China Mobile

China Mobile rings up higher profit

Giant carrier buoyed by massive user base but growth is slowing and rivals mounting challenge

PUBLISHED : Tuesday, 23 October, 2012, 12:00am
UPDATED : Tuesday, 23 October, 2012, 4:19am

China Mobile, the world's biggest wireless network operator, posted a 1.4 per cent gain in net profit for the first three quarters year-on year, as subscriber numbers grew and greater wireless data traffic helped stem declines in average per-user revenue.

"China Mobile is benefiting from its large user base, which gives the company a favourable scale effect," Huang Meng, an analyst at market research firm Analysys International, said.

China Mobile had 683.1 million mobile subscribers at the end of June, or 65 per cent of the total mobile market.

That subscriber base grew by 15.4 million to 698.5 million in the third quarter. The total included 75.6 million users of its high-speed, third-generation service, which gives smartphones faster access to the internet.

Huang said growth in China Mobile's user base slowed in the third quarter and the carrier could face a tougher challenge from its two rivals in the fourth quarter.

"The near-term future for China Mobile is not all that bright. China Unicom and China Telecom may develop faster than it does," Huang said.

He expected the two rival carriers to be more aggressive in luring new users.

"They have more measures to attract student users and to promote their service before the Lunar New Year," Huang said.

China has the biggest number of mobile-phone users in the world, surpassing one billion subscribers in the first quarter, according to official data.

China Mobile also raised its investment in handset subsidies for this year to 26 billion yuan (HK$31.94 billion) from the originally planned 20 billion yuan in August, helping to maintain its lead in smartphone subscribers.

The company's average monthly revenue per user remained stable at 67 yuan, helped by growing data traffic through downloads of videos, games and e-books.

China Mobile is the only one of the three mainland carrier giants that does not offer Apple's iPhone to subscribers, although users can buy the popular gadget from an Apple store and register it with China Mobile.

Huang said China Unicom had begun reaping the rewards of its iPhone package, which it started marketing three years ago.

"The return takes a cycle. China Unicom offered big subsidies to lure consumers and now their investment is beginning to pay," he said.

He expected China Unicom to start offering the iPhone 5 from December, helping it woo users of higher-end smartphones.

China Mobile reported 408.6 billion yuan in revenue in the first three quarters of the year, up 6.4 per cent from the same time last year.

Net profit was 93.3 billion yuan during the period, compared with 91.98 billion yuan a year earlier.