There's a party going on at the Ministry of Industry and Information Technology, where the bureaucrats are gleeful that TD-SCDMA subs at China Mobile have crawled past the 500k mark. Well, they should be crying, since the new (lowered) target is 50m subs within three years.

The new numbers came out during a recent MIIT press conference to release telecom stats. It's progress for sure, and better than the roughly quarter million subs China Mobile had at the end of the year. But investors should also be crying. China Mobile profits are down, mostly due to frugal farmers that make up the majority of new subs, and the boost from 3G service is currently more of a burn -- of investment capital. Does anyone want to amortize US$8 billion in capex this year over 500k subs?

Let's hope things rapidly improve. I'm not optimistic in the near term. China Mobile still has to browbeat the supply chain to get more phones out there, especially from the likes of Nokia and Samsung. What the market has now are mostly overpriced, overugly 3G devices that look like throwbacks to the early Motorola days. Slowly -- very slowly -- there are some decent looking phones from local brands, and Motorola has a nice mid-range device, too, the ZN300. Samsung is supposed to release 10 TD phones this year, while LG will release six. No word from Nokia.

China Mobile is also making a big push for subsidized Netbooks, releasing more than a dozen models two weeks ago. This should and better be a good boost for gaining subscribers, and partially offset the troubles with phone supply. If the next round of sub numbers don't double or triple, then investors should begin taking a closer look at China Unicom or China Telecom.

That's it for now. Off to lunch.

PS: MIIT said call reliability now surpasses 95% in the 10 Phase 1 cities,  including Beijing, Shanghai, Tianjin and Guangzhou. 

Sources:
工信部：TD用户数超50万 语音接通率达95%以上