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Author: bradbeebe52 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3433  
Subject: China Mobile (CHL) Date: 8/13/2003 1:58 PM
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China Mobile...

What going on with the Chinese mobile phone market?
Is CHL the dominant player as potrayed in a Money Magazine article in 2002?
Are they still cutting each others' land lines?
Culturally, is it one phone many members of a family share or will it be more like the American experience where there are many individual subsctibers?
Any guidance, experts?
thanks.
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Author: Larry01Gott Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211 of 3433
Subject: Re: China Mobile (CHL) Date: 8/13/2003 3:59 PM
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Brad, we've not really tackled the China mobile market here much -- the two biggest players being China Mobile (formerly China Telecom) and China Unicom.

Part of the problem is that I like to run the numbers, to see if the numbers match the chatter. Neither of the two companies prepare quarterly reports like the standard USA 10Q, and don't report to the SEC as you can see on SEC's Edgar site.

They apparently do financial reports every six months, which can be found on their own websites. Now that earnings season is over, maybe I'll have time to look at them a little closer.

But anyone that's willing and able, can step in and become the board expert on the mobile market -- keeping us informed about who are the players besides the two mentioned, what % of total existing business do each have, what % of China population is covered, what's coming new, how can the government help or hurt the companies, and so on, and so on.

Oh! And something to keep in mind, those of us that have UTSI stock. One of UTSI's big growth areas are their local-area cellphones -- can't remember what they're called -- but they don't do long distance. They are VERY popular in China. This is big competition to China Mobile and China Unicom, and it is not certain how it will play out.
The "Big Two" are China-based companies, but UT Starcom is VERY highly valued in China, and is instrumental in the buildout of the national infrastructure for cellular. As a "reward" for faithful and speedy buildout, UTSI may be allowed to keep its corner on the local-area cellphone market for the forseeable future.

Anybody please feel free to add or subtract from my understanding of that latter issue.

Larry

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Author: jimpiccard Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 217 of 3433
Subject: Re: China Mobile (CHL) Date: 8/13/2003 11:12 PM
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I agree with your implication that UTSI is the sleeper here. I have all three (with puny monthly dollar amounts invested via my Sharebuilder account); with 50% of my 'China telecom' money into UTSI; 50% split between the 'standard' cell phone services (i.e., 'standard' in the sense that those two are pretty much exactly the same type of cell service we have in 'the West' et al; unlike UTSI). My reason for favoring UTSI is simple: simplicity! China is a big market by any standards even for regular cell phone service....which, let's face it, for the 'average' Chinese (whoever that is!) is much more unaffordable than we're used to. That's the slot UTSI has slipped into, with their more limited...and much cheaper.....

UTSI's web site is UTSTAR.COM. One of the articles you can access there is from Business Week: http://www.businessweek.com/magazine/content/03_23/b3836148_mz033.htm

Two salient paragraphs from that excellent article follow, and explain what we're talking about:


"That was the first of two big decisions that have helped make Lu's UTStarcom Inc. perhaps the world's hottest telecom-gear supplier. The second was taking a chance on a technology called Personal Access System (PAS), which was developed in Japan but never caught on there. PAS uses phones that offer wireless calling. But unlike cellular systems, PAS allows users to send and receive calls only from a limited area and doesn't offer roaming. By combining UTStarcom gear with existing infrastructure, phone companies can deploy PAS for just $100 per subscriber, roughly half the price of cellular systems.

The combination of an underserved market and an inexpensive product that meets its needs has made PAS-based services -- marketed in much of China as "Little Smart" -- a runaway hit. The big Chinese phone companies, including China Telecommunications Corp., have signed contracts with UTStarcom worth more than $1 billion in the past year. As a result, Alameda (Calif.)-based UTStarcom is prospering like it's 1999. It has blown past Wall Street's expectations in each of the 12 quarters since its initial public offering in March, 2000, and it has upped guidance on revenues twice this year already. In the first quarter, sales soared 80%, to $330.5 million, and profits more than doubled, to $37.3 million. For the year, profits are expected to reach $168.7 million on sales of $1.7 billion, according to brokerage Pacific Growth Equities. "Our biggest problem is keeping up with demand," says Lu. So far this year, the stock price has risen 45%, to about $29."
((note: it's now $40.--jp))


By the way, the reason I put a little money into both CHL and CHU is that while both technically are 'China', CHL is really Hong Kong; which is a different animal, and my guess is does things differently, and emphasizes different parts of the country. UTSI is based in the Far East.....er, eastern San Francisco Bay Area, anyway.

Regards,

jp


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