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China Mobile Ltd. (ADR) (CHL), AT&T Inc. (T) & Verizon Communications Inc. (VZ) – Mobile Operators: Which is the Best Bet for Profits?

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7 Reasons Why Investors Should be Afraid of ChinaWith a declining number of new mobile subscriptions, is China Mobile Ltd. (ADR) (NYSE:CHL) able to earn you profits on your hard earned money? Сan AT&T Inc. (NYSE:T) help you realize gains? Is Verizon Communications Inc. (NYSE:VZ) a better option to invest in? The following article scrutinizes all the above-mentioned companies to give you the answers to these questions.

Recent events

China Mobile Ltd. (ADR) (NYSE:CHL) is the largest mobile service provider in terms of subscriber base, with roughly 700 million subscribers. The telecom company serves the largest emerging market with exceptional escalation potentials. The Chinese mobile market experienced a year-over-year growth rate of 12%, heading towards a 1.17 billion subscriber base.

Recently, China Mobile has hit another milestone figure of 129.40 million 3G subscribers, the highest number of 3G subscribers in the country. Moreover, the company is aggressively pursuing 4G developments, investing around $6.7 billion to launch 4G services in 344 Chinese cities. The company plans to officially launch 4G services later this year, which should provide a decent average return per user. Furthermore, introduction of 4G enhances the growth prospects of the company by many folds, providing the investors with reasonable and long-term returns.

Avoiding global expansions and diversification, China Mobile Ltd. (ADR) (NYSE:CHL) has always focused on its home market. The company has been allowed to hedge itself from stern regulatory interference in potential host countries.

AT&T Inc. (NYSE:T)’s financials project a mixed sentiment among the market analysts. The company has experienced a decline in revenues as well as in net income. The company reported a negative net income in the second quarter of 2012 due to customer additions and pursuit of growth opportunities. This trend is expected to continue as similar costs are expected to suppress the margins in the second quarter this year.

The company faced a reduction in mobile phone subscriptions, while sustaining growth in tablet subscribers; however, the tablet subscribers are not as profitable as the phone subscriptions. AT&T’s revenue growth is annually 2%, where the company is lagging behind its competitors. To top the low growth rates, the APRU is merely 0.9%, far lower than the forecasted 1.9%.

Industry saturation is another reason for sluggish customer growth, which AT&T Inc. (NYSE:T) is countering by squeezing more money from its existing subscribers. Furthermore, AT&T is allegedly selling personal subscriber data to the U.S. government, which has spurred negative sentiments in the customers. All this has boiled down to the retardation of customer growth, resulting in lower demand.

Verizon Communications Inc. (NYSE:VZ) has very promising growth rates this quarter, with an 8.6% increase in its revenue this quarter. The company’s net income, which was reported to be in negative figures in the last quarter of 2012, has also revived.

The U.S. telecom industry overall has witnessed a decline in new subscriptions due to intense industry saturation. To contain that, Verizon Communications Inc. (NYSE:VZ) like its rivals has increased the charge on their plans. There has been a 60% reduction new subscription in the first quarter. The revenue from new subscriptions has experienced a whopping fall from 20% to merely 2%. Hence, the revised rates.

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