China: Soaring Mobile Data Challenges Bearish Outlook
February 26, 2002
Investors may have been too bearish on the outlook for growth in China's mobile phone market, according to recent data. There were more than 5.09 million new mobile phone users last month, bringing the country's total users to 149.9 million, according to Ministry of Information Industry (MII) statistics.
Joe Locke, telecommunications analyst at ABN Amro, said that although there were widespread fears China's market was reaching saturation, last month's subscriber numbers showed the market was still strong.
The net addition last month was slightly higher than last year's monthly average of 4.95 million users.
"This illustrates no material decline for the first month of 2002, despite some claims in the market to the contrary," Mr Locke said.
Last year, China added 59.54 million new mobile phone subscribers to reach 144.81 million.
Of the new subscribers, 37.29 million signed with China Mobile Communications, while the remaining 22.25 million signed with China Unicom Group.
The MII has forecast that the mainland market will grow by another 55 million new users this year.
Based on last month's figure, the mainland mobile phone market could easily meet and even exceed the telecom regulator's target - regarded as a guidance figure.
"The officially published numbers should be viewed more as a floor under which the MII likely feel embarrassed if they do not hit, rather than the real growth target they have been receiving credit for," Mr Locke said.
The latest MII data showed the telecoms sector generated 26.32 billion yuan (about HK$ 24.66 billion) revenue last month, representing 12.5 per cent year -on-year growth.
Shares in China Mobile and China Unicom - the only two mobile phone operators in the country - have been heavily sold down by investors on concerns of an expected increase in competition and a slowdown in market growth.
However, ABN Amro has taken a contrary view by forecasting China Mobile will post full-year earnings above expectations and that China Unicom will also demonstrate strong growth.
China Unicom is targeting 7.2 billion yuan in profit this year, the Xinhua News Agency yesterday quoted company president Wang Jianzhou as saying.
He also forecasts the firm will generate 52 billion yuan revenue from its core businesses, representing a 38 per cent growth rate from the previous year.
The mobile carrier is also forecasting it will pick up more than 20 million subscribers this year.
China Mobile has a revenue growth target of 10.5 per cent for this year, aiming to reach 148.8 billion yuan.
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