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China Mobile Communications SWOT & PESTLE Analysis

ID : 52231653| Jul 2018

COMPANY PROFILE -China Mobile Communications

Business Sector :Telecommunications

Operating Geography :China, Hong Kong, Pakistan

About China Mobile Communications :

Formerly known as China Telecom Mobile Communication Bureau, China Mobile Communications Corporation was founded in 1997 and is based in Beijing, China. It is a telecommunication company providing mobile voice and multimedia services. As of May 2016, it is the world’s largest mobile phone operator by subscribers (835 Million).

China Mobile Communications Revenue :

Rmb 708.4 bn ($102.8 bn) (FY ending 31st December, 2016)

Competitive Analysis of China Mobile Communications

SWOT
PESTLE
The SWOT analysis for China Mobile Communications is presented below:
Strengths
Weaknesses
1. First mover in the 4G services
2. 64% of market share in 4G services
3. World’s largest VoLTE network
4. Unflagging pursuit of customer service excellence
1. Limited geographical presence
2. Steady decline in net profit
3. Incompetence in decision making
Opportunities
Threats
1. Expansion into rural markets in China
2. International expansion
1. Introduction of foreign players
2. High number of low-value customers
3. Withdrawal of Chinese government from China Mobile
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Detailed SWOT Analysis of China Mobile Communications

Strengths

1. First mover in the 4G services: The Chinese government granted three time division, TD-LTE, licenses to China Mobile (CM), China Telecom (CT) and China Unicom (CU) in December 2013. CM launched its 4G services officially in 2014. On the other hand, CT and CU discovered that their 3G technologies (CDMA2000 and WCDMA respectively) were not compatible with TD-LTE. Therefore they decided to hold back on their 4G launch and wait for FDD-LTE (Frequency division duplex long term evolution) licenses instead. The government was keen to promote TD-LTE and saw it as a self-developed technology. The FDD-LTE licenses were granted only in February 2015, i.e. almost after 14 months of granting TD-LTE. This resulted in CM having more than one year’s lead time in 4G.

2. 64% of market share in 4G services: The 4G penetration rate of its mobile customers have reached 63% and its net market share for additional 4G customers has exceeded 64% as of 2016.

3. World’s largest VoLTE network: The CM group has built the world’s largest VoLTE, which provides highest quality VoLTE for commercial use in 313 countries. The CM group took measures to bolster the growth of terminal industry which is the driving factor towards the development of VoLTE. At the end of 2016, there were 1090 4G terminal models in stock out of which 927 models supported VoLTE.

4. Unflagging pursuit of customer service excellence: The CM group pursues unwavering devotion towards providing exceptional customer services and drawing a relentless focus on its valued customers. The group continuously strives towards upgrading its service quality management and creates a transparent and secured communication platform. The full centralisation of its 10086 customer service hotline operation initiated by the China Mobile group in 2016 has played an important role in improving the service efficiency and further improving the overall hotline connection rate. 1.96 million call numbers which were nuisance numbers and more than 100 million fraudulent calls were blacklisted from overseas, which curbed new types of unlawful behaviours and crimes taking place in the telecommunication industry.

Weaknesses

1. Limited geographical presence: The Company has a limited geographical presence and it operates in three areas namely, Mainland China, Hong Kong and Pakistan. In order to sustain long term growth, they need to diversify their portfolio.

2. Steady decline in net profit: Since it is a state run company, the company has a heavy social responsibility. There are more than 400 thousand employees working in the company. It also has a duty towards building communication networks as well as investing in basic network facilities which increases its operational cost. Due to this, in spite of increasing revenues, the company shows decline in net profit.

3. Incompetence in decision making: Since the company is a state-owned enterprise, the complex organizational structure leads to a very slow market reaction thereby increasing the cost of innovation.

Opportunities

1. Expansion into rural markets in China: Having a huge market in China and the pace at which China is growing, the company can expect a huge jump in its subscriber base. There is a chance however, that the overheated domestic market might compel the company to look outwards into international markets for its expansion. Also, rural markets of China are not completely developed which shows a huge potential for the company.

2. International expansion: The company has a huge opportunity to tap emerging markets like India where already there is a telecom war going on. In order to increase their global presence they can spread their reach by Mergers & Acquisitions with the local or regional players.

Threats

1. Introduction of foreign players: The Chinese telecom sector has heavy regulations and is currently screened off from international competition. Recently the Chinese government has been contemplating opening up the sector to foreign players. As the industry becomes more open, China Mobile will need to also concentrate not only upon the competitive potential of local firms but also that of international players.

2. High number of low-value customers: In order to gain a competitive advantage over its rivals, China Mobile has added huge number of subscribers mostly in the low-price, low-value segment. This shows that it is a volumes player rather than a premium player. With recent advancement in technological breakthroughs like 4G, China Mobile faces a threat to its business model and in turn will have to offer high value added services to stay in the competition.

3. Withdrawal of Chinese government from China Mobile: China Mobile enjoys a strong relationship with the Chinese government partly because of the fact that it is a SOE which might change in the future. With the opening up of the Chinese economy, the government would most likely be assessing the trade-off between the economic payoffs and social dividends.

To get the complete detailed SWOT report on China Mobile Communications please mail us at: support@swotandpestle.com. or contact us here.

China Mobile Communications SWOT analysis has been conducted by Devang Vinchhi and reviewed by senior analysts from Barakaat Consulting.

References

1. China Mobile Communications Corporation Annual report 2016- http://www.chinamobileltd.com/en/ir/reports/ar2016.pdf  

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