3G to Bolster Data RevenuesWhile the arrival of the iPhone on China Mobile could potentially be a huge blow to China Telecom, it is a good sign that the carrier is not banking on the popular smartphone alone to drive 3G adoption.
The carrier recently came up with a strategy to sell low-cost 3G smartphones made by ZTE, Huawei and Lenovo that run on its 3G network. Considering that the Chinese market is still in an evolving stage, the demand for cheaper Android smartphones is huge.
Even Nokia (NOK), which is trying to push its Lumia line of smartphones and create a third ecosystem with Microsoft (MSFT), is launching Lumia handsets at lower price ranges. The Lumia 800C was launched on China Telecom at about $200 cheaper than the iPhone.
China's huge potential is fostering healthy competition among handset makers and this will help China Telecom manage its subsidies better, so as to lessen the impact on its margins going forward.
Driving 3G adoption will serve to drive the ARPU levels of China Telecom further, as has been the case in the developed world. Carriers such as Verizon, AT&T (T) and Sprint (S) in the U.S. have seen rapid growth in mobile data revenues over the past few years, driven by growing demand for 3G/4G-capable smartphones. This has come even as their voice ARPUs declined, a trend that can be seen in the Chinese telecom market as well.
China Mobile's voice ARPU levels have declined from above $7.30 levels in 2007 to about $6.60 in 2011, by our estimates. We expect to see China Telecom's mobile ARPUs continue to increase in the coming years as 3G demand bolsters data ARPUs further.Click here to find out how a company's products impact its stock price at Trefis Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin. This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV