Here it is halfway through 2007 -- the basketball and hockey seasons are behind us, and the sleepy summer heat is settling in. The lull before second-quarter earnings gives us a good opportunity to review company performance, so we'll step up to the plate and take a look at leading Chinese wireless-service provider China Mobile
First-half review
This wireless giant just refuses to let up. The company continues to expand its networks, and it added nearly 15 million more subscribers in the most recent quarter. That strong subscriber growth is certainly pleasing, but Fools should keep on an eye on the average revenue per user (ARPU) metric, which has been declining as the company has had to expand to more rural areas to grow its subscriber base. Rural subscribers tend to be more price-sensitive and therefore spend substantially less on services. While investors are disappointed to see ARPU dropping, this development should come as no surprise, given that the company and its primary competitor, China Unicom
Another impact of a maturing -- though still far from saturated -- market in China is increasing churn. Just like U.S. operators AT&T
Second-half prospects
To get a peek at what top investors think of China Mobile's prospects going forward, we can tap the Motley Fool CAPS database of investor opinions and ratings on the stock. CAPS players currently give the company a top-notch five-star rating, which the company has held for most of 2007.
Even after a dramatic run-up in China Mobile's stock over the past few years, I agree with CAPS investors that the shares are attractively priced, considering the firm's growth prospects. The growing middle class and largely untapped rural population in China still represents a sizeable opportunity for China Mobile to expand its services. And even though a maturing market will present new challenges, the company still stands to benefit from next-generation services rolling out in the near future.
More Foolish fortune-telling:
- What Will Be China Mobile's Fortune?
- ETF Teardown: China's Best Stocks
- Stocks That Pay You To Retire
Fool contributor Dave Mock can eat rice with chopsticks, but a spoon is so much more efficient. He owns no shares of any companies mentioned here. He is the author of The Qualcomm Equation. Vodafone is an Inside Value recommendation. The Fool's disclosure policy won't slap your sunburn or tweak your nose.