China Mobile Ltd. (NYSE: CHL) was a hot growth stock during the past two years, but things have started to slow down so far in 2008. The Chinese telecommunications company is the world's biggest phone company by users, but a recent merger with China Tietong Telecommunications has many investors bearish on the stock.

A merger is an often-expensive process that adds an element of uncertainty to the financial health of the acquirer. Buyers are forced to take on sometimes dangerous amounts of debt to finance the transaction and the repayment of this debt over time reduces the earnings per share number. The trade-off is a larger company able to realize improved economies of scale.

Chinese mergers are even more complex due to government intervention. Recently, Chinese officials are putting the finishing touches on plans to revamp the country's telecommunications sector. The plans will include a series of mergers and a reshuffle of senior executives. In fact, the merger above was originated from these officials.

However, many investors remain bullish on the prospects of China Mobile. The firm recently raised its earnings forecast for fiscal 2008 to fiscal 2010. These estimates are slightly higher than analyst expectations and mark continued growth for what is already the largest phone network in the world.

Currently, China Mobile has some 399.5 million subscribers across 31 provinces, autonomous regions and directly administered municipalities in Mainland China and Hong Kong. The company provides mobile telecommunications and related services to these customers and has continued to focus on building out its value-added business segment.

China Mobile Ltd. shares dropped $0.27, or 0.4%, to $67.07 in early trading.

Source:investerms