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Goldman Sachs Calls Out Chinese Mobile Operators: Risk in China Mobile, Opportunity for China Telecom

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In a report published Thursday, Goldman Sachs analysts made calls on Chinese mobile operators. The analysts, led by Donald Lu, remarked on downside risk seen in China Mobile Limited (NYSE: CHL) and a buying opportunity for China Telecom (NYSE: CHA).

Goldman Sachs noted that China Mobile, China Telecom, and China Unicom (Hong Kong) Limited (NYSE: CHU) face uncertainties in profitability and market share as they enter the 4G capex cycle.

The analysts reported numerous near-term negative catalysts for China Mobile. Some of these factors include tax reform, FDD-LTE licensing, and the beginning of asymmetric interconnection charge in the first quarter. Goldman Sachs commented that China mobile's incremental 4G ARPU should help offset the pace of overall ARPU decline in late 2014.

Goldman prefers China Telecom on its relatively stable fixed-line business. Lu wrote that the company has the opportunity to become the first FDD-LTE service provider in the country.

The analysts lowered the price target on the three Chinese mobile carriers. The price target on China Mobile was cut from $87.00 (HK) to $82.00 (HK). China Unicom's price objective was cut from $12.00 (HK) to $11.70 (HK). The price target on China Telecom was lowered from $4.70 (HK) to $4.60 (HK).

On the New York Stock Exchange Thursday, shares of China Mobile and China Telecom closed on a positive note at $46.08 and $45.41, respectively. China Unicom closed at $13.01 on Thursday, down 1.537 percent.

Posted-In: Donald Lu Goldman SachsAnalyst Color Price Target Analyst Ratings


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