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China Mobile's (CHL) Monthly Key Performance Indicator Data is Modest Positive for Apple (AAPL), Others - Cowen

June 22, 2015 11:11 AM EDT
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Cowen and Company is issuing commentary on the implications for hte semiconductor industry following an update from China Mobile Limited (NYSE: CHL).

Analyst Tim Arcuri commented, China Mobile's monthly Key Performance Indicator data rebounded somewhat in May and was roughly in-line with our forecast for double-digit M/M LTE connection growth. Specifically, May KPI data shows China Mobile's LTE installed base growth accelerated M/M, increasing ~11% (or ~17.2MM) versus April's ~7% M/M growth. CHL's May LTE monthly connection growth rate is below the ~17% average monthly LTE connection growth in CQ1:15 but above the average monthly LTE net additions of ~16.5MM over the past six months. CHL's May LTE installed connection base of ~170.3MM is in-line with a monthly run rate that should drive its C2015 LTE installed connection base to ~275MM+. We further note May CHL data showed continued contraction in its 3G TD-SCDMA and 2G GSM installed bases - which decreased by ~3% and ~2% M/M respectively - suggesting substantially all growth is now driven by LTE. From here, June KPI data would appear to be of increasing importance given CHL's LTE connections now represent ~21% of its installed base - roughly the point where penetration should accelerate.

Arcuri sees the data as a modest positive for Apple (Nasdaq: AAPL), Marvel (Nasdaq: MRVL), and Qualcomm (Nasdaq: QCOM).



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