China Mobile earnings rise 37pc

PUBLISHED : Tuesday, 23 October, 2007, 12:00am
UPDATED : Tuesday, 23 October, 2007, 12:00am

Strong consumer demand adds 48.43 million new users in third quarter

China Mobile, the nation's largest mobile operator, delivered a 37 per cent growth in net profit for the third quarter as the strong economy drove robust demand for its services, the company said yesterday.

Still, shares of the firm, which is celebrating the 10th anniversary of its listing on the Hong Kong stock exchange, could not buck the massive market sell-off yesterday, sliding 3.85 per cent to close at HK$142.20.

Shares in China Mobile have risen 1,117 per cent since its Hong Kong debut a decade ago at an initial public offering price of HK$11.68 per share. It has a current market capitalisation of more than HK$2.85 trillion.

Net profit for the first nine months rose 29.8 per cent compared with a year earlier to 59.8 billion yuan while revenue grew 21.5 per cent to 258.4 billion yuan.

Earnings before interest, tax, depreciation and amortisation (ebitda), which measures cash flow from operations, rose 14.9 per cent to 139.2 billion yuan. The ebitda margin was 53.9 per cent, down from 57 per cent a year earlier.

Third-quarter net profit jumped 37 per cent year on year to 21.9 billion yuan as revenue rose 21 per cent to 91.88 billion yuan.

The company's total subscriber base reached 349 million at the end of September, a 5.1 per cent increase from the end of June.

'The strong growth in third-quarter results shows China Mobile's users are spending more on non-voice, value-added services which helps to uphold the revenue,' said Marvin Lo, analyst at Daiwa Institute of Research.

The strong growth was due mainly to the competitive domestic environment and the enormous demand for telecom services. The company added 48.43 million new users in the third quarter. Average revenue per user (arpu) was 89 yuan by the end of September, up from 88 yuan at the end of June. Customers used an average of 447 minutes, up from 440 minutes in the previous three months.

'The company will exercise reasonable control over the decline in arpu and tariffs with the launch of a new campaign to boost voice usage,' China Mobile chairman Wang Jianzhou announced yesterday.

Mobile data users, who subscribed to non-voice services such as music downloads, internet browsing and mobile newspapers, reached 336.47 million, up from 314.8 million.

Meanwhile, China Telecom Corp, the nation's largest fixed-line operator, managed record growth in the first nine months.

Net profit rose 1.8 per cent year on year to 17.2 billion yuan while revenue increased 2.8 per cent to 131.2 billion yuan. Total fixed-line users slipped from 224 million at the end of June to 223 million by the end of September. But 5.57 million new broadband users were added, bringing the total to 33.89 million.

China Netcom Group Corp, which operates a fixed-line business in the country's north, recorded a 3.2 per cent drop in revenue to 61 billion yuan for the first nine months.