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Thursday June 07, 2012
China Mobile: Ni hao
by Paul Tracy, editor High-Yield International With 650 million subscribers, China Mobile (CHL) is the largest cell phone provider in the world -- with more customers than AT&T, Verizon and Sprint combined. Now before you dismiss this as another risky emerging-market stock... let's see the facts. China Mobile is the world's largest wireless telecommunications company. It controls about two-thirds of the total Chinese mobile phone market and around 45% of the nation's third-generation (3G) mobile data market. With a $200 billion market cap and $84 billion in annual revenue, China Mobile is just as big as the leading U.S. cell-phone provider, AT&T. But unlike AT&T, China Mobile has a lot more room for growth. As Chinese households continue to grow their incomes, China Mobile should maintain its top line growth as more first-time mobile customers buy handsets. Currently, the Chinese government has been targeting economic growth in the nation's smaller cities and towns, where China Mobile dominates with unparalleled network coverage and about 70% of the 2G market share. Since mobile penetration is lowest outside the major cities, China Mobile is the best-placed competitor in China to win this new business. And that's just the tip of the iceberg. China Mobile's more exciting growth prospects lie in high-speed mobile data services. Data revenues soared 45% in 2011 powered by overall mobile data traffic growth of 152% year-over-year. To boot, the company pays a solid dividend yield that has grown every year since 2006. In 2011 alone, the company boosted its dividend nearly 13%. Right now, China Mobile pays a quarterly $0.51 distribution for a current yield of 4.0%. But with close to $53 billion in cash and $4.6 billion in total debt on the books, I expect the company will have no problem growing its dividend in the years to come. Learn more about this financial newsletter at Paul Tracy's High-Yield International. Related articles:
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