China Mobile Steams Ahead With 4G 中国移动积极推进4G网络

By newsdoug on January 11, 2012

China Mobile signals continued push in 4G It’s only the second week of the new year, and already we’re seeing the latest signs that China Mobile (HKEx: 941) is aggressively moving forward with development of its 4G network with plans to expand its already-ambitious trial program for the homegrown technology called TD-LTE. Frankly speaking, I was a bit skeptical when the company began aggressive large-scale trials for the technology last year, less than 2 years after it and its 2 rivals collectively spent around $50 billion to build 3G networks and as the regulator was signaling it wouldn’t award 4G licenses for several years. But recent signs that China Mobile is getting more aggressive on its neglected 3G network, coupled with more positive signs from the regulator, have led me to revise my thinking, and if trials go well we could actually see the company get a 4G license and a limited commercial launch of TD-LTE as early as the first quarter of 2013. Let’s look at the most recent developments, which have Chinese media reporting that China Mobile will soon expand its TD-LTE trials to 3 more cities, following trials in 6 major cities during the second half of last year. (English article) In a related report, other Chinese media are saying 3 chip developers have finished testing for new TD-LTE chips, indicating product development for the technology is coming along much faster than for China Mobile’s 3G network, based on another homegrown standard called TD-SCDMA that has suffered in part from a lack of cellphones compatible with the technology. Earlier this week, chip developer Spreadtrum (Nasdaq: SPRD), which has recently emerged as a strong supporter of the TD standards, unveiled a chip that can support both TD-SCDMA and TD-LTE, an important development as China Mobile will ultimately need to offer handsets that can run on both its 3G and 4G networks when it begins to commercialize 4G. (Spreadtrum announcement) All things considered, I do see a more exciting year ahead for China Mobile, which after a couple of years of denial about its 3G technology, is finally taking concrete steps in both 3G and 4G that could finally start to yield some tangible results as soon as the middle of the year. If that happens, which still isn’t guaranteed, look for some much-needed growth to finally return to the company’s anemic top and bottom lines.

Bottom line: China Mobile’s latest moves on 4G, coupled with recent new activity in 3G, indicate it is getting more aggressive and could soon see its growth rates climbing.

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