China’s mobile industry could be about to change significantly. According to data from Topeka Capital Markets, China has close to 200 million mobile 3g users. Apple never had 4G, a much faster mobile system than 3G, until they recently rolled out the recent iPhone 5, which has a 4G capacity. Topeka claims that Chinese users are ‘craving’ the new iPhone 5. This would benefit Apple and many Chinese based mobile industry companies. A summary from Topeka’s recently issued report:
China’s Wireless Subs Grow to 1.07 Billion in August. This morning, the last of the China based carriers reported mobile subscribers for August, including China Telecom Corporation Limited (NYSE:CHA) (HKG:0728), China Mobile Ltd. (NYSE:CHL) (HKG:0941) and China Unicom Limited (NYSE:CHU) (HKG:0762). During August, total subscribers in China (i.e., wireless, wireline and broadband) rose to 1.475 billion, up 0.8% MoM (11.87 million), while wireless subscribers increased by just over 1.0%, up 11 million to 1.07 billion versus 1.06 billion in July. We expect China to get a taste of iPhone 5 fever this Friday with the launch in Hong Kong.
• China Watches with Envy as the iPhone 5 Launches in Hong Kong this Friday. During the first phase of the iPhone 5 roll out, Apple Inc. (NASDAQ:AAPL) added Hong Kong to the lineup and this is much earlier than the third phase for the iPhone 4S. In our view, the demand for the iPhone 5 in Hong Kong will be unprecedented and this enthusiasm will quickly spill over into mainland China that we believe will launch in December. The combination of the new look, lighter weight, larger screen and thinner form factor of the iPhone 5 will drive the “status” upgrade in Hong Kong and China. At the same time, Apple Inc. (NASDAQ:AAPL)’s new iOS 6 has enhanced features that directly benefit users in China, including Siri that now speaks Mandarin (and Cantonese).
• 3G Subs in China Grow 105% YoY and Reach 192 Million in August. During the month of August, 3G subscribers at the three carriers in China reached 192.3 million, up 4.8% MoM for an increase of 8.9 million subscribers and an acceleration from the up 4.5% MoM (7.8 million net adds) in July. This represents 105% YoY growth from the 93.8 million 3G subscribers in August 2011. As such, 3G subscribers now represent 18% of China’s wireless subscribers and well above the 10% from a year ago. However, this penetration rate remains low relative to the developed world and provides significant growth opportunities for mobile industry companies such as Apple Inc. (NASDAQ:AAPL)over the next several years. Topeka continues to believe 3G subscribers in China will reach 230 million by the end of 2012 and we are now projecting 325 million to 350 million 3G subscribers by the end of 2013. This compares to just 127.5 million 3G subscribers in China at the end of 2011.
• China Mobile Ltd. (NYSE:CHL) (HKG:0941) Reaches 72 Million 3G Subs and Waiting on the iPhone 5. China Mobile’s total wireless subscribers came in at 693 million in August, up 5.1 million MoM (up 0.7%). China Mobile Ltd. (NYSE:CHL) (HKG:0941) ‘s 3G subscribers (TD-SCDMA) reached 72.1 million at the end of August, up 3.2 million MoM (up 4.6%) from 69 million in July. China Mobile Ltd. (NYSE:CHL) (HKG:0941) represents 65% of the total wireless subscribers in China but only 38% of the 3G users and down from 43% of 3G users a year ago. China Mobile is the only major carrier in China that does not have a relationship with Apple Inc. (NASDAQ:AAPL) to sell the iPhone. During the first-half of 2013 (most likely 1Q13), Most analysts (Topeka included) continue to believe Apple Inc. (NASDAQ:AAPL) and China Mobile will announce an agreement for the iPhone 5.
• China Unicom Limited (NYSE:CHU) (HKG:0762) and China Telecom Corporation Limited (NYSE:CHA) (HKG:0728) Continue to Gain 3G Share. Once again, the two carriers that offer the iPhone in China delivered faster MoM 3G percentage growth in August than China Mobile, growing share to 62% of China’s 3G subscribers in August from 57% a year ago. China Unicom Limited (NYSE:CHU) (HKG:0762) reported 63.7 million 3G subscribers (WCDMA) in August, up 3.07 million users MoM (up 5.1%) from 60.6 million users in July. Total wireless subscribers came in at 226.1 million, up 3.4 million MoM (up 1.5%), while total subscribers increased by 3.9 million subscribers MoM (up 1.0%) to 380.5 million users. China Telecom Corporation Limited (NYSE:CHA) (HKG:0728)’s 3G subscribers (CDMA 2000) grew by 2.63 million MoM (up 4.9%) to 56.4 million in August. Total wireless subscribers reached 149.4 million users, up 2.5 million MoM (up 1.7%) and total subscribers grew by 2.9 million users to 401.7 million MoM (up 0.7%).
(Disclosure: No positions in any securities mentioned)
