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CHL to Add 11 TD-LTE Phones

Zacks Equity Research

China Mobile Limited (CHL) – world’s largest telecom operator– by subscribers’ plans to expand its TD-LTE-based smartphone portfolio by adding 11 new smartphones.

China Mobile has already set an annual target to rollout 4G LTE service across 100 cities in China and will also deploy 200,000 base stations in the same period. Moreover, the telecom giant also plans to sell at least 120 million handsets based on TD-SCDMA standard by the end of the third quarter of 2013.  

Hence, we believe that China Mobile is moving in the right direction by continuously adding new smartphones based on home grown TD-LTE standard. By expanding its TD-LTE based smartphone portfolio, the company will offer great support in deploying 4G LTE service across its footprint. The company has ordered for more than 3 million TD-LTE-based devices.

China Mobile covers more than half of the Chinese mobile market with only 13% of its huge subscriber base being 3G customers. The other two carriers in the country, China Unicom Limited (CHU) and China Telecom Corp. (CHA) have 33% and 44% of 3G customer concentrations, respectively

China Mobile’s moderate 3G subscriber growth can be attributed to the poor worldwide acceptance of the TD-SCDMA technology.  The technology is a unique home grown standard and is not supported by most smartphone manufacturers. Likewise, the company will be deploying its own home grown TD-LTE standard, which is quite similar to the 4GLTE technology.

However, we believe that the lack of TD-LTE devices may obstruct the successful rollout of its TD-LTE service. Moreover, the existing 4GLTE handsets developers, inclusive of Apple Inc.’s (AAPL) iPhones, are not quite compatible with the TD-LTE technology.

So, it will remain a huge challenge for the world’s largest carrier to deploy its TD-LTE services across the country.

Currently, China Mobile has a Zacks Rank #2 (Buy).

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