China Mobile Shows Strength

China Mobile Ltd. ADS (CHL - Analyst Report), the largest wireless carrier in the world, continues to deliver healthy operating results as evidenced by strong subscriber accretion in 2008. The company exited the year with 72% share of the Chinese wireless market.

However, growth slowed in late 2008 due to general economic conditions and increased competition. Nevertheless, it remains our view that the new competitive entities will face unanticipated challenges deploying and advancing services to levels and coverage delivered by China Mobile.

Accordingly, we assess that successful expansion into low-penetration rural regions of China coupled with aggressive 3G TD-SCDMA service deployments in 2009 and customized mobile value-added services, establish China Mobile as the dominant mobile provider, far ahead of its nearest competitors.

Additionally, a strong balance sheet, strong free cash flow and sustainable dividends facilitate the company's efforts to weather economic volatility. We maintain our Buy rating even as we factor in potential impacts of a more competitive landscape and a comparatively weaker Chinese economy in 2009.

Anindya Barman contributed to this report.

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