China Mobile Limited .

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Motivation. Nation ProfileIndustry Status QuoCompany ProfileIndustry ProspectusChina Mobile ValuationConclusion. China Mobile. China Mobile is the overwhelming supplier of remote telephony administrations in ChinaRevenue Growth of 70% all things considered in the course of the last 5 YearsAbout 120 million supporters
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China Mobile Limited Presented by: Jonathan Rook, Christopher Philippou, Malik Vorderwuelbecke, Zeeshan Memon, and Chetan Talwar

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Agenda Country Profile Industry Status Quo Company Profile Industry Prospectus China Mobile Valuation Conclusion

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China Mobile China Mobile is the prevailing supplier of remote communication benefits in China Revenue Growth of 70% by and large in the course of the most recent 5 Years About 120 million supporters – biggest on the planet China Mobile is claimed 76% by China Mobile Communications which is specifically subordinated to the Ministry of Information Industry (MII). China Mobile Communications is not by any stretch of the imagination intrigued by benefits yet the long haul accomplishment of the Chinese Phone advertise

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China – The Economy The Chinese Communist Party (CCP), still overwhelms the whole political range in China, and exceedingly imperative authoritative positions in the legislature are held by gathering individuals. China is verifiably among the most moderate & controlled cell showcases on the planet. Monetary Reforms have occurred in China: - Privatization has developed - Introducing industrialist systems to build showcase effectiveness.

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China – Recent Economic Trends Eastern Seaboard is the motor of the Chinese Economy. Quick Growth of China Mobile has reflected fast development of Urban China all in all. Tremendous uniqueness between the provincial and Urban districts. - Income - Literacy - Infrastructure - Unemployment

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China – Economics of the Future State strategies of growing residential request and market request are significant strengths driving financial improvement. Framework Investments – e.g. speculations on streets, property, and power networks has risen 21.8%. China keeps on being a substantial undiscovered market, that has immense potential.

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China\'s Telco Industry Over 200 million cell phone supporters Currently commanded by China Mobile with 70% of piece of the overall industry Closest contender Unicom at 11% Low cost PAS (Personal Access System) activities by settled line administrators

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Government Involvement 70% of China Mobile claimed by the Ministry of Information Market subject to restorative mediations License vulnerabilities Minister of Information and remote rivalry MII separation of China Telecom

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Current Competition China Unicom deliberately made as a state-possessed rivalry for China Mobile Became a noteworthy danger after presentation of multi-layered duty frameworks Introduction of its CDMA organize benefits in late 2003 prone to additionally heighten rivalry CDMA gives route, M-trade, amusement, and undertaking

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Current Competition Chengdu Telecom encountering to a great degree high development in its PAS systems with endorsers expanding from 0 to 700K in barely a year China Unicom offers a 10%-15% rebate on its GSM administrations contrasted with China Mobile It most now rival PAS taxes that are 70%-80% lower than postpaid GSM taxes GSM as of now records for 70% of world remote market GSM taxes premise of quality and steadiness for China Mobile

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Future Market Concerns PAS-"Minimal Smart" Expansion to Major Cities Prepaid PAS Price War-DEMAND "Unreasonable Operators" Increasing Regulatory Costs Spectrum Fee and Number Fee USO Fee Increasing Competition Unicom: Prepaid administration 3G: 2 new contestants by 2005

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Irrational Chinese Operators China Unicom and Mobile in Price War-Increasing supply so promptly that qualities are falling Need for Increasing Marketing Costs Hurting China Mobile\'s capacity to pass Gov\'t Tariffs onto supporters

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PAS Expansion-Same Front Competition First Entry to "super urban areas" with populace > 5 million-Will twofold Coverage High convergence of China Mobile Users-Chengdu PAS Subscribers developed from 0 to 700,000 from March 2002 to February 2003 Will have more prominent impact on evaluating and piece of the overall industry than in past Red-PAS Entry

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Subscriber Base Changing

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Dwindling Value Per Customer

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New Prepaid Wireless Competitor China Unicom: Will Add CDMA Prepaid PAS Both in 2 nd Quarter 2003 – Further Consummation of Consumer Values

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Next Generation CDMA China Unicom-Inside Track on W-CDMA 2000 Technology China Mobile-Catch-up Game NEW 3G Competition in 2004/2005 China Telecom China Netcom Gov\'t Regulation-will part up net options for 1 st year among all opposition (23% for these)

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Added Regulatory Costs Number and Spectrum-Competitive Fees USO Tariff Compensate Universal Service Provider for building unbeneficial lines in country regions 0.6%-1% of Total Revenues

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Decline in the Growth Rate Revenue development will back off because of: Drastically Increased Competition Lower income per client Consumers may entirely incline toward prepaid Factors strengthened in westbound drive

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Suppressed Growth

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CapEx a s pivotal figure 3G Technologies expected to lessen CapEx development soon GSM arrange should be totally redesigned Only g reenfield wanders made less expensive Consensus accept western territories to be low on plan PAS and Landline Operators must be battled for piece of the pie

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Goldman Sachs Model Sovereign Yield Spread: 0.023% Risk Premium: 6.05% Raw beta: 1.58 Riskfree rate: 3.93% Cost of Equity: 13.66%

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Cost of Debt Hong Kong Premium - Aa3 : 1.35% China Mobile – Govt. AAA : 0.75% Riskfree Rate : 3.93% Cost of Debt : 6.03%

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ADR Price Target Critical considers Valuation: Revenue Growth CapEx Current price: $10.03 Target cost: $ 7.66 24% drawback revision

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Sensitivity of Key Variables Turnover Growth Capex Growth

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Conclusion Beware of predispositions Don\'t take after the buildup without Due Diligence China huge, as well as mind boggling Business environment changing quicker than in G10

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