What I find interesting is that the telco industry revenue per capita in the US is about 10x that of China while the GDP per Capita is 12x. One can easily see that if penetration rates in China were as high the United States, the two ratios would be a lot similar especially since many of China's potential new subscribers are low ARPU customers out in remote rural areas.

China's GDP per capita has doubled in the past 4-5 years. If it were to do so again in the next 5 years, by 2015, China's GDP per capita would be $8,000. The telco industry in China is still adding north of 6 million subscribers per month. If this pace is sustained, it is also likely that by 2015, mobile penetration in China would also be close to 90%.

If the relationship between GDP per capita and telco industry revenue per capita continues to hold, China's telco industry revenue could be over US$350 billion by 2015.

If market shares remain the same, then China Mobile's revenue has the potential to grow to over US$200 billion from its current US$70 billion.

Eoin Treacy's view With a market cap of US$212 billion China Mobile is the heavyweight of the global mobile telecoms industry. Yields across the sector are competitive with Vodafone, AT&T and Belgacom having shown up on tables of high yielders I have produced over the last two months. There is a high degree of commonality across the global sector where the majority of companies considered ex-growth share a similar chart pattern of relatively lengthy base formation development.

However as Bernard points out China Mobile has a massive amount of cash on its balance sheet, was never victimised by its government by being forced to bid for 3G licences and has no debt to speak of. The share found support in late 2008 and has plotted a sequence of incrementally higher reaction lows since, the most recent of which is in the region of HK$76. A sustained move below that level would be required to hinder scope for further higher to lateral ranging leading to an eventual completion of the two-year base.

China Mobile currently yields 3.48%. With so much cash on its balance sheet, the company could easily decide to pay a higher dividend. However, it may have other ambitions. Revenue from its Chinese mainland business should continue to improve as standards of living increase but since it has already got a dominant position in the Chinese market it may look at expanding elsewhere.

Parts of Latin America, developing Asia or Africa remain the world's growth markets for mobile telecoms. European or US companies with already high debt loads are unlikely to be in a place to compete and might even be targets themselves. Even without the prospect of M&A activity the yields in this sector remains competitive particularly compared to sovereign bonds and help to cushion downside scope.

Disclosure - China Mobile is one of David's top-10 largest investment positions. (Also see Comment of the Day on September 7th).