China Mobile Growth Drivers: 4G And China's 'Internet Plus'
Summary
China Mobile's ARPU has been affected by a combination of falling voice revenue and the government's price cutting strategy.
However, with 4G subscribers generating about 1.5 times the ARPU of regular mobile customers, 4G is likely to drive revenues going forward.
Over the long term, China's "Internet Plus" initiative should help drive growth.
Please take note this is only one aspect in weighing the attractiveness or non-attractiveness of China Mobile (NYSE:CHL) as an investment and should not be used independent of other factors.
China Mobile is the largest wireless network operator in the world with over 800 million subscribers and is the leading mobile operator in China with an approximately 60% market share.
Short-Term Driver: 4G
China Mobile is currently the 4G market leader in China, with a market shareexceeding 80% as at August 2015.
China Mobile's total mobile subscriber base grew by 2.4% to 826 million subscribers in 2015. China Mobile started the year with 90 million 4G subscribers and ended with a massive 312 million, representing an increase of over 200%. Despite this, there's still ample room to grow as the company's 4G subscribers represent just 38% of its total subscriber base. China Mobile intends to increase its 4G subscriber base to 500 million by 2016.
Data services is the key revenue driver. 4G customers consume around double, and in some cases, triple the monthly amount of data of non-4G users. Much of this increase is driven by video streaming. Consequently, 4G users generate 1.5 times the Average Revenue Per User (ARPU) of regular telecom customers.
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