Dec. 22, 2009 (Chinavestor) All three main Chinese carriers reported operational statistics for the month of November in the lat two days. While China Mobile (NYSE:CHL) (HKG:0941) maintains a healthy lead in the mobile arena, China Telecom (NYSE:CHA) (HKG:0728) regained momentum while China Unicom (NYSE:CHU) (HKG:0762) continued to suffer despite having the iPhone.
The fixed line segment have continued to deteriorate for both China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA). As the following chart testifies, China Unicom lost -1.25 million customers in the month of November 2009 compared to a net monthly loss of -1.84 by larger China Telecom.
But the most important development takes place within the mobile sector. China is more wireless then wired with over 700 million mobile subscribers vs. 300 million wireline users. Given China's total population of over 1.200 million current market penetration is around 60% compared to 95% for western nations. This implies there is more room to go for mobile carriers.
Just as importantly, smartphone revolution has just started in China at the end of 2009. China Unicom (NYSE:CHU) hit the market with the iPhone in October but sells at a high premium of around $1,000 and attracted only 801,000 new subscribers in November. While it is more then CHU's 2G subscriber growth of 605,000 for the month but is far from China Mobile's 4.58 million new customers for November. China Mobile didn't provide 2G-3G break down for the month. China Mobile has now 518.05 million subscribers out of which has 4.58 million 3G users. China Telecom (NYSE:CHA) added 3.07 million new subscribers in November reaching a total of 52.99 million mobile customers.
This translates to China Mobile remaining the largest and growing at the fasts speed in November as the following chart testifies.
Looking forward 3G fall out is extremely important. China Mobile (NYSE:CHL) announced a target to reach 30 million 3G subscribers by the end of 2010. China Mobile (NYSE:CHL) just launched couple of new smartphones in December, including Dell's Mini 3 and one with HTC. Both run on Google's no cost Android platform and are priced at a fraction of the iPhone. Investors have to pay close attention to China Mobile's December 3G growth. If the company can add around 2 million new 3G users in December the 30 million target is within its reach. Assuming CHL can squeeze more money out of the pocket of each 3G subscriber, profitability is expected to rise.
China Telecom (NYSE:CHA) announced strong 3G growth in November and has a great GSM based phone lineup with the support of key vendors like Nokia. On the downside CHA has a limited 3G coverage, mostly around 55 cities, and has a less reliable network in rural areas. This in turn suggests CHL is expected to be the winner of the 3 G fallout. But again, December numbers will be crucial to assess how much momentum CHL has really got.