5.7%). Ericsson, Nokia, and Fiberhome (another local firm) received less than 5% of the order between them.
- Alcatel also received a double-digit share of a recent China Mobile tender for 207K 4G base stations. Ericsson and Nokia fared notably better that time around.
Sep. 24, 2013, 11:11 AM
- In what could be a trial balloon, the Chinese government plans to lift its ban on "politically sensitive" foreign websites in Shanghai's new free-trade zone, according to government sources talking to Hong Kong's South China Morning Post. Facebook (FB +4.7%), Twitter, and the New York Times are among the sites that will reportedly be made accessible.
- In addition, the government plans to allow foreign carriers to bid for licenses to provide Internet services in the free-trade zone. State-owned carriers China Mobile (CHL -0.8%), China Telecom (CHA -1.8%), and China Unicom (CHU -2.8%) have all reportedly been informed foreign companies will be able to compete with them in the area.
- For now, the zone only covers 29 sq. km. But sources state it could eventually cover Shanghai's entire Pudong business district (1,210 sq. km), home to the Shanghai Stock Exchange and arguably China's most vital commercial hub.
- The report comes shortly after Facebook COO Sheryl Sandberg met with Chinese Web regulators. China already has a well-developed social networking scene, with Tencent (TCEHY.PK) and SINA claiming hundreds of millions of registered users for their respective platforms.
Sep. 16, 2013, 11:08 AM
- China Unicom (CHU +0.6%) says its iPhone 5S/5C (AAPL -2.6%) reservations have topped 100K since it began taking them last week. Last year, Unicom took 200K+ iPhone 5 reservations in the phone's first two days of availability.
- Meanwhile, China Telecom (CHA +2.5%) has cut its iPhone subsidies. A subscriber signing up for an RMB289/month ($47/month) plan will get an iPhone 5S subsidy of RMB2890, 15% less than the RMB3400 subsidy it provided for the iPhone 5. It's worth noting CHA's ARPU is below $10.
- The Chinese figures come amidst sharp criticism of the 5C's unsubsidized pricing, which starts at $735 in China. For reference, upstart Xiaomi's new Mi3 flagship Android phone (5" 1080p display, 13MP camera) starts at $327 in the Middle Kingdom.
- On the other hand, Japanese carriers are aggressively subsidizing the 5S in the wake of NTT DoCoMo's (DCM +0.7%) iPhone deal. DoCoMo, SoftBank (SFTBF.PK), and KDDI are each providing the 5S for free with 2-year contracts for certain plans.
- Kantar Japan recently estimated 2/3 of DoCoMo subs who have been leaving the carrier ended up buying an iPhone.
- Also: Bernstein thinks Apple could still come out with a cheaper iPhone in the form of a sub-$400 iPhone 4C that puts the iPhone 4's components inside a 5C body.
Sep. 11, 2013, 3:07 AM
- A long-awaited deal between Apple (AAPL) and China Mobile (CHL) appears to have moved closer after the U.S. company received a license for its phones to operate on China Mobile's 3G and 4G networks from the country's Telecom Equipment Certification Center.
- Apple's products also obtained licenses to run on the infrastructure of China Unicom (CHU) and China Telecom (CHA), both of which will sell the two iPhones that were unveiled yesterday.
- While a deal with China Mobile will open up a market of 700M subscribers, the "low-end" iPhone 5C looks rather pricey for the cost-conscious consumers that Apple was expected to target with the handset. The device will retail at 4,488 yuan ($730), just 800 yuan ($130) less than the top-of-the-line 5S.
Sep. 6, 2013, 10:58 AM
- Two months after U.S. district judge Denise Cote declared Apple (AAPL +0.2%) guilty of conspiring to fix e-book prices, and two weeks after the DOJ proposed e-book injunction terms, Cote has issued an injunction.
- As suggested by the DOJ, Apple is prohibited from striking restrictive e-book pricing deals with publishers for 5 years, and is required to stagger its talks with publishers to prevent collusion. Also, an external monitor has been assigned for two years.
- However, Apple won't be required to allow rivals to sell e-books through their iOS apps without giving Apple a 30% cut, as the DOJ had suggested. Amazon (AMZN +0.4%) has refused to sell e-books through its Kindle iOS apps out of an unwillingness to pay Apple 30% of its take.
- Meanwhile, Reuters nearly backs up yesterday's Sina Tech report by reporting China Unicom (CHU -0.3%) and Telecom (CHA -0.6%) will begin selling the iPhone 5S/5C shortly after it goes on sale in the U.S., a major change of pace from the delays accompanying past Chinese iPhone launches.
- Other news: Apple Insider reports Mac OS X 10.9 (Mavericks) will be released at the end of October, and Quantcast and Piper estimate iOS' share of U.S. mobile browsing traffic has grown to 65%.
- The latter is a negative for Google (GOOG +0.2%), due to the huge traffic acquisition payments it makes to Apple for Mobile Safari search ad clicks. However, Google doesn't have to pay Apple if iOS users rely on Chrome, as a growing portion of them are.
Sep. 5, 2013, 3:55 PM
- If the Chinese media report (comes from local site Sina Tech - translation) pans out, it means China Telecom (CHA +0.4%) and China Unicom (CHU -0.3%) will start selling Apple's (AAPL -0.8%) newest iPhones the same day they're expected to launch in the U.S. and several other big international markets.
- Last year, Telecom and Unicom didn't begin selling the iPhone 5 until Dec. 14, more than 2 months after the device went on sale in dozens of other markets.
- Sina Tech also reports China Mobile (CHL +0.7%) won't be able to sell the 5S until November (assuming a deal is announced), due to the need for regulatory approval of an iPhone supporting CHL's TD-LTE 4G network.
- The 5S is said to come in 4 colors, and the plastic-shell 5C in 5 colors. Other reports suggest the 5S' colors will be white, black, gold, and graphite, and the 5C's colors white, red, green, blue, and yellow.
- An iPhone event will take place in Beijing shortly after Apple's main Sep. 10 event.
- Earlier: DoCoMo to reportedly offer iPhone soon
Aug. 22, 2013, 12:39 PM
- Jefferies reiterates its Buy rating on T-Mobile (TMUS +1.5%) and hikes the PT to $28 from $25. Analyst Thomas Seitz: Q2 "results were outstanding ... the disruptive 'Uncarrier' strategy likely has started yielding positive results." T-Mobile added 688K customers in the quarter, the first postpaid gain in 16 quarters.
- Seitz maintains a Hold rating on Boingo Wireless (WIFI -4.5%) and raises his PT to $7.50 from $6.50. Boingo "continued to further diversify its rev stream away from retail subscription & single-use segments & towards wholesale & advertising ... which gives us incrementally more confidence in the company's strategy."
- Analyst Cynthia Meng reiterates a Buy rating on China Telecom (CHA -0.7%) but lowers her PT to $60 from $64 on reduced expectations of FY 2013 and 2014 earnings (0.9% and 5% respectively) following the company's 1H results.
Aug. 21, 2013, 11:23 AM
- China Telecom's (CHA) revenue in 1H 2013 grew 14.1% Y/Y to RMB157.5B. Mobile revenues climbed 34.7% to RMB72.9B (data revenue led the way, up 35.8%). Wireline revenues were up 0.9% to RMB84.6B.
- Mobile subscriptions climbed 21% Y/Y in H1 to 174.5M. ARPU grew 3.6% to RMB54.3. 18.3M (60.4%) of new subscriptions were on the 3G network.
- EBITDA grew 35.5% to RMB50.1B. EBITDA margin was 36% (up from 26.8% in H1 2012).
- Long-term debt shrank slightly to RMB82.6B.
- FCF grew 61.9% to RMB13.8B. Net profit was up 15.9% to RMB10.2B.
- (1H report), (presentation)
Aug. 19, 2013, 12:12 PM
- China Telecom (CHA +1.4%) and NetEase (NTES +7.2%) are creating a JV that will launch YiChat, a "social" smartphone messaging app.
- The companies are clearly looking to challenge 800-lb. gorilla Tencent (TCEHY.PK) and its dominant WeChat mobile messaging/social networking platform. WeChat's monthly active users rose another 21% Q/Q in Q2 to 236M. Moreover, Tencent boasts average daily usage of 5.3x/user/day.
- WeChat's traffic-hogging ways have upset Chinese carriers. However, Tencent stated in May it has reached "preliminary solutions" (likely involving payments to the carriers) to address the issue.
- NetEase and China Telecom assert YiChat will be differentiated by its support for free text and voice messages (whether or not the recipient has installed YiChat), as well as by noise-reduction tech and the bundling of "free data promotional packages."
- China Mobile (CHL +0.5%) is also trying to challenge Tencent, courtesy of its Fetion messaging platform. Fetion claimed 99M active users earlier this year, but its growth has been notably slower than WeChat's. SINA's Weibo microblogging platform (now backed by Alibaba) also competes in this space.
China Telecom Corp. Ltd. is engaged in the provision of wireline and mobile telecommunications services. Its products and services include wireline and mobile voice, internet, managed data and leased line, and integrated information application. The company was founded on September 10, 2002 and... More
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