Market Overview

Don't Expect China Mobile's Global Expansion To Hit America

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China Mobile (NYSE: CHL) is looking for growth, and it is starting with Thailand's True Corporation.

The Chinese corporation is already the world's largest carrier with more than 700 million subscribers. Apple reportedly spent years trying to work out a deal with the company, which was made official in December 2013.

On May 9, 2014, China Mobile announced that it had agreed to buy an 18 percent stake in True Corporation. The $881 million dollar deal is part of True Corporation's effort to raise $2 billion.

Related Link: Analysts: Apple's China Mobile Deal Will Add 17M To 30M In Incremental iPhone Sales

China Mobile is expected to invest in other carriers in the future, but IHS (NYSE: IHS) analyst Julian Watson does not think that the carrier will come to America.

"There's been quite a lot of speculation on that," Watson told Benzinga. "I think it's pretty unlikely that China Mobile will move to the U.S."

Consolidation has eliminated many of the smaller players in the domestic cellular business. This leaves China Mobile with only one notable entry point.

"Really, I guess the only candidate at the moment for [China Mobile] to invest in would be T-Mobile USA because Sprint is pretty much sewn up," said Watson.

Instead of coming to America or another territory that may be difficult to enter, Watson expects China Mobile to focus on emerging markets.

"I think the acquisitions are going to come through True Corp," Watson added. "I think True Corp will be, in effect, its conduit into the emerging market. I think it would be looking at mobile operators in…Philippines, Singapore as well."

China Mobile may be the world's largest carrier, but it does not currently have the highest market cap. That crown goes to Verizon (NYSE: VZ), which has a market cap of roughly $204 billion.

The Chinese stalwart isn't too far behind, however. China Mobile's market cap currently comes in at $195 billion.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Posted-In: china mobile comments IHS Julian Watson True Corporation VerizonTech Best of Benzinga

 

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