China Phone Stocks Ringing up Profits!
China Phone Stocks Ringing up Profits!
Industry giants China Mobile and China Unicom are currently among the market’s biggest Big Cap gainers. Both companies are soaring in anticipation of a new generation of 3G phones entering the world’s biggest wireless market.
For China Unicom (CHU), it’s all about the much-coveted 3g iPhone. Unicom executives have been in negotiations for months with Apple about exclusive use of the 3g iPhone on its network. An agreement had been expected on May17th, according to a number of sources, but the lines of communication went silent during the middle of the month.
The breaking news that is driving both stocks into positive territory is a report that China Mobile (CHL) will be receiving access to Google’s Android phone. Negotiations between China Mobile and Apple for the iPhone had broken down several months ago because Apple was holding out for substantial revenue-sharing, something that China’s largest phone company flatly refused to concede.
The latest reports about China Mobile’s access to the Google Android phone are also very good news for China Unicom. Regulators have been holding back news about China Unicom’s introduction of the iPhone until the company’s biggest competitor, China Mobile, concludes its deal for a comparable 3G phone on its network.
In other words, China Mobile gets the Android. That clears the way for China Unicom to get the iPhone. In the tightly regulated Chinese telecom world, both sides win and there are no losers. (except perhaps the smallest of them all, China Telecom.)
This win-win story means that both stocks have been outperforming the market in recent days. We are up more than 20 percent on China Mobile and almost 40 percent on China Unicom.
Reports indicate that China Mobile has struck an especially rich deal for apps, the applications (or small programs) that make 3G phones so versatile. Telecomasaia says the world’s biggest phone company will demand a 50 percent cut of revenues from its app store. The industry norm is 30 percent. (This is exactly the point of contention that had derailed talks between China Mobile and Apple.)
China Mobile’s app store, the so-called “Mobile Market” will be the world’s first carrier operated storefront.
The terms of the China Unicom deal are still unclear but it’s obvious that the market feels access to the iPhone will be a huge bonus for the nation’s second-largest carrier. China Mobile has 482 million subscribers and China Unicom has 126 million users, a vast and rich market for new 3G products in years to come!
Check out our most recent special on China Stock Digest: http://www.aweber.com/b/Tflh
Committed to your profits in China,
Jim Trippon
Editor-in-Chief
China Stock Digest
Http://www.chinastockdigest.com
