China Mobile

Spotlight on China Mobile's 3G subscriber gains, 4G expansion plans

World's largest wireless network operator expected to book modest gains for first half but the market is looking for signs of growth

PUBLISHED : Monday, 12 August, 2013, 12:00am
UPDATED : Monday, 12 August, 2013, 4:05am

While speculation remains rife about a potential deal with Apple, China Mobile will be more closely watched by investors this week for signs of revenue improvement, 3G subscriber growth and updates on its 4G network expansion.

China Mobile, the world's largest wireless network operator by subscribers, is expected to show modest gains when its financial results for the six months to June are released on Thursday.

Listed in Hong Kong and New York, China Mobile had 740.15 million subscribers at the end of June, including 137.88 million 3G users.

A research note released by Barclays last month said China Mobile had driven the robust addition of 3G data users on the mainland, which became the world's largest market for smartphones last year.

Unlike domestic rivals China Unicom and China Telecom, China Mobile does not support Apple's iPhone on its 3G network, which is built on the mainland-developed 3G standard called TD-SCDMA.

Barclays forecast China Mobile would report a first-half net profit of 63.16 billion yuan (HK$80 billion), up from 62.2 billion yuan a year earlier.

The consensus estimate from a Bloomberg poll of analysts was for net profit to reach 65.58 billion yuan.

Barclays predicted revenue of 281.57 billion yuan, against 266.53 billion yuan last year.

The Barclays report said: "Our key focus [during China Mobile's interim earnings announcement] will be to what extent wireless data growth can start to offset voice and SMS declines to drive overall revenue acceleration."

It added that updates on China Mobile's 4G network trials and build-out plans would also be worth watching out for in the announcement.

The operator launched in June the much-anticipated telecommunications equipment tender for its high-speed 4G network, which is based on the government-backed standard called TD-LTE. It did not disclose the financial terms of the bid, but the project aims to add about 207,000 new 4G base stations across the mainland.

Advanced 4G networks have theoretical internet download speeds of up to 100 megabits per second. The fastest existing 3G networks run at 42Mbps. The 4G standard called FD-LTE is the most widely adopted by 4G operators worldwide.

China Mobile embarked on 4G network trials last year, which involved 20,000 new base stations deployed in 15 cities. Beijing is widely expected to grant 4G licences on the mainland in the fourth quarter.

Ricky Lai, a research analyst at Guotai Junan International, said last week that China Mobile would continue to lead the mainland in 4G network expenditure. "It is estimated to spend 49 billion yuan on 4G infrastructure this year," he said.

Timing on the issuance of 4G licences and China Mobile's 4G network expansion could augur well for Apple, which has long been in talks with the operator to support and distribute the iPhone. Last month, China Mobile said chairman Xi Guohua had met Apple chief executive Tim Cook in Beijing "to discuss matters of co-operation".