China's Dueling Wireless Players: China Mobile vs. China Unicom
From BusinessWeek: China's Dueling Wireless Players
"The two major players in the world's largest wireless services market are China Mobile (CHL) and China Unicom (CHU). Listed on the Stock Exchange of Hong Kong and the New York Stock Exchange in October, 1997, China Mobile has 64% market share in mainland China."
"China Mobile's smaller rival, China Unicom, captures the market's remaining 36%. Apart from its GSM and CDMA wireless networks, China Unicom owns a fiber backbone that provides long-distance and Internet/data services."
"BUY VS. HOLD. We believe valuations for China Mobile are attractive, with the stock trading at a price-earnings ratio of 11.3, enterprise value (EV)-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) of 4, and a dividend yield of 2.8%, for 2005. China Unicom has a p-e of 17.3, EV/EBITDA of 4.7, and a dividend yield of 1.9%. In our view, China Mobile's strong free cash-flow generation could allow it to comfortably absorb its 3G capital expenditures and also let it enhance value by redistributing cash to shareholders in a higher dividend payout. Therefore, we have a buy recommendation on China Mobile and a hold opinion on China Unicom."