The Mobile Internet Report Key Themes*

Key Scenario Drivers
for China Wireless Industry Service Revenue
Upside
Case
Base
Case
Downside
Case
8.8%
’09-’15E
Service
Revenue
CAGR
6.7%
’09-’15E
Service
Revenue
CAGR
5.1%
’09-’15E
Service
Revenue
CAGR
Better-than-expected 3G demand drives data revenue to grow faster than in the base
case, and contribution from data revenue will surpass that from voice in 10 years’ time. In
the bull case, we expect data revenue as a % of total industry service revenue to increase
from 13% in 2009E to 35% in 2015E, and data revenue growth for CU and CT to be faster
than the incumbent CM due to 3G technology advantage over the next 5 years. We
estimate (1) CU’s and CT’s data revenue as a % of total service revenue would increase
from 12% and 21% in 2009E, to 37% and 44% respectively; and (2) CM’s would rise from
13% in 2009E to 33% in 2015E.
Voice is expected to be a majority revenue driver for the China telco industry over the
next 10 years. But its contribution will be replaced gradually by data, helped by moderate
3G and mobile internet demand. We expect data revenue as a % of total industry service
revenue to increase from 13% in 2009E to 27% in 2015E in the base case; data revenue
growth for CU and CT should be faster than for the incumbent CM due to 3G technology
advantages over the next 5 years. We estimate (1) CU’s and CT’s data revenue increases
from 11% and 20% in 2009E, to 28% and 33% in 2015E; and (2) CM’s rises from 12% in
2009E to 25% in 2015E.
Sluggish demand results in slow data revenue growth for the industry. We estimate (1)
data increases as a % of total industry service revenue from 12% in 2009E to just 19% in
2015E; (2) CU’s and CT’s data revenue increases 11% and 19% in 2009E, to 24% and 26%
respectively; and (2) CM’s would rise from 12% in 2009E to 16% in 2015E.
Note: Assume constant currency of US$ 1 = RMB 6.8.
Source: Company data, Yvonne Chow, Morgan Stanley Research 609