China Mobile (HKEx: 941; NYSE: CHL), the nation’s largest mobile carrier, is forging ahead with a couple of new initiatives in the broadband and 4G spaces, even as it neglects its 3G mobile business that continues to lose market share. I’m happy to see that the company seems determined to move ahead with broadband, which could become an important new revenue source. But I worry that the telecoms regulator will soon clamp down on China Mobile’s aggressive 4G drive that is increasingly looking like an unlicensed commercial service.
Tag Archives: China Mobile
News Digest: June 19, 2012 报摘： 2012年6月19日
The following press releases and media reports about Chinese companies were carried on June 19. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
◙ Solar Boom Heads to Japan Creating $9.6 Billion Market (English article)
◙ Japan’s Rakuten (Tokyo: 4755) Considers Return to China (Chinese article)
◙ China Mobile (NYSE: 941) to Receive Fixed-Line Network License – Source (English article)
◙ Lenovo (HKEx: 992) Parent Legend Holdings to List by 2016 – New Chief Executive (Chinese article)
◙ China Finance Online (Nasdaq: JRJC), Baidu (Nasdaq: BIDU) Pair on Mobile Web App (PRNewswire)
China iPhones: Apple Ties Up With Youku 中国型iPhone：苹果与优酷合作
Smartphone powerhouse Apple (Nasdaq: AAPL) is finally waking up to the importance of the China market, forging a new tie-up with leading online video site Youku (NYSE: YOUK) in bid to incorporate more China-friendly features into its wildly popular iPhones. This latest deal follows the even bigger unconfirmed news last week that Apple was in talks to integrate software from leading Chinese search engine Baidu (Nasdaq: BIDU) into its next generation iPhone, in another major nod to the importance of a market that now accounts for a fifth of Apple’s global sales, second behind only the US. (previous post) What we see here is a growing trend for Apple to integrate leading Chinese Internet software into its next-generation iPhones, which should result in some smart new models when Apple rolls out its latest smartphone later this year. Executives speaking at a developer conference in the US have already touted the fact that the next generation iPhone will have better Chinese input and Mandarin voice recognition capabilities, and I wouldn’t be surprised if we see some more news leaks and announcements in the days ahead for tie-ups with other Chinese Internet leaders like e-commerce giants Alibaba or Jingdong Mall, and microblogging sensation Sina (Nasdaq: SINA) Weibo. Let’s look at this latest announcement, which has Youku saying its video site software will be integrated into the newest versions of Apple’s desktop and mobile operating systems, set for release later this year. (company announcement) The integration should provide a nice boost for Youku, which will solidify its place as the country’s leading online video site with its pending merger with the second largest player, Tudou (Nasdaq: TUDO). Youku-Tudou will control a combined 40 percent of China’s online video market, and the addition of their platforms on the next-generation iPhones and Apple notebook computers could help them to further consolidate their dominance and perhaps even push them to their elusive goal of sustained profitability by year end. iPhones have become a must-have product for gadget lovers in big Chinese cities, with the smartphones now offered in plans by 2 of China’s top telcos, China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU). This new drive to create a China-friendly iPhone also hints that Apple could be near one of its biggest objectives for the market, namely the signing of an iPhone deal with China Mobile (HKEx: 941; NYSE: CHL), China’s biggest wireless carrier with two-thirds of the market. Such a deal has been repeatedly delayed due to technological reasons, but this rapid and sudden push to develop a China-friendly iPhone leads me to believe we could also see a China Mobile iPhone deal by the time the newest China iPhone comes out later this year.
Bottom line: Apple’s new tie-up with top online video site Youku is the latest step in its plans to make a China friendly iPhone, which could soon also include a long-awaited deal with China Mobile.
Related postings 相关文章:
◙ Baidu, Sina in Smart Cellphone Tie-Ups 百度、新浪在智能手机领域的合作
◙ China Telecom iPhone Debut Looks Strong 中国电信iPhone初次发售，势头强劲
◙ Apple CEO Cook Stirs Up Guessing Firestorm 苹果CEO库克低调访华意欲何为？
Regulator Exposes China Mobile’s 3G Exaggeration 官员披露中国移动虚夸3G用户数量
I’ve always suspected that China Mobile (HKEx: 941; NYSE: CHL), the country’s dominant mobile carrier, vastly exaggerates the size of its 3G business, and now it seems like the more authoritative national telecoms regulator agrees with me. The news shouldn’t come as a shock to anyone, but it does provide a clearer picture of how the 3G market is developing in China, an important indicator since high-speed data services that can be delivered over 3G and upcoming 4G networks is clearly the wave of the future. Let’s look at the latest news, which has an official from the Ministry of Industry and Information Technology saying the number of true 3G subscribers in China is probably around 80 million, or about half the combined total reported by China Mobile, along with its 2 main rivals, China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). (English article) The official puts the blame for the inflated total figure squarely on China Mobile, saying the nation’s top mobile carrier exaggerates its numbers by including many voice-only users among the subscribers for its 3G network. By comparison, Unicom’s and China Telecom’s 3G subscribers use their service for data-related products such as Internet surfing. China Mobile’s latest figures show the company had 62 million 3G subscribers. So if most of the inflation is coming from China Mobile, it’s probably fair to assume that as many as 50 million or more of the company’s 3G users are simply using the service for voice calling, reducing China Mobile’s total figure to a mere 10 million or so. Even that figure could be high, as I have yet to meet a single person who uses China Mobile’s 3G service for Web surfing, with nearly everyone preferring Unicom and China Telecom. Industry followers know the reason for China Mobile’s anemic 3G performance is largely due to the fact that the government forced it to build a network based on a homegrown technology called TD-SCDMA, which has been plagued with reliability problems and lack of handsets. China Mobile has shown signs of planning to boost its 3G efforts following the recent retirement of long-serving Chairman Wang Jianzhou, announcing a steady stream of new handsets and chips for TD-SCDMA phones. But it’s still unclear how serious the company will be on that front, with its new leaders sending out some troubling signals back in April that China Mobile will continue to focus its efforts on next-generation 4G services, which aren’t expected to receive an official license from the MIIT for at least another couple of years. (previous post) Perhaps this latest indirect criticism by the telecoms regulator will embarrass China Mobile into promoting its 3G service more aggressively, which it really needs to do to remain competitive with Unicom and China Telecom. Otherwise, it could not only become a bit player in the 3G space, but could also see its overall market position quickly slip as more and more mobile users migrate to data service plans.
Bottom line: The industry regulator’s disclosure that China Mobile vastly overstates its 3G subscribers reflects the company’s weak promotion of the service and bodes poorly for its future position.
Related postings 相关文章:
◙ China Telecoms Regulator Plays 3G Target Games 工信部制定3G目标
◙ New China Mobile Chief Sends Bad Signals 中国移动新任领导传递糟糕迹象
◙ China Mobile Starts New Era as Wang Leaves 王建宙退休，中国移动开启新时代
China Mobile Chases Fixed-Line Broadband 中国移动有望获固网牌照
A steady stream of news has been coming from a broadband conference taking place in Beijing this week, including reports that the fixed-line broadband market could soon get a healthy dose of new competition with the entry of wireless giant China Mobile (HKEx: 941; NYSE: CHL) into the mix. (Chinese article) I’ll admit that I was never really clear why China Mobile had never previously entered the lucrative market for fixed-line broadband services, which is now dominated by its 2 main rivals China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE CHU), who offer services over their legacy networks inherited from the break up of China’s former fixed-line phone monopoly. After reading the reports, I’ve learned that China Mobile was never formally licensed to directly offer fixed-line broadband and instead was only allowed to offer such service through its China Railcom unit, the former telecoms unit of China’s national rail operator that China Mobile took over as part of an industry restructuring 3 years ago. Apparently that restriction was preventing China Mobile from getting many customers for its fixed-line broadband service, according to the reports. It looks like that could soon change and China Mobile could finally get the license it’s seeking to offer fixed-line broadband services directly. The biggest new factor in the equation is the ongoing anti-monopoly investigation launched last year by the powerful National Development and Reform Commission (NDRC) into China Telecom and Unicom over their fixed-line broadband service. (previous post) China Telecom and Unicom have taken steps to improve their broadband services since then, but the NDRC would certainly be pleased to see another major new player like China Mobile come into the space. What’s more, China is in the process of consolidating its many regional cable TV networks into a single operator, which could offer an instant wired-line platform for China Mobile to offer its service over. We saw signs last year that China Mobile was looking for just such a tie-up with the new cable TV operator, and broadband Internet service could be one of the easiest and most logical products for it to launch in such a tie-up. (previous post) Lastly, China Mobile has new top leadership following the recent retirement of its long-serving chairman, and those leaders are showing early signs of taking more aggressive steps to jump-start the company’s flagging growth with just this kind of initiative. If things keep moving in this direction, which looks likely, I predict we could see China Mobile announce a tie-up with the new national cable TV operator as soon as year-end, and for it to also announce a new fixed-line broadband license around the same time.
Bottom line: China Mobile could tie-up with the country’s new national cable TV operator as soon as year-end, and launch a new fixed-line broadband service soon after that.
Related postings 相关文章:
◙ China Mobile Eyes New Nat’l Cable Network 中国移动有望携手中国广播电视网络公司
◙ China Mobile Starts New Era as Wang Leaves 王建宙退休，中国移动开启新时代
◙ Anti-Monopoly Regulator Makes Poor Choice in Chasing China Telecom 中国反垄断初试牛刀 选错对象
News Digest: June 1, 2012 报摘： 2012年6月1日
The following press releases and media reports about Chinese companies were carried on June 1. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
◙ China Mobile (HKEx: 941) Submits Application to Run Fixed-Line Network – Source (Chinese article)
◙ 360Buy to IPO in September 2012 – Analyst (English article)
◙ Baidu (Nasdaq: BIDU) Unlikely to Invest in E-Commerce – Executive (English article)
◙ RealD (NYSE: RLD), HNA Group Unit to Install RealD 3D on 500 China Cinema Screens (Businesswire)
◙ PetroChina (HKEx: 857) Needs Time on Shale Gas, Looks Abroad: Energy (English article)
West Launches New Attack on Huawei, ZTE 西方对华为和中兴通讯发起新攻击
The bad news never seems to end for embattled telecoms equipment makers Huawei and ZTE (HKEx: 763; Shenzhen: 000063), which have become magnets for attacks from global rivals seeking to curb their gains into the lucrative US and European markets. The latest move has seen the European Union launch an anti-dumping probe against the Chinese pair over allegations that they receive unfair subsidies from Beijing, according to foreign media reports. (English article; Chinese article) It’s not surprising that this investigation is coming in Europe, since most of Huawei’s and ZTE’s biggest global rivals are based there, including Ericsson (Stockholm: ERICb), Nokia Siemens Networks and Alcatel Lucent (Paris: ALUA). All those companies have complained for years that Huawei and ZTE can offer lower prices partly due to strong support from Beijing, which indirectly subsidizes them through policies like export rebates. From my perspective, the fact that the EU has launched this investigation is not surprising at all. What is more interesting is the timing of the move, as well as the broader implications of the probe for a recent major push by Huawei and ZTE into the faster-growing and less controversial smartphone sector. In terms of timing, this anti-dumping investigation is the latest in a recent series of government probes in the US and Europe against not only Huawei and ZTE but also a growing number of other Chinese firms in up-and-coming sectors. Both companies have been largely locked out of the US network-building market to date over concerns their equipment could be used for spying by Beijing. ZTE received a major setback on that front early last year when Sprint (NYSE: S), one of the top 4 US wireless carriers, rejected its bid to help build a new 4G telecoms network (previous post); Huawei received a similar setback months later when it was blocked from bidding for US government contracts to upgrade some of the nation’s emergency telecoms networks. (previous post) Even top Chinese mobile carrier China Mobile (HKEx: 941; NYSE: CHL) has gotten caught up in the fray, with US regulators earlier this month citing security concerns as a reason for potentially vetoing the carrier’s application to offer service between China and the US. (previous post) This latest EU move is unrelated to security concerns, but is rather based on accusations of unfair subsidies from Beijing, which has become another popular tool for Western firms to slow down the advance of aggressive Chinese rivals into their markets. Both the EU and US regularly launch anti-dumping investigations against Chinese sectors, though most of those have usually targeted low-end manufacturing areas like construction materials and auto parts. But the unfair trade attacks moved into the high-tech space last year when the US has launched a high-profile investigation against China’s solar panel industry, which could soon result in big punitive tariffs. (previous post) This new series of attacks against such higher tech companies could quickly become a major obstacle for China as it tries to move away from its traditional strength as a low-end manufacturing powerhouse to higher-tech products that command bigger profit margins and rely less heavily on the cheap labor. From the perspective of Huawei and ZTE, equally worrisome is the prospect that the US and Europe could soon turn their attention to the companies’ smartphone units, which they are aggressively building up as a less controversial alternative to their traditional networking equipment businesses. If the EU believes the 2 companies’ networking equipment business is unfairly subsidized, it should logically believe the same is true for their cellphones. At the end of the day, I suspect there is some truth to the anti-dumping and possibly even the security concerns, which Chinese companies will need to address if they really want to become global players. At the same time, however, I do believe that much of this activity also represents foreign rivals’ attempts to stop encroachment into their home markets by Chinese firms — a reality that Huawei, ZTE and other aspiring Chinese high-tech firms will have to learn to deal with more effectively if they really want to become top global players.
Bottom line: An EU anti-dumping probe against Huawei and ZTE is the latest move by their global rivals to try and keep them out of lucrative Western markets.
Related postings 相关文章:
◙ ICBC, Huawei: It’s Cold Out There 工商银行、华为：国外市场冷清
News Digest: May 24, 2012 报摘： 2012年5月24日
The following press releases and media reports about Chinese companies were carried on May 24. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
◙ Lenovo (HKEx: 992) Reports Fiscal Q4 and Full Year Results (Businesswire)
◙ China Mobile (HKEx: 941) to Spend 20 Bln Yuan on Handset Subsidies This Year – CEO (Chinese article)
◙ Suntech (NYSE: STP) Reports Q1 Financial Results (PRNewswire)
◙ Sina’s (Nasdaq: SINA) Weibo Microblog Incorporates Web Search (English article)
◙ TCL (HKEx: 1070) Showcases Its LED SMART Television in “Marvel’s The Avengers” (Busineswire)
Wanda’s AMC Buy: The Show Isn’t Over Yet 万达并购美国AMC影院：表演还未结束
The headlines are buzzing today with word that China’s leading theater chain operator Wanda Group has agreed to buy struggling US chain AMC Entertainment, calling it a landmark cultural exchange for Chinese firms expanding overseas. But to those applauding the deal, I would quickly caution not to celebrate just yet, as I see a greater than 50 percent chance that the sale will never close due to opposition from US politicians in this presidential election year. Let’s look at the deal first, which looks benign enough and was actually first reported 2 weeks ago when talks were in advanced stages. (previous post) Under their agreement, Wanda will buy struggling AMC from its current private equity owners for $2.6 billion, in what foreign media are calling the largest ever buyout of a US company by a Chinese one. (English article) Chinese media are noting the deal comes just a week after Rupert Murdoch’s News Corp (Nasdaq: NWSA) agreed to buy 20 percent of Bona Film (Nasdaq: BONA), a leading Chinese film distributor, implying the doors are opening in both directions to cross-border investment in the sensitive media and entertainment sectors. But anyone who follows Chinese investments in the US will know that US politicians love to get involved in anything even remotely sensitive, and that is even more likely to happen in this election year as candidates look for votes by portraying themselves as tough on China. That kind of grandstanding has led to problems mostly in the telecoms space so far, with China Mobile (HKEx: 941; NYSE: CHL), Huawei and ZTE (HKEx: 763; Shenzhen: 000063) all running into recent obstacles in their attempts to expand in the US. Politicians have also attacked the banking regulator for recently allowing several of China’s top banks to set up branches and make small acquisitions in the US for the first time, again reflecting how candidates are seizing on fears of these kinds of Chinese investments to raise their profiles. (previous post) Considering that movies are such a central part of American culture and that movie theaters are clearly a part of that picture, I could very easily see politicians raising objections to this latest deal, questioning the wisdom of letting such an important company into Chinese hands. Never mind that AMC and the theater industry in general are struggling due to tough competition not only from other theaters, but also from DVDs and newer products that let people watch and download movies over the Internet. The politicians won’t care about any of that, and they probably won’t care if AMC goes bankrupt in the end because no other company wants to buy it. All they will care about is looking tough against China in order to gain votes. All that said, I predict we will hear the first political objections to this deal within 2 weeks and potentially much sooner, and that all the negative publicity will give the deal a greater than 50-50 chance of ultimately collapsing, to the benefit of no one except the politicians.
Bottom line: The planned purchase of struggling US theater chain AMC by a Chinese buyer is likely to collapse due to objections from vote-seeking US politicians.
Related postings 相关文章:
◙ Welcome to the US Dollhouse, China Mobile 中移动和万达进军美国料将失败
News Digest: May 22, 2012 报摘： 2012年5月22日
The following press releases and media reports about Chinese companies were carried on May 22. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
◙ Alibaba Already in Fund-Raising Talks, Temasek to Invest $500 Mln – Source (Chinese article)
◙ China’s Wanda to Buy AMC Cinema Chain for $2.6 Billion (English article)
◙ Tencent (HKEx: 700) E-Commerce Subsidiary May IPO (English article)
◙ China Mobile (HKEx: 941) Spends 193 Bln Yuan Over 3 Years to Commercialize TD-SCDMA (Chinese article)
◙ China Mobile Subscribers Rise 1.1 pct to 1.02 Bln in April (English article)
◙ Latest calendar for Q1 earnings reports (Earnings calendar)
China Mobile Nears iPhone Deal 中国移动引进iPhone在即
My headline for this post may be a little misleading, as I’m purely guessing based on the latest media reports that China’s dominant wireless carrier China Mobile (HKEx: 941; NYSE: CHL) may soon sign a long-anticipated deal to sell an Apple (Nasdaq: AAPL) iPhone that can run on its struggling 3 network based on a homegrown Chinese technology. In fact, the actual news in this case is relatively simple, with China Mobile’s new Chairman Xi Guohua telling investors at the company’s annual meeting in Hong Kong that he is talking with Apple about developing an iPhone for a technology called TD-SCDMA, which is the basis for China Mobile’s 3G network. (English article; Chinese article) Xi, who took over as China Mobile’s chairman in March after the retirement of his long-serving predecessor Wang Jianzhou, didn’t say very much more on the subject, except to add that there were no guarantees that a deal would be reached. The 2 sides had actually previously talked about a TD-SCDMA iPhone as much as a year ago, but they never reached a deal for reasons that were never disclosed. My guess is that the conservative Wang wanted Apple to take most of the risk for developing the TD-SCDMA iPhone, figuring that Apple wouldn’t mind spending lots of its own R&D dollars to develop a model for the world’s largest mobile carrier with more than 600 million subscribers. If that was the case, Apple clearly balked at taking such risk by itself and the 2 sides never reached a deal that would have clearly benefited both, especially China Mobile as it steadily lost 3G market share to more aggressive rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), which both offer iPhones for their networks. But the situation may have taken a major turn in March when Wang finally retired after months of rumors, leaving Xi to finally take the reins of a company that has seen its growth slow to a crawl in the last 3 years under Wang’s conservative leadership. Not long after Wang left, Apple’s Tim Cook came to China for his own first visit since taking over as the company’s chief executive from Steve Jobs. (previous post) Media closely followed Cook’s trip, which included meetings with top government and industry leaders even though no mention was ever made of a visit to China Mobile. Still, I am quite sure that Cook must have met with Xi and other top China Mobile executives during the visit, with discussion of restarting the stalled TD-SCDMA iPhone talks most likely high on the agenda. Unlike Wang, Xi must realize that his company needs to take some major action to develop its 3G business, which is where the future of mobile communications lies. China Mobile already has a huge cash pile that it never seems to spend or return to investors, and I suspect that a newly empowered Xi will finally be willing to spend some of that money to share more of the risk with Apple for developing a TD-SCDMA iPhone. If that’s the case, look for the 2 sides to make rapid progress in their current talks and announce a long-delayed and much needed iPhone deal in the next 2-3 months, which could greatly boost China Mobile’s prospects in the 3G space and its broader overall outlook.
Bottom line: Apple’s stalled iPhone talks with China Mobile appear to have restarted under the carrier’s new, more progressive leadership, with a long awaited deal possible in the next 2-3 months.
Related postings 相关文章:
◙ New Developments, Including iPhone Deal, Heat Up 3G, 4G 中国电信iPhone销售和日益升温的3G、4G最新进展
◙ Apple CEO Cook Stirs Up Guessing Firestorm 苹果CEO库克低调访华意欲何为？
◙ China Telecom Turns Up Volume in 3G Drive 中国电信计划一鼓作气 3G市场欲再下一城
