'King Kong' China Mobile Running Out of Room for Growth
The company enjoys strong support from the Chinese government, its largest stakeholder. And China Mobile's main rival, China Unicom
China Mobile is the world's most popular cellular carrier, with 787 million subscriptions as of May. Almost everyone in China old or young enough to swipe a screen carries at least one device equipped with a China Mobile SIM card.
But the gorilla may be running out of room for future growth. China's economy is cooling, and consumer prices are rising for non-discretionary items such as food. A new value-added tax on telecom services that took effect June 1 is likely to bite into telecom profits. And free, Internet-based voice and messaging services are undermining traditional telecom revenue sources.
Moreover, mobile Wifi plans offered by China Unicom and third-place carrier China Telecom
Everbright Securities has rated China Unicom's stock a buy, given the company's 74% year-over-year increase in first-quarter net earnings to 1.1 billion yuan. The report cited strong sales of China Unicom's broadband Internet services and expectations that the company may spin off assets as the Chinese government opens more state companies to private investment.
China Mobile is actively seeking growth. It's building a faster, 4G Wi-Fi network that will accommodate the free voice and messaging services used daily across China, such as Hong Kong-listed Tencent's
Moreover, China Mobile is cooperating with 17 wholesale Wi-Fi marketing companies, called mobile virtual network operators, such as Alibaba's