How China Communications will benefit from the 4G capex cycle

It has about 20%-30% market share.

According to Maybank Kim Eng, its channel checks suggest PRC telcos will adopt high frequency bands for the upcoming 4G mobile service in China. Maybank anticipates more base stations are needed for providing similar 3G service coverage in China on high frequency bands. As one of the telecom infrastructure service market leaders (major competitors: subsidiaries of China Unicom and China Mobile), China Communication Services (CCS), with about 20%-30% market share, is expected to benefit from the 4G CAPEX cycle. 

Here's more:

We forecast 16% earnings CAGR over FY13F-15F, especially after China Mobile announced it will increase total CAPEX by 49% / CNY63b for building 200k and more 4G base stations in FY13F. The stock is trading at 9x PER with a 4% dividend yield, which is attractive to us. Re-iterate BUY with TP of HKD5.80. 

200k base stations to cover about 150 cities. We estimate China Mobile’s 200k 4G base stations will cover 100-150 major cities in China. Therefore, it’s easy to understand that China Mobile will need more than 800k base stations to provide full 4G service coverage.

Although China Mobile may upgrade some of its 3G base stations to 4G for cost savings, we believe it will still need to invest in the existing network infrastructure to provide quality 4G mobile services, especially as the high frequency bands will have issues of weak indoor penetration and narrow coverage.