China Mobile’s 4G frantic expansion continues to run into stormy weather.
** On Monday, reports that China Mobile’s chairman said prices for its 4G services could be cut took a toll on the stock which was the most actively traded stock on the HSI and hit its lowest in 2-1/2 years.
** China Mobile appears to be sacrificing margins to protect & gain market share from leaner rivals. Both ROE & margins have slid since 2008. link.reuters.com/tuc57v
** China‘s, and the world‘s, largest mobile network operator is betting that 4G will re-ignite average revenue per user and eventually feed margin expansion.
** But competition between China’s top 3 operators is likely to keep price wars in place while a prospect of a VAT could further dent profits.
** A 4.7% dividend yield might keep some investors interested but those betting on growth from 4G could have to prepare for a much longer wait than anticipated.
** 2013 results are due in the next week.
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