Credit Suisse Reiterates China Telecom, Handset Business Expected to Be Accretive to Company

In a report published Monday, Credit Suisse analyst Collin McCallum maintained a Neutral rating on China Telecom Corporation Limited CHA. According to the report, “The introduction of an asymmetrical interconnect regime, under which China Telecom will pay Rmb0.04/min to China Mobile but still receive Rmb0.06/min will raise FY14 EBITDA by Rmb3.6 bn. Against this, while we would not over-exaggerate the impact of China Mobile's launch of the iPhone in itself, the expectation of a higher total handset subsidy budget from China Mobile leads us to raise our China Telecom subsidy forecast by Rmb2.0 bn to Rmb35.0 bn and raise FY14 capex by Rmb10.0 bn to Rmb95.0 bn.” Some highlights from the report included: -Sharper broadband price point decline due to China Mobile receipt of a fixed line license. -It has been confirmed that China Mobile and Apple will launch the TD-LTE enabled iPhone 5S and 5C Jan. 17, 2014, for New Year sales. -Apple has been losing market share in the China market due to rapidly rising amounts of lower-cost smartphones. CHA closed Friday at $50.57.