China Mobile (CHL), the largest wireless carrier in the world, continues to deliver healthy operating results with strong subscriber accretion. The company exited last year with a 72% share of the Chinese wireless market. This is as growth slowed in late 2008 due to general economic conditions across the industry, along with increased competition.

Nevertheless, it remains our view that the new competitive entities will face unanticipated challenges deploying and advancing services to levels and coverage delivered by China Mobile. Accordingly, we assess that successful expansion into low-penetration rural regions of China — coupled with aggressive 3G TD-SCDMA service deployments in 2009 and customized mobile value-added services — will establish China Mobile as the dominant mobile provider, far ahead of its nearest competitors.

Additionally, a strong balance sheet, strong free cash flow and sustainable dividends facilitate the company’s efforts to weather economic volatility. We maintain our Buy rating even as we factor in potential impacts of a more competitive landscape and a comparatively weaker Chinese economy in 2009.

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