Top Opportunity in Mobile Market Lies in China

China Mobile Leading the Mobile Growth PackThe Chinese economy is showing signs of stalling, but there are numerous areas that continue to show decent growth metrics, including automobiles and mobile phones.

Now, if you think AT&T Inc. (NYSE/T) or Verizon Communications Inc. (NYSE/VZ) are big, take a look at China Mobile Limited (NYSE/CHL). China Mobile is the largest mobile phone operator in China, with about 790 million subscribers as of June 30—that’s more than the entire population of Europe! The company’s growth is even expected to expand as 3G and 4G networks grow in popularity.

You cannot ignore the fact that China is the top mobile market in the world with more than one billion users. Plus, you not only have the urban dwellers using these services, but we are seeing massive demand in the rural areas as well, especially when rural workers migrate to the cities, looking for jobs.

And with the mobile sector in the country being heavily regulated by the Chinese government as far as licenses and the landscape, there are currently only three major mobile operators in the country.

What’s most intriguing is the development of advanced mobile technologies. China Mobile only introduced its 4G network six months ago and already it has coverage in 300 cities and approximately 6.5 million users.

China is a key global growth market for Apple Inc. (NASDAQ/AAPL), too, which is searching for growth in the emerging markets. Apple’s deal with China Mobile will definitely help.

China Mobile is regarded as the top brand in BusinessWeek’s “20 Best China Brands.” The stock pays an annual dividend of $1.88, for a current dividend yield of 3.8% based on the prevailing stock price of $55.35 on August 13.

China Mobile Limited Chart

Chart courtesy of www.StockCharts.com

Not being happy with simply operating in its own domestic market, the major mobile provider has international expansion in its sights, something that is absent with the U.S. carriers.

Spreading through the massive Asian market makes sense. The company already holds an 18% stake in Thailand-based True Corp., which it purchased for $880 million. China Mobile also owns Bertrange, Luxembourg-based Millicom International Cellular S.A., which is relatively minor with about eight million subscribers in Central America, South America, Africa, Pakistan, Sri Lanka, and Southeast Asia.

The company’s annual revenues have increased sequentially for nine straight years and are expected to continue to grow going forward, as is reflected on the chart below.

China Mobile Revenue Chart

Data source: MSN Money web site, last accessed August 13, 2014

In my view, the Chinese mobile market has excellent prospects and playing a company like China Mobile as a gateway to the Chinese and Asian markets is worth a look.