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
Nov. 21, 2014, 9:31 AM
- Chinese regulators have granted Youku (YOKU +2.5%) a license to provide mobile services as an MVNO. A reseller deal has been reached with #2 local carrier China Unicom (CHU +3.7%).
- Youku asserts becoming an MVNO will allow it to "add more customer behavioral data to its existing big data of users' content consumption behavior, and expand its reach beyond its current mix of customers as an online video service provider."
- Youku now gets over 60% of its video traffic from mobile. However, mobile's share of ad revenue is still only about half that figure.
- Youku and Unicom have joined many other Chinese companies in opening sharply higher.
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.
Aug. 7, 2014, 10:57 AM
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. 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.
Apr. 30, 2014, 9:11 AM
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, 1:43 PM
- Just eight days after Amazon and IBM announced they're launching cloud infrastructure (IaaS) services meant for Chinese companies and subsidiaries, China Unicom (CHU -0.7%) is doing the same.
- The #2 Chinese mobile carrier has launched Wo Cloud, an IaaS solution that leverages the open-source OpenStack platform (strongly supported by Rackspace, Red Hat, and others), and which features cloud computing, storage, and app hosting services. Unicom says it will increase its cloud-related infrastructure investments to help support Wo Cloud.
- In addition to Amazon and IBM, Unicom will face IaaS competition from Alibaba, which has long been a major player in the Chinese IaaS market, and Microsoft's Windows Azure (expanded into China earlier this year).
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
CHU vs. ETF Alternatives
China Unicom (Hong Kong) Ltd, though its subsidiaries, provides cellular and fixed-line voice and related value-added services, broadband and other Internet-related services, ICT services, and business and data communications services in the PRC.
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