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China Mobile Gets Valuable Head Start on 4G Services

Stocks in this article: CHA CHU CHL AAPL

TAIPEI (TheStreet) -- It's usually just a wishful cliche when businesses cite China as the land of a billion consumers. But early next year, telecom provider, China Mobile will find many subscribers suddenly within reach as it takes a lead in 4G phone services.

China Mobile (CHL) aims to commercialize its 4G telephone services to from Dec. 18 to users whose total number across the country -- all providers counted -- have surpassed one billion following a license from the government, according to local media reports.

China's Ministry of Industry and Information Technology gave 4G licenses to China Mobile as well as rivals China Telecom (CHA - Get Report) and China Unicom (CHU - Get Report), but regulators haven't yet approved the 4G standard that those two are best equipped to offer. That standard may get the green light mid-2014.

Regulators already allow TD-LTE, a standard in which China Mobile has invested "significant resources," says Jay Jacobs, research analyst with Global X Management in New York.

"China Mobile therefore has the most viable 4G network available off the bat," Jacobs says. "China Mobile is expected to dominate the first six months of the 4G rollout due to their head start with the TD-LTE network. They may achieve huge scale in the first few months that could prove difficult to compete with in the future."

The 17-year-old state-invested mobile provider's first strike in the market, for business and individual subscribers, helps resume the lead in a market it had dominated a decade ago -- before the other providers came along. The carrier has seen market share decline from 74%, five years ago, to 62% today as competitors give better deals to common users, says Mark Natkin, managing director with market research firm Marbridge Consulting in Beijing.

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