China Telecom Set for 3G Revolution
While the Chinese figure may not be reflective of the actual number of mobile users in country, as some of these connections are currently inactive, it is still a compelling statistic that shows the huge growth opportunity that China presents for many smartphone manufacturers. At the same time, it is also a huge opportunity for the incumbent Chinese telecom providers such as China Mobile(CHL) , China Unicom(CHU) and China Telecom(CHA) to tap their huge 2G subscriber base and drive the demand for the more lucrative 3G data services.
Of the three Chinese carriers, China Telecom may be the smallest but its subscriber base of over 135 million (135.83 million as of March) easily puts most wireless carriers in the developed world to shame. The largest wireless carrier in the U.S., Verizon, has about 110 million total connections currently and it operates in an increasingly saturated market.
On the other hand, China's 3G penetration is only about 15% and is likely to increase heavily in the coming years as smartphone makers target China. Armed with the iPhone 4S, the Lumia as well as a horde of cheaper Android handsets, China Telecom looks set to ride the widespread 3G transition in the coming years.
We have a $68.45 price estimate for China Telecom stock, about 27% ahead of the current market price.
3G Market in China Is an Equitable Mix
With close to 670 million subscribers, China Mobile is the largest wireless carrier in the world and has almost six times as many subscribers as China Telecom. But when it comes to 3G, the difference is not nearly as much. As of March 2012, China Mobile had around 60 million 3G subscribers, only about 36% ahead of about 44 million that subscribe to China Telecom's 3G network.