Dec. 21, 2009 (Chinavestor) The second largest mobile carrier in China by subscriber base, China Unicom Co. Ltd. (HKG:0762) (NYSE:CHU), reported operational statistics for the month of November 2009 today. All three important segments -cellular, fixed line and broadband- have continued to show softness but 3G phone sales continued to grow. The number of new smartphone subscribers (3G) outnumbered regular cellphone subscribers for the first time in a month. China Unicom (NYSE:CHU) has the iPhone but sells for around $1,000 each targeting the high end users. In contrast, China Mobile (NYSE:CHL) has launched couple of smartphones of its own in December, all running on the free Android platform targeting the mass market. Expect CHL to show much stronger 3G growth for the month of December.
We have turned bullish on the Chinese telecom sector at the end of 2009 based on the following factors:
- sector rotation will favor Chinese telecoms after a lackluster performance in 2009.
- 3G revolution is coming to in 2010 with all three carrier launching their 3G phone arsenal. Carriers with the highest 3G growth will be able to regain pricing control and squeeze more out of each subscriber, improving ROI, profit margin and earnings prospects.
- Sharp rise in disposable income is expected to benefit telecoms, China mobile (NYSE:CHL), China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA) alike.
For China Unicom (NYSE:CHU), here are the latest statistics in numbers:
- Total number of 2G subscribers reached 144.205 million representing an increase of 605,000 from last month
- Total number of 3G subscribers reached 1.822 million representing an increase of 801,000 from last month
- Total number of fixed line subscribers were 104.932 million representing a decrease of-1.252 million from last month
- Total number of broadband subscribers reached 38.331 million representing an increase of 325,000 from last month
As the following chart testifies the 605,000 new addition to he 2G subscriber base is the lowest in record for 2009 as most subscribers now prefer smart phones like the iPhone.
The deterioration of the fixed line segment continues to accelerate as the following chart testifies. Remember, China is a country that is more wireless then wired when it comes to telecommunications.
Weakness in the broadband segment is very disappointing and is expected to hurt the bottom line of China Unicom (NYSE:CHU) in the last quarter of 2009.
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