China Mobile 1
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Transcript of China Mobile 1
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2010-2015 Strategy SummaryAugust 19, 2010
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Now the #1 cellular carrier in the world by
revenue, by subscribers, and by profit
We have grown to 554 million subscribers
70%of Chinese domestic market
Our Company
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Recent Success
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100,000
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300,000
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500,000
2005 2006 2007 2008 2009
Revenue (RMB million) # of Subscribers (million)
86% 5 YR
Revenue
Growth
112% 5 YR
Subscriber
Growth
2009 Financials C. Mobile C. Telecom C. Unicom
Market Cap (RMB billion) 1,479.6 269.6 218.4
Revenue (RMB million) 452,103 208,219 153,950
Employees 145,954 312,520 216,830
Operating Margin 33.5% 11.6% 5.3%
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Government
97% population coverage
Size and excess capital
Chinese economic growth
Increasing Churn Rate1.5% in 2005 3.3% in 2009
Falling ARPU
985 in 2005 866 in 2009 (RMB)
Government
Increased competition
Market saturation
New RisksStrengths3
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Strategic Priorities
Expand Customer Base
Increase ARPU
Decrease Churn
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Decrease Churn
Increase Customer
Satisfaction
Retention Offers
Revamp Care IVR/
Routing
Enhance handset
offerings
Care Staffing andTraining
Strategic Priorities
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Increase Profitability (ARPU)
Up-Sell
Convert customers
to higher revenue
voice plans
Promote value
added services
MMS
Cross-Sell
Promote data plan
adoption for voice
users
Promote mobile
data products
Strategic Priorities
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Expand Customer Base
Domestic Market
Penetrate remaining 500M
potential customers
Targeting of rural market
Targeting of youthful, tech
savvy users
Strategic Priorities
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Domestic Growth Strategy
0
554mm791mm
1.3B
Current Market Share
Total Market
Potential Market
Expand into untapped market potential
Rural
Middle Class
Youth
Faster Network
266 Smartphones under 100RPM ($146)
Pricing
Decrease Churn
Retention Offers
Revamp Care IVR/routing
Care Staffing and Training
Increase ARPUMobile Banking
Enhance App Platform
Smartphone and Mobile Broadband
Potential Market (509+mm) Competitor Market Share (237mm Subs)
Current Market Share (554 Subs)Chinese Wireless Competitive Landscape
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Expand Customer Base
Enter a new
developing market
Global Market
OptimizationDomestic Market
Penetrate remaining 500
potential customers
Targeting of rural market
Targeting of youthful,
tech savvy users
Strategic Priorities
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Operation: Africa
Objective: To enter Africa via either a joint or
independent venture
Why?
High growth potential (37.5% penetration)
Low competition
Competitive Advantages:
Management expertise in prepaid market
excess capital
37.5 %
Wireless
Market
Penetration
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Operation: Africa
Explored potential joint venture with local entity
Was unable to reach satisfactory capital expense / revenue
sharing terms
Determined more economic opportunity through
independent market entry
Anticipate approx. 10B capital expenditures over the next three years
of untapped market = $20.9 billion annually
China has achieved success in other industries entering the
African market (i.e Healthcare, Construction, etc.)
Limited competition results in broader spectrum availability
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Questions?
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Appendix
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Appendix A
2005 2006 2007 2008 2009
Operating revenue (RMB million) 243,041 295,358 356,959 411,810 452,103
# of Subscribers (million) 247 301 369 457 522
EBITDA (RMB million) 133,338 159,574 194,003 216,267 229,023
EBITDA margin 54.90% 54.00% 54.30% 52.50% 50.70%
Profit attributable to shareholders (RMB million) 53,549 66,026 87,062 112,627 115,166
Profit attributable to shareholders margin 271.00% 22.40% 24.40% 27.30% 25.50%
Basic EPS (RMB) 0.45 3.32 4.35 5.62 5.74
Avg. Revenue per User (RMB) 985 981 966 901 866
Avg. Churn Rate 1.9% 2.7% 2.6% 2.7% 3.3%
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Appendix B
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200,000
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SubBase(millions)
Revenue(M
illionRPM)
Revenue (RMB mill ion) # of Subscribers (mill ion)
Grow ARPU
Through Innovation
Continue To Expand
Subscriber Base
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Append. C - NPV Of Africa Entry
If we capture of the African Market, we have a massive ROI opportunity, evendiscounted to today.
2010 2011 2012 2013 2014 2015
Initial Capex (60,000,000) - - - - -Subs - 31,250,000 62,500,000 93,750,000 125,000,000 156,250,000
ARPU 800 800 800 800 800 800
Revenue - 25,000,000,000 50,000,000,000 75,000,000,000 100,000,000,000 125,000,000,000
Interest Rate 18.80% 18.80% 18.80% 18.80% 18.80% 18.80%
NPV (60,000,000) 21,043,771,044 35,427,223,979 44,731,343,408 50,203,527,955 52,823,577,394
Sum of NPV 204,169,443,781
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Appendix D - Financials