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China Mobile Limited (ADR) (CHL)’s True Global Value: Nokia Corporation (ADR) (NOK), Apple Inc (AAPL)

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In the telecom sector, state-owned China Mobile Ltd. (ADR) (NYSE:CHL) is the world’s largest mobile phone operator by subscribers, with about 700 million customers. It’s not just the large client base that is impressive, but also the way it is run, assuring share holders that their investment is in good hands.

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Proof of this is the New York Stock Exchange said that China Mobile Ltd. (ADR) (NYSE:CHL) is the 7th best managed company among publicly listed Asian companies, 2nd best in corporate governance, and also 2nd best in commitment to strong dividend payment.

The company also has global industry recognition, such as its 8th place ranking in 2012 in the Financial Times’ Global 500, the 31st spot in Forbes Magazine’s Global 2000, and corporate credit ratings of Aa3/Outlook Positive and AA-/Outlook Stable, from Moody’s and Standard & Poor’s, respectively, the equivalent to China’s sovereign credit rating.

With its offer of fixed line and mobile services, Internet services, and digital television covering mainland China, Hong Kong, and Pakistan, a lot of Western mobile phone manufacturers seek a deal with China Mobile since the sales of their smart phones would benefit drastically from being sold to China Mobile’s user base.

Tie-up with manufacturers that sell affordable units

The Chinese market became a stronghold for Finnish phone manufacturer Nokia Corporation (ADR) (NYSE:NOK) after China Mobile Ltd. (ADR) (NYSE:CHL) activated 2 million units of the Nokia Lumia phone. Nokia is also releasing the Lumia 520 and 720 models in China sometime in Q2.  Both models run on the Microsoft Windows 8 platform.

Nokia Corporation (ADR) (NYSE:NOK) used to be the #1 mobile phone maker until Apple Inc. (NASDAQ:AAPL) and Samsung relegated Nokia to third place. However, Nokia is far from a losing business, ending 2012 with a strong balance sheet and solid gross cash position of €9.9 billion

Nokia Corporation (ADR) (NYSE:NOK) is also scheduled to roll out more lower-end smartphones, which will definitely sell in the Chinese market where few consumers can afford the $500 Apple iPhones. The Lumia 720 and 520 would be sold for €249 and €139, respectively, and two more affordable units, the Asha 105 and 301, are slated to have Chinese launches priced at €65 and €15, respectively.

Although Apple Inc. (NASDAQ:AAPL) produces high-end units, reports said that Apple CEO Tim Cook had discussions with China Mobile, apparently to secure a deal similar to Nokia’s, a deal which offered customers of China Mobile the Lumia 920T free in exchange for a long-term contract with the telecom provider.

In mid-2012 China Mobile opened discussions with Apple to allow newer iPhone models, beginning with iPhone 5, to use the company’s network, which previously relied solely on China-only 3G standards. Cook is hoping the strategy would help reverse the 20% decline in Apple’s share prices for the past 12 months due to concerns over the slow growth of Apple shipments to overseas markets. Despite the fall in share prices, Apple Inc. (NASDAQ:AAPL) is very much a stable company and reported Q1 2013 net profit of $13.1 billion, or $13.81 earnings per diluted share.

Benefitting from the government’s protectionist policy

It works to China Mobile Ltd. (ADR) (NYSE:CHL)’s benefit that the state-owned company is directly controlled by the People’s Republic of China.  The company has controlled 70% of the domestic market since its inception in 1997, leaving the remaining 20% to China Unicom and 10% to China Telecom.

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