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China Mobile

China Mobile 4G costs depress profit

PUBLISHED : Tuesday, 22 October, 2013, 3:28am
UPDATED : Tuesday, 22 October, 2013, 3:28am

China Mobile, the world's largest telephone company, posted an 8.8 per cent profit decline - the most since 1999 - in the third quarter as costs to build its new fourth-generation network increased.

Net income fell to 28.4 billion yuan (HK$36.1 billion) from 31.1 billion yuan a year earlier, according to figures derived from nine-month results released by the company yesterday.

Sales totalled 159.9 billion yuan in the quarter.

Chief executive Li Yue, fighting to stem a decline in the company's share of 1.2 billion wireless users on the mainland, intends to roll out commercial 4G services by the end of the year that will boost capital spending by 49 per cent this year.

"Costs are surging," said Ricky Lai, a Hong Kong-based analyst at Guotai Junan International. "While the company has rapidly raised its 3G subscribers, it has also invested a lot in handset subsidies to push that subscriber growth and to bear the 4G network expense."

Beijing may issue licences for commercial 4G services towards the end of this year, the company said in March. It built a trial 4G network in 15 cities last year and said in February it would expand that to 100 cities this year with 200,000 base stations able to reach 500 million people.

Costs of the 4G build-out, previously borne by the state-owned parent, are now being shouldered by the Hong Kong unit.