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China 3G/4G Subscribers Grew 39% Last Month: Here's What It Means


In a report published Monday, Cantor Fitzgerald analyst Brian White commented on newly released statistics for the month of June showing that 3G and 4G mobile subscriber growth in China grew 39 percent year-over-year.

White continued that China Mobile Ltd. (ADR) (NYSE: CHL)'s 4G users accounted for 27 percent of total 3G and 4G subscribers in China during June and reached 189.7 million total users, while its 3G subscribers declined 3.5 percent from a month ago to 214.8 million.

China Unicom (Hong Kong) Limited (ADR) (NYSE: CHU) grew its combined 3G and 4G subscribers over 3 percent month-over-month to 157.8 million in June. Finally, China Telecom Corporation Limited (ADR) (NYSE: CHA) 3G and 4G subscriber base rose 1.4 percent 1.4 percent month-over-month to 131 million in June.

Apple To Benefit From Continued Growth

According to White, aggregate wireless subscribers in China totaled 1.298 billion as of June. Within the next five years, 15 to 20 percent of all mobile subscribers in China could be in a position to purchase a higher-end smartphone, such as Apple Inc. (NASDAQ: AAPL)'s iPhone.

"Given the 4G expansion in China and rise of the middle class, we continue to believe that Apple's iPhone portfolio is better positioned than ever to benefit from a major upgrade cycle across the country, with larger iPhones, expanded distribution and a growing relationship with China Mobile," White wrote.

Bottom line, White noted that during a trip to the region in June the smartphone market in China was "softer than expected." Nevertheless, he concluded that the 4G build-out in China will continue expanding regardless and the market will show "healthier trends" over the next 12 to 18 months.

Shares of Apple remain Buy rated with an unchanged $195 price target.

White does not cover any of the Chinese-based telecom providers named in the report.

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