China Mobile Pays a Price for Being First

China Mobile is the largest cellular operator in the world, with 644 million subscribers and two-thirds of the Chinese mobile market. The state-owned giant’s market capitalization of $196 billion makes it the most valuable telecom company globally.

But in the fastest-growing part of China’s cellular industry, China Mobile is much less of a force. Competitors China Unicom and China Telecom each control about 30 percent of the market for fast 3G connections, which has more than doubled in size since the end of 2010, to about 118 million subscribers at the end of November. China Mobile has 40 percent of the market, but many of its 3G customers use fixed-line handsets instead of mobile phones to access the network, making them less valuable because they don’t use data. When it comes to 3G, “only China Unicom and China Telecom are benefiting,” says Andy Poon, an analyst with Kim Eng Securities in Hong Kong. China Mobile’s stock price was down 1.7 percent in 2011, compared with a 47 percent jump for China Unicom and an 8.6 percent rise for China Telecom. All three declined to comment.