Nomura Securities on China Telecom Services: Drama Unfolded as the Mainland Operators Announced 1H Results

August 27, 2012 9:15 AM EDT
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Nomura Securities on China Telecom Services: Drama unfolded as the mainland operators announced 1H results

Analyst, Danny Chu, said, "China Unicom (NYSE: CHU) implemented measures to drive down handset subsidy/service revenue. The company was rewarded with a nice turnaround of EBITDA margin. China Mobile’s (NYSE: CHL) miss on EBITDA margin could raise eyebrows among investors. China Telecom (NYSE: CHA) announced its widely anticipated CDMA network acquisition. The key remaining task is to deliver synergy and help the underlying profitability of the listco."

Other highlighted points include: 1) China Unicom repeated as the champion with highest revenue growth momentum; 2) We believe the q-q improvement in EBITDA margin is a testament that the company is committed to deliver a profitability turnaround. In our view, the new iPhone is unlikely to hit China until sometime in the 4Q this year; this should further help stabilize Unicom’s EBITDA margin through most of 3Q; 3) Of the three, both China Telecom and China Unicom reported earnings above consensus estimates. For 1H12, China Telecom reported net profit that beat consensus estimates slightly by 2%. China Unicom reported net profit that beat
consensus estimates by 10%.

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