Shares of China Mobile (NYSE:CHL), the biggest wireless carrier in China, fell 4% in 2017 on concerns about a seasonal slowdown in its revenue and earnings, exacerbated by higher capex for its 5G expansion. As a China Mobile shareholder, I'm disappointed with those results. But I also don't plan to sell the stock either, since it's become too cheap to ignore for four simple reasons.

1. Its valuation

Analysts expect China Mobile's revenue and earnings to both rise 9% this year. Next year, analysts anticipate 5% sales growth and 6% earnings growth. Those growth rates are much higher than analyst expectations for US telcos AT&T (NYSE:T) and Verizon (NYSE:VZ).

A group of Chinese smartphone users.

Image source: Getty Images.

Yet China Mobile trades at just 12 times trailing earnings, which is much lower than the industry average of 22 for telecom companies. AT&T and Verizon have respective P/E ratios of 19 and 14.

China Mobile is also cheaper than its direct competitors, China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA), which respectively trade at 67 and 13 times trailing earnings.

Looking ahead, China Mobile trades at 12 times forward earnings, compared to China Unicom and China Telecom's respective forward P/E ratios of 30 and 12.

2. Its dividend

China Mobile pays semi-annual dividends, which vary annually based on its earnings growth. That yield fluctuated between 2.75% and 5% over the past five years, but it's consistently remained higher than China Unicom and China Telecom's payouts.

CHL Dividend Yield (TTM) Chart

Source: YCharts

China Mobile also paid a special dividend last year to mark the 20th anniversary of its public listing in Hong Kong. Meanwhile, China Unicom actually withheld its dividend last year amid plummeting profits. China Telecom pays a decent 2.9% dividend yield, but it's only paid out once per year.

Income investors who want stable dividends will likely prefer AT&T and Verizon's bigger 4%-5% yields and their reliable annual hikes, but China Mobile's dividend is still a nice bonus which easily bests its domestic peers.

3. Its slow but steady growth

In the second half of 2017, several analysts expressed concerns about a sequential slowdown in China Mobile's revenue and EBITDA amid tougher competition and higher spending on network upgrades. There were also concerns about the Chinese government's decision to support the "narrow band" Internet of Things (IoT) -- a standard which China Mobile couldn't support with its existing networks.

A visual representation of the Internet of Things.

Image source: Getty Images.

Yet China Mobile's year-over-year growth remains positive, and its subscriber base continues to grow. It served 883.9 million wireless customers in November, representing 4.3% growth from a year earlier. Within that total, 71.7% were higher-paying 4G subscribers, compared to just 60.1% a year earlier.

China Mobile's wireline subscribers rose 42.7% to 110.1 million, giving the company more room to bundle its wireline, wireless, and pay TV services.

A growing percentage of 4G subscribers and a rising number of wireline customers gives China Mobile more room to grow its average revenues per customer.

4. Its wide safety net

China Mobile, China Unicom, and China Telecom are all state-backed enterprises. The government regularly monitors all three companies and rotates their management to ensure that one company doesn't overwhelm the other two.

This throttles China Mobile's growth, but it also gives the company a wide safety net and prevents margin-crushing price wars. It also ensures that the three telcos cooperate on certain deals, like the sale of their towers to China Tower in late 2015. That deal allowed the telcos to lease back the towers and save hundreds of millions per year.

The key takeaways

China Mobile isn't the ideal telco for income investors, since it's somewhat volatile and US telcos offer better yields. But for investors seeking a conservative, long-term play on China's rising internet penetration rates, China Mobile is simply too cheap to ignore at these low valuations.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.