China Mobile Sets Yearly LTE Target

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China Mobile Limited (CHL) – the largest telecom operator in the world by subscribers remains optimistic on its previous set target of deploying home grown 4G-LTE technology across 100 cities in China by the year-end and also well supported by 200,000 base stations. Moreover, it has also set an annual target to sell LTE-based devices to more than 1 million people in the country.

The telecom giant plans to sell at least 120 million handsets based on TD-SCDMA standard by the end of the third quarter of 2013 and consequently aims to release TD-SCMDA devices under its own brand.

China Mobile uses 2.6 GHz spectrum band to deploy TD-LTE technology, which is quite effective in densely populated areas as it supports huge data traffic as compared to 700 MHz band spectrum, which supports better coverage and is very popular for 4G LTE deployment in U.S. Unlike 3G technology which has limited option, as it supports only four frequency bands for deployment while 4G LTE supports 20 bands of spectrum on which it can be deployed.

China Mobile, which covers more than half of the Chinese mobile market, has so far been successful in penetrating only 13% of its huge subscriber base with 3G customers, while China Unicom Ltd (CHU) and China Telecom Corp. (CHA) have 33% and 44% of 3G customer concentration respectively.

Such a moderate 3G subscriber growth is mainly due to an unique home grown standard followed by China Mobile called TD-SCDMA technology, which is not consistently accepted around the globe and not well supported by most smartphone manufacturers. Even Apple Inc.’s (AAPL) iPhones are not well supported on that technology, which happens to be a major drawback, as it is offered by the other two carriers.

To retain its market traction, China Mobile is setting such ambitious goals of launching its own new TD-SCDMA based devices by the end of the third quarter of 2013 rather than depending on some other device manufacturers and simultaneously rolling out its unique TD-LTE technology across different cities in China.

Currently, China Mobile has a Zacks Rank #3 (Hold).

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