China Mobile (NYSE:CHL) has quickly grown to become one of the largest broadband providers in China, in terms of number of subscribers, with its total user base standing at about 168 million as of April 2019. The growth of this business is crucial for the company as revenue from its core mobile operations have remained sluggish (CAGR of under 2% over the last 3 years). In this analysis, Trefis compares and contrasts China Mobile’s key wireline broadband metrics with its rivals and also examines how the business impacts its overall earnings and stock price.
View our interactive dashboard analysis How Does China Mobile’s Wireline Broadband Business Compare With Its Peers?
China Mobile’s Wireline Broadband Subscriber Base Expanding Faster Than Rivals
- China Mobile’s wireline broadband base grew at a CAGR of about 42% over the last 3 years, as it expanded its coverage area.
- This compares to a growth of about 9% and 4%, respectively, for China Telecom and China Unicom.
How Do China Mobile’s Wireline Broadband Revenues Compare With Rivals?
- Wireline broadband revenues stood at about $8 billion in 2018, compared to levels of around $11 billion for China Telecom and $6 billion for China Unicom.
China Mobile’s Growth Has Been Coming At The Expense Of ARPUs
- China Mobile’s average revenue per user is significantly lower than its rivals, coming in at about $4.40/month in 2018, versus about $6.50 for its rivals.
- However, we expect the metric to trend higher, driven by higher broadband speeds and growing Fiber to the home penetration.
Arriving At Price Estimate
- We are valuing the company at about 12x its projected 2020 results.
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