Wed, Feb. 11, 11:46 PM
- China's telecoms all headed solidly into positive ground in Hong Kong midday Thursday on chatter (translated) that two smaller ones -- China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA) -- would merge.
- The two are a ways behind China Mobile (NYSE:CHL) in terms of 4G network upgrades, and China Mobile is more than double the size of the other two, which might spur Beijing to let a merger go forward.
- In latest Hong Kong trading, on heavy volume: China Telecom +6.8%; China Unicom +5.1%; China Mobile +3%.
- Related: China Telecom Poised For Large Growth Opportunity (Jan. 29 2015)
- Related: 4G Networks Will Boost China Mobile Performance In The Long Run (Oct. 31 2014)
Wed, Feb. 4, 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
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. 10, 2014, 6:24 AM
- Deutsche Telekom (OTCPK:DTEGF, OTCQX:DTEGY) and China Mobile (NYSE:CHL) ink a JV offering telecom services in China's connected-cars business.
- The pair will jointly develop 4G-based vehicle-information services for drivers in the Chinese connected-car market. The JV will start operating at the beginning of 2015.
- The Chinese automobile market is the biggest in the world, and requirements for car safety and information and entertainment services in cars are expected to rise in the future.
- DT traders shrug off the news, with shares recently -2.2% in Frankfurt.
Sep. 16, 2014, 8:41 AM
- According to a report in the state-owned 21st Century Business Herald, Apple (NASDAQ:AAPL) may not get Beijing's approval for iPhone 6 sales until next year.
- Meanwhile, China Mobile (NYSE:CHL) Chairman Xi Guohua tells reporters he doesn't know when the new iPhones will be available, and his company will focus on selling cheaper phones which don't require subsidies. "The direction of our development is to completely focus on the mass market,” says Xi. “We have 4G devices selling for ¥1K. I believe, subsidy or no subsidy, discount or no discount, the common person will be able to appreciate this.”
- China Mobile fell the most in two years in Hong Kong acton overnight, down 3.9%. Apple is lower by 1.1% premarket.
Sep. 15, 2014, 2:39 PM
- America Movil (AMX +2.4%) has contacted potential suitors including AT&T (T +0.6%) and SoftBank (OTCPK:SFTBY, OTCPK:SFTBF), and perhaps BCE’s Bell Canada (BCE -0.1%) and China Mobile (CHL +1%), as it prepares to sell assets along the east coast of Mexico that could fetch as much as $17.5B, Bloomberg reports.
- AMX is selling assets in its biggest market to appease antitrust regulators; the Mexico-based carrier, which commands 70% of the local wireless market and 80% of landlines, may get penalties revoked if it cuts market share below 50%.
Aug. 15, 2014, 11:25 AM
- Mizuho has upgraded China Mobile (CHL +2.3%) to Neutral following its 1H report, in which the carrier reported a 34% increase in data revenue to go with 5% and 13% respective declines in voice and SMS/MMS revenue.
- The Street has been quite pleased with CHL's plans (following government pressure) to cut its 2014 phone subsidy budget to RMB21B ($3.4B) from a prior RMB34B ($5.5B). With the company having spent RMB15.3B on phone subsidies in 1H14, that suggests 2H subsidy spend will only be RMB5.7B ($930M).
- Deutsche and Morgan Stanley hiked their targets yesterday. The latter noted management expects earnings (down 8.5% Y/Y in 1H) to bottom in 2014, sooner than the firm expected.
Aug. 14, 2014, 1:18 PM
- China Mobile's (CHL +3.4%) operating revenue rose 7.1% Y/Y in H14 to RMB324.7B ($54.1B). But net profit fell 8.5% to RMB57.7B ($$9.37B) thanks to 4G investments, iPhone subsidies, and declining SMS revenue (high-margin).
- The world's biggest carrier ended July with 793.6M subs, up from 790.6M at the end of June and 767.2M at the end of 2013. 3G subs have grown to 240.9M from 191.6M at the end of 2013, and 4G subs have grown to 20.4M since the launch of services in February.
- CHL's 4G network now covers 300+ cities. The company has an RMB225.2B 2014 capex budget, of which RMB74.9B is devoted to 4G. It hopes to have 50M 4G subs by year's end.
- Voice services revenue fell 5.3% Y/Y in 1H14 to RMB165.8B, and SMS/MMS revenue 13.2% to RMB18.2B. But data services revenue rose 34% to RMB121.9B on the back of a 91.4% increase in mobile data traffic.
- Chairman Xi Gouhua reiterates CHL will look for foreign acquisitions to boost growth."Our targets are not limited to those in emerging countries. We will also invest in companies that operate in developed markets if they offer good growth opportunities."
- Credit Suisse has upgraded shares to Outperform.
- Earnings slides (.pdf)
Jul. 14, 2014, 10:03 AM
- Aruba (ARUN +1.2%) has been upgraded to Outperform by Macquarie. Shares rallied on Friday after the FCC cleared a $2B school Wi-Fi initiative.
- China Mobile (CHL +2.7%) has been upgraded to Buy by BofA/Merrill.
- Informatica (INFA +1.2%) has been upgraded to Overweight by Evercore ahead of its July 24 Q2 report.
- TripAdvisor (TRIP -1.5%) has been cut to Neutral by Nomura ahead of its July 23 Q2 report.
- Teradata (TDC +1.5%) has been started at Buy by Standpoint Research. Q2 results are due on Aug. 7.
- Jumei (JMEI +2.7%) has been started at Buy by BofA/Merrill.
- MTS Systems (MTSC +1.4%) has been started at Buy by Needham.
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.
Jun. 24, 2014, 4:34 PM
- Light May 3G subscriber adds for Chinese carriers suggests Himax's (HIMX -3.9%) Q2 guidance is at risk, writes Chardan's Jay Srivasta, cutting his PT by $1 to $5.
- Srivasta, who downgraded Himax to Sell in May, notes 57% of Himax's Q1 revenue was tied to small-panel LCD drivers (mostly for 3G smartphones), and that 52% of 2013 revenue came from China.
- Worth noting: The 3G weakness is partly due to rising 4G subscriber adds. Top carrier China Mobile (CHL -0.1%) saw its 3G net adds drop to 4.3M in May from 7M in April, but also saw its 4G net adds rise to 3.3M from 2M.
- Srivasta also reiterates his doubts about Google Glass' near-term value to Himax (previous). Shares have already been hit hard by reports Google is thinking of using a Samsung OLED microdisplay in a next-gen Glass model.
Jun. 9, 2014, 12:08 PM
- China Mobile (CHL +0.3%) is spending $880M to buy an 18% stake in Thai carrier True. The company is getting a 13% discount to True's Bangkok trading price prior to the announcement.
- CHL, the world's biggest carrier in terms of sub count, has been cautious with its overseas expansion efforts to date: Prior to the True deal, its biggest foreign investment was the acquisition of Pakistani carrier Zong (formerly known as Paktel).
- But with the company sitting on $70B in cash and contending with both slowing growth and intensifying competition in China, a pickup in foreign investment activity could be in the cards. Chairman Xi Guohua mentioned last year CHL is on the lookout for foreign acquisitions.
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
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China Mobile Ltd provides cellular telecommunications and related services in the People's Republic of China and Hong Kong SAR. It offers voice services, voice value-added services & telecommunications network planning.
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