China Mobile, the world's largest wireless network operator by subscribers, said yesterday that it is facing "unprecedented" challenges as the telecommunications industry adapts to the impact of the so-called over-the-top (OTT) services.
The telecommunications giant reported net profit rose a mere 1.5 per cent year on year in the first half to 63.1 billion yuan (HK$79.3 billion), driven by robust growth in data consumption that offset a fall in voice services.
"In the first half, the impact from [OTT] products on the traditional communications industry was more palpable, and competition was more intense due to the continued increase in mobile penetration in the country," said chairman Xi Guohua.
OTT services refer to any applications that provide services over the public internet infrastructure and bypass traditional distribution channels.
Xi said China Mobile needed to change its role from a telephone call operator to a data operator to meet the challenge. "We are making an effort," he said.
Yang Changlong, an industry analyst at Beijing's Bayes Consulting, said China Mobile was pinning its hopes on the high-speed 4G networks, for which Beijing is expected to issue licences at the end of this year.
Beijing has expressed support for the time-division long-term evolution standard and aims to push forward deployment of such networks.
China Mobile is building its 4G networks on this technology while its other two state-owned rivals may use the frequency-division-duplex long-term evolution standard, which is more widely adopted by 4G operators worldwide.
The firm hopes to reinforce its position with the launch of 4G networks after losing market share in the past few years. It had 740.15 million subscribers at the end of June, representing 62.8 per cent of the mainland's mobile-phone market, down from 65.2 per cent a year earlier.
China Mobile is the only one of three mainland carriers that does not offer iPhones but Xi said talks with Apple were continuing.
IPhone cannot be used on China Mobile's 3G network, which is built on the homegrown TD-SCDMA standard.
The operator reported revenue increased 10.4 per cent in the first half to 303.1 billion yuan. Data business contributed 95.4 billion yuan, up 25.5 per cent over last year.