Friday, September 12, 2008

Is China Mobile losing its edge?

China Mobile, the world's biggest wireless carrier by users, fell to its lowest in 15 months in Hong Kong trading on a report regulators will let its users retain phone numbers when switching to rival services.

The mobile carrier fell 5.3 percent to close at HK$77 on the city's stock exchange, the lowest since June 15, 2007. The benchmark Hang Seng Index fell 3.1 percent.

Chinese regulators plan to let Beijing-based China Mobile's users in the cities of Tianjin and Shenzhen keep their phone numbers when they switch service providers from next month, the Nanfang Daily newspaper reported, citing an unidentified source. Customers who move from other carriers to China Mobile won't be able to keep their numbers, according to the report.

“The phone numbers issue is certainly weighing on the shares,” said Li Zhiwu, an analyst with BOCOM International Holdings in Hong Kong. “I think we've already seen the peak of growth for China Mobile,” said Li, who rates the stock “neutral.”

China will introduce so-called number portability nationwide next year if the trials in Tianjin and Shenzhen are successful, Nanfang Daily reported. China Telecom, China Unicom and China Netcom Group also fell in Hong Kong trading on concern that the policy may affect earnings at the companies.

“The point of number portability is to increase competition, which could be a concern,” he said. Li rates shares of China Unicom, China Telecom and China Netcom “neutral.”

China Telecom declined 5.1 percent to HK$3.37, while China Unicom dropped 4.8 percent to HK$11.48 and China Netcom fell 4.5 percent to HK$17.24.

The Chinese government said in May that it planned to adopt regulations that limit China Mobile's dominance of the world's biggest wireless market. The government also ordered the nation's six state-owned carriers to merge into three companies all able to provide mobile, fixed-line and Internet services in a bid to spur competition.

Can we attribute China Mobile's current estate to the restructuring plan of the Chinese government?