China Mobile to Invest in 3G – Gets Better Subscribers

World’s Largest Telecom Company China Mobile added 26.4mn 3G subs (averaging 8.8mn per month), which is more than double that of its domestic rivals. Management attributes the strong subs growth to enriching TD-SCDMA smartphone models, falling prices and effective promotion. The parent company will build more than 100,000 3G base stations to increase the total number to more than 400,000 by end-2013, which, in our view, will improve its 3G coverage substantially and improve user experience.

China Mobile extended handset subsidies, given its much stronger-than-expected 3G subs growth in 1Q13. Surprisingly, 1Q13 saw an uptick in SMS usage, indicating a weaker-than-expected threat from over-thetop (OTT) providers, in our view.

We also expect LTE rollout and likely LTE licensing to be the medium-term catalysts for the company.