Here are the key points:
- Do not expect major
policy changes from China Mobile (ticker: CHL).
- CHL's biggest focus seems strengthening its service providers and creating more content for subscribers.
- Piper believes CHL will
continue to support service providers, and is unlikely to pressure them to
cut back on marketing or take less revenue share.
- Piper expects gradual changes that may have
a short-term negative impact.
China Mobile's new management has taken an unprecedented interest in value added services:
- Piper believes this is fueled by competitive reasons.
- CHL is gearing up for 3G, and a
new environment that will be more challenging than the
current one where China Mobile is facing only one competitor, China Unicom (ticker: CHU).
- Piper believes CHL is also determined to accelerate
growth through data services, new
content and products.
Which companies will gain most from China Mobile's support for wireless service providers?
- Tom Online (ticker: TOMO). See its latest Q4 results here.
- Hurray (ticker: HRAY). Latest news on HRAY from the China Stock Blog here.
- Service providers with the closest relationships will have even more of an advantage
already has a strong relationship with China Unicom (ticker: CHU).
- Possible near-term wireless weakness.
- Long-term growth.
- Piper recommends long-term investors increase wireless exposure in China.
More here from Piper Jaffray.
China Mobile stock market performance: