发帖
雷达卡
China Telecoms Sector
ASSUMING COVERAGE
Not yet competitive 'tipping point'
Technology
Network &
Coverage
China Mobile
China Unicom
China Telecom
■ The cellular market in China still represents an attractive growth
opportunity (39.1% voice and SMS “traffic” penetration, with wireless
broadband access to less than 1% of households).
■ Given China Mobile’s unusual dominance in terms of network coverage
and scale, particularly in high-growth rural areas, it looks set to
continue capturing well over half of incremental market revenues.
■ The introduction of three different 3G technologies creates the
possibility of a ‘tipping point’ at which high-end users (18.5% of
industry revenue) might churn from China Mobile to competitors.
■ Analysis of five ‘factors’ (including network, handset supply and 3G
take-up) firmly suggests that no such tipping point will be reached in
the next 12-18 months, giving upside risk to China Mobile’s margins,
and we assume coverage with an OUTPERFORM rating and HK$105
target price.
■ China Unicom may well have some (limited) success in attracting highend
users from 2H10 through 2H12, and we rate the stock NEUTRAL
with a target price of HK$12.35. China Telecom, with the weakest
network and a technology which lacks significant scale, looks unlikely
to share such success. Given ongoing fixed-line revenue declines, we
rate the stock UNDERPERFORM with a target price of HK$3.79.
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