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China Cell-Phone Subscriptions Exceed U.S. Population (Update3)

May 24 (Bloomberg) -- China, the world's largest mobile- phone market by users, said subscriptions rose to 296 million in April, exceeding the U.S. population for the first time, as China Mobile (H.K.) Ltd. and China Unicom Ltd. boosted sales.

The nation added 5.4 million accounts in April, bringing new accounts this year to 27 million, the Ministry of Information Industry said. At this rate, the number of Chinese who own cell phones may rise by half in less than two years, said CLSA Ltd. analyst Francis Cheung.

``There is still a lot of room there,'' Cheung said. ``It's a huge country.''

China, adding users at a rate of two every second, overtook the U.S., with a population of 293 million, as the world's largest cell-phone market by customers in 2001, helped by rising affluence and falling call rates. Still, only one of five Chinese has a cell-phone account, compared with about one in two people in the U.S. and about two out of three in Japan. Elsewhere in Asia, the penetration rate in the Philippines is about 30 percent.

``There is no problem for China hitting at least levels similar to the Philippines,'' Cheung said.

Mobile services in China are provided by China Mobile, the world's biggest cellular operator by users, and China Unicom. China Mobile's revenue of $19 billion last year ranked third, after Britain's Vodafone Group Plc and Japan's NTT DoCoMo Inc.

China Mobile's sales may rise to $25 billion in 2006, according to a Thomson Financial survey of 15 analysts. Unicom's sales may rise to $12.2 billion in 2006, from $7.9 billion last year, Thomson Financial said.

Fixed Lines

Mobile accounts in China outnumbered fixed lines for the first time last year. Fixed-line subscriptions in China rose by 4.4 million to 285.4 million last month, the ministry said in a monthly statement on its Web site.

All China Mobile customers use its global system for mobile communications service, based on China's dominant wireless standard. Smaller rival China Unicom provides a service that uses code division multiple access technology, developed by Qualcomm Inc., in addition to services based on GSM.

China Mobile shares rose 2.2 percent to HK$21.05 on May 21 in Hong Kong. The stock has dropped 12 percent this year compared with an 8 percent decline by the benchmark Hang Seng index. Shares of China Unicom rose 1.9 percent to HK$5.50 on May 21.



To contact the reporter on this story:
Kenneth Wong in Hong Kong
at [e-mail]

To contact the editor responsible for this story:
Charles Bickers in Tokyo
at [e-mail]
Last Updated: May 23, 2004 23:00 EDT

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