U.S. telecom stocks performed well over the past year thanks to low interest rates driving investors toward high-yielding dividend stocks. However, investors shouldn't forget about overseas telcos, which combine many of the same benefits as American telcos with higher growth potential. One such company is Chinese telco China Mobile (NYSE:CHL), which I recently added to my portfolio for four simple reasons.

China Mobile is based in Hong Kong.

Hong Kong, China. Image source: Getty Images.

1. It has great long-term growth potential

As the biggest wireless carrier in China (and the world) with 849 million customers, China Mobile's moat is nearly impossible for any rival to cross. Between last January and December, China Mobile's total customer base grew 2.5%. That growth sounds tepid, but its 4G customer base -- which generates higher subscription revenues -- grew 59% to over 535 million during that period.

Meanwhile, its 3G customer base shrank by 37% to just over 103 million. The remainder of China Mobile's customers remain on 2G networks -- which means that there are still plenty of feature phone users who could eventually convert to data-hungry smartphones. China Mobile also has a small but growing wireline business with 78 million customers. This could enable the company to offer more digital bundles in the near future.

2. It's backed by the state

China Mobile is the largest of China's three state-backed telcos, which also include China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA). The Chinese government sometimes rotates the management of the three companies to ensure that one of the companies doesn't overpower the other two.

China Mobile Chairman Shang Bing during the company's 2016 interim earnings report.

China Mobile Chairman Shang Bing. Image source: China Mobile.

While this setup prevents China Mobile from ever becoming a monopoly, its state backing presents a wide safety net for the company. The state-backed status of all three companies also makes it easier to sign collaborative agreements. In late 2015, all three telcos agreed to sell their towers to China Tower for cash and stock, and lease them back to reduce operating costs. Analysts estimate the move generated about 2.4 billion yuan (about $350 million) in savings for China Mobile during the first year alone.

3. It generates strong and steady growth

As a mature telco, China Mobile offers investors steady top and bottom line growth. Analysts expect its revenue to rise 2% this year and 5% next year, as more 2G and 3G users upgrade to 4G plans and it expands its wireless and wireline ecosystems. China Mobile's positive sales growth offers a stark contrast to China Unicom and China Telecom, which are expected to post respective revenue declines of 6% and 1% this year.

On the bottom line, China Mobile's earnings are expected to grow 17% this year and 7% next year. That slowdown should be caused by expenses related to its 4G base station expansion plans and its investments in digital bundles for its customers. But once again, that forecast crushes China Unicom's projected earnings drop of 87% this year and China Telecom's estimated 13% decline.

4. It's fundamentally cheap and pays a decent dividend

China Mobile is clearly the "best in breed" player among Chinese telcos, but its stock trades at just 14 times earnings -- which is slightly higher than China Telecom's P/E of 13 but lower than China Unicom's P/E of 47 and the industry average of 18 for foreign telecom companies.

China Mobile has a trailing dividend yield of 2.9%, which admittedly isn't as attractive as the 4%+ yields of its U.S. counterparts. Its dividend payments are also semi-annual instead of quarterly, fluctuate from year to year, and don't follow a pattern of annual hikes. The payments are then converted from Hong Kong dollars to U.S. dollars for ADR shareholders, which could be hurt by currency headwinds. That might not sound appealing to income investors, but it's still a decent bonus for owning the stock.

The key takeaway

China Mobile isn't an ideal stock for income investors, but it provides a good blend of growth and income while giving your portfolio exposure to the second biggest economy in the world. A slowdown in the Chinese economy could definitely hurt China Mobile, but I believe that the company is built to last for a very long time.

Leo Sun owns shares of China Mobile. The Motley Fool recommends China Mobile. The Motley Fool has a disclosure policy.