CHL China Mobile Limited

China Unicom (CHU) announced operational statistics for the month of Jan 2014 on Wednesday.

At the end of Jan 2014, China Unicom’s mobile subscriber base reached 284.106 million. For Jan, net addition in total subscribers was 3.123 million. The company’s 3G subscriber base rose to 126.469 million with the addition of 3.7 million 3G subscribers. 

Further, the company reported net addition of fixed line broadband subscribers of 661,000 bringing the total to 65.308 million. In addition Fixed-line Local Access Subscribers rose to 88.023 million with the addition of 380,000 subscribers in January.  

Despite being positive news, China Unicom’s share price closed 4 cents below its opening on Wednesday trading. 

Over the past years, China Unicom had made several developments to enhance its network infrastructure. The company launched star handset terminals, innovative tariff plans, High Speed Packet Access (HSPA+) networks and advanced mobile Internet services.

The company has also deployed HSPA+ network, which generates a higher download speeds of up to 21 Mbps, within the entire 3G network and speeds of up to 42 Mbps in some urban parts of China. China Unicom is making every possible effort to make its 3G network the fastest in the country and is also working to improve the 3G penetration rate in the rural regions. The company is consistently teaming up with international big brands like Nokia Corp. (NOK), BlackBerry Ltd. (BBRY) and Samsung to expand its 3G business that stands as the prime contributor to its revenue growth.

Besides 3G infrastructure, the company is also ramping up the deployment of its 4G network. Recently, China Unicom issued a tender for 50,000 LTE base stations in a bid to offer 4G services by the middle of 2014. China Unicom is the latest nationalised telecom service provider in China to enter the 4G space. The tender is expected to be completed in the first quarter of 2014.

The company also won the LTE-TDD (Time Division Duplex) license. However, China Unicom wants to focus on the globally accepted FDD (Frequency Division Duplex) technology and thus plans to roll out only 20% of its network on the TDD technology.

Notably, the world’s largest mobile operator by subscriber, China Mobile Ltd. (CHL) has been the leader in 4G deployment and is expected to deploy 500,000 base stations by 2014. Smaller rival, China Telecom Corp Limited is also planning to launch 60,000 base stations by 2014.

With Internet penetration still very low, 4G will provide a huge opportunity for China Unicom. Though initially expensive, the rollout of 4G will be accretive to the company’s future growth. However, with China Mobile’s strong presence in the 4G market, we believe China Unicom needs to ramp up its infrastructural investments to gain meaningful market share.

China Unicom currently carries a Zacks Rank #3 (Hold).

 
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