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Stacie Stuart (CHL) November 10, 2011

Stacie Stuart (CHL) November 10, 2011. China Mobile Limited. “Largest telecommunications operator in the world by customer base and network size” More than 630 million customers Incorporated on September 3, 1997 Owns over 100% in various operating subsidiaries 31 for the provinces in China.

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Stacie Stuart (CHL) November 10, 2011

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  1. Stacie Stuart (CHL) November 10, 2011

  2. China Mobile Limited • “Largest telecommunications operator in the world by customer base and network size” • More than 630 million customers • Incorporated on September 3, 1997 • Owns over 100% in various operating subsidiaries • 31 for the provinces in China

  3. Criteria

  4. Chart

  5. Strengths • Revenues increased due to additional subscribers while ARPU decreased • 68% of entire market • 45% in 3G high margin (43% of entire market) • Growth • Investment in marketing and infrastructure in competitve areas • Strong Balance Sheet • Scale efficiency

  6. Weakness • Although there is growth, grow in rural, low income areas • Competitors have better 3G technologies and a larger smartphone selection • Decreased EBITDA • Excusable because of growth and investments

  7. Opportunities • Installing Wi-Fi hotspots • More handset vendors (eg. HTC) • Rise value added and data services • Upgrade 2G customers to 3G (Higher margin) • Although rural areas are bring in less income, there is less competition

  8. Threats • Government regulation • Mandate to use less mature TD technology in 3G • Must use China’s own 3G standard: TD-SCDMA • May allow competitors to cut prices • Intense competition • Number portability • Changing customers from 2G to 3G

  9. Recommendations • HOLD • Morningstar’s Recommendations • Hold: 2 • Buy: 2 • Closing Price (11/9) - $47.89 • Purchase Price (10/2009) - $50.90

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