China Mobile Communications Corp, China’s major telecom provider, declared that its client base achieved 901.92 million in May 2018, increasing by 2.26 million from the earlier month, this is based on a report by Chinese news portal, Jiemian.
The number of China Unicom’s 4G users exceeded 200 million recently with a growth of 25.46 million so far this year, greater than the number of 22.32 million new 4G users of China Mobile this year, the report said.
While China Unicom and China Telecom are knocking China Mobile in adding new 4G users, China Mobile has speeded up its moves in 5G to keep its position as the number one.
Furthermore, the first multivendor 5G call to meet 3GPP’s standalone 5G NR requirements was completed on June 15 in Beijing by telecom equipment maker Ericsson, Intel and China Mobile Research Institute.
“It is an important milestone for the productization and commercialization of 5G standards and will lay a solid foundation for China Mobile in its large-scale 5G trial, enabling the success of the global 5G industry,” Huang Yuhong, deputy general manager of China Mobile Research Institute, said.
In addition to all that, China Mobile International has also commenced construction plans for a new data centre in Singapore, its second built-up facility in Asia-Pacific, which will boost its global network.
Situated in Singapore Dacheng Industrial Park, the site covered a vast area of 7,330 square metres and a construction area of 15,174 square metres. It would house 2,100 racks, the Chinese telco said. The new Singapore data centre would sync up with other data centres within China Mobile’s global network, suplementing connection services for the telco’s several services such as roaming, cloud computing, and voice.
China has an internet coverage rate of just 52%, as per Internet Live Stats. Which is very low compared to an 89% coverage rate in the U.S. and 91% coverage rate in Japan. It also signifies that China Mobile has enough room to continue growing its wireless and wireline customer bases.
Also, being one of three state-backed telecom companies in China, the other two of which are China Telecom and China Unicom, China Mobile gets to enjoy the Chinese government’s occasional rotating management at these three companies which then, prevents China Mobile from ever becoming a monopoly. The government backing also gives it an ample safety net during market decline.
China Mobile has a trailing yield of 3.2%, which certainly doesn’t look as notable as AT&T and Verizon’s 4.6% yields. Its semi-annual payments, which are declared every half year based on earnings growth, are also less frequent than AT&T and Verizon’s quarterly payments.
Even though with those disadvantages, China Mobile has regularly paid dividends for 14 straight years, and its trailing yield has remained between 3% and 5% over the past five years — which is much higher than the S&P 500’s 2% yield.
China Mobile’s top line growth has slowed down since 2014, but that should just be a temporary pause before it adds more customers and produces more revenues per customer with 4G plans and wireline/wireless bundles. Analysts forsee China Mobile’s revenue to rise 2% this year and 4% next year. That growth rate might look weak, but it matches favorably to AT&T’s estimates for 1% sales growth and Verizon’s estimates for a 1% sales decline.
Finally, China Mobile trades at just 14 times earnings, which is higher than China Telecom’s P/E of 12 but lower than China Unicom’s P/E of 51 and the industry average of 18 for foreign telecom companies.
That low appraisal — combined with its solid dividend, government backing, and growth opportunities across China — make China Mobile one of the securest ways to invest in China’s long-term growth. The stock may face near-term volatility due to alarmist talk about a trade war between the U.S. and China, but those challenges will likely vanish over the next few years.