It is not easy being an incumbent with a three-quarter market share. China Mobile is the world’s largest mobile operator by subscribers, yet investors have consistently dwelled instead on the fact that its rivals are eating into its subscriber base. After the strongest three-day rally in its shares in more than two years, maybe that view is changing.

Reasons to be gloomy about China Mobile are well-known. Top of the list is the effect of the company’s forced use of a homegrown 3G network rather than the widely-used foreign standards adopted by China Unicom and China Telecom. This has until now weighed on sales by limiting its offerings of the most popular handsets, including the iPhone. It has also resulted in heavy spending to improve its 2G network and wireless coverage to patch over its weak 3G offering. As a result, its margin on earnings before interest, tax, depreciation and amortisation has weakened to just under 50 per cent in the first half of 2011 from 54 per cent five years ago. Full-year figures are due this week. But optimists are looking ahead.

China Mobile’s 74 per cent owner, China Mobile Communications, is building a 4G network; a commercial launch, pending state approval, is expected in 2014. Its parent’s bearing of the capital spending for that project means that the listed entity’s capital expenditure should drop rapidly if all goes to plan: Credit Suisse forecasts that it could fall to 20 per cent of China Mobile’s sales by 2014, from more than a quarter currently, boosting free cash flow. China Mobile’s shares have jumped by a 10th since Thursday to their highest level in over two years. At 13 times this year’s earnings – or 10 times when its cash pile, equivalent to more than $50bn, is taken out – that multiple compares favourably with China Unicom’s 18 times and China Telecom’s 13 times. A long-term view might be worth taking.