Chinese telecom sector:Oct stats -bigger pie for all

CT the strongest gainer in Oct, likely aided by the promotion of large data plans.

    The migration towards large data packs has been beneficial to the telcos so far with mobile net adds rising and industry revenue growth picking up to ~7% in 3Q17. The trend continued in October with the three operators adding 9.8m new mobile subscribers vs. a monthly average of 7.5m in FY17 YTD. CT saw the strongest gains in October (and in September) with 4.2m net adds which is likely the result of its promotion of the “unlimited” local data plans which typically sell for RMB100/mth.

    Risk that CM may retaliate, though there are some offsets.

    CM has been losing market share in the mobile segment this year, as it has not aggressively followed the push towards “unlimited” data plans. While we think CM could tolerate some market share loss to CU, should CT also continue to gain share at the current rate, there is a risk of CM retaliating. At this stage, we see some offsets to the above risk including: 1) CM is still growing in mobile (4% YoY run-rate) and growing above the market overall, 2) CM appears to want to protect the value of its existing customer base, and 3) it may still be holding on to its core high-value customers as the other two operators are mainly targeting second sims.

    No let-up in fixed broadband competition.

    There still does not seem to be any lessening in broadband competition with CM adding another 3.6m subscribers in October (vs. monthly average of 2.9m YTD), while CU’s subscriber base was broadly flat month-on-month. CT is holding its ground in fixed broadband with 0.8m net adds.