China Mobile profit rises 9pc
Dominant mobile carrier looks to network acquisitions as it faces falling per-user revenues and intensifying competition
China Mobile (Hong Kong) expects to see per-user revenues drop this year as subscribers opt for low-usage, pre-paid mobile services.
The company also says fierce competition from rival networks poses challenges, but claims new network acquisitions will leave it well-placed to build on its dominant market share on the mainland.
The country's No1 mobile carrier saw its average revenue per user (arpu) drop from 105 yuan in the first quarter of last year to 100 yuan in the final quarter.
Overall annual arpu slid to 102 yuan from 115 yuan the previous year, despite the addition of 23.94 million new subscribers. The company's total subscription base stood at 141.61 million at the end of last year.
The number of pre-paid users, who spend an average 58 yuan for 129 minutes every month, grew 31.79 per cent to 90.47 million last year. Contract users, who spend an average 171 yuan for 417 minutes a month, grew by just 4.31 per cent to 51.13 million.
'Assuming we keep the same strategy as in 2003, our pre-paid users will increase this year,' said company chairman and chief executive Wang Xiaochu. 'But we will continue to invest [in pre-paid card usage] if this strategy boosts our total revenue.'
Net profit at the company rose 9.06 per cent last year to 35.55 billion yuan. Turnover reached 158.6 billion yuan, up from 128.56 billion a year ago.
Analysts generally gave the company high marks for its performance.
'Overall the results were solid and highlighted good progress in customer segmentation,' Goldman Sachs said.
China Mobile said capital expenditure this year would reach US$5.8 billion, up from $4.9 billion. That amount excludes the planned acquisition of 10 mobile networks from its unlisted mainland parent slated for June this year, according to Mr Wang.
The company is saving cash for the purchases by limiting its dividend payout to 21 per cent of earnings, compared with the 30 per cent analysts had expected.
China Mobile proposes to pay a total dividend of 36 HK cents per share, up 12.5 per cent from the previous year, and said it might increase its total dividend payout after the acquisitions were completed.
The company has accrued cash and bank deposits of 56.35 million yuan, up from 43.64 million a year ago. 'The [acquisitions] will be also funded by bank loans - rather than issuing new shares - due to low prevailing interest rates,' said Mr Wang.
Analysts were optimistic about the planned acquisitions, expecting them to boost China Mobile's earnings this year by 8.4 per cent.
'China has a very competitive telecoms market and China Mobile is the preferred play in the sector,' said Francis Cheung, an analyst at CLSA Asia-Pacific Markets.
China Mobile expects text messaging and high-speed data services to provide solid near-term revenue growth.
SMS sales were up 133.86 per cent to 9.9 billion yuan last year, while other data services contributed 2.84 billion yuan, up from 1.34 billion in 2002.
The improved earnings prospects failed to help China Mobile's Hong Kong-traded shares yesterday, which slipped 3.4 per cent to $23.90. Rival China Unicom fell 4.4 per cent to $8.65.