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A reduction in average monthly spending is mitigated by record user growth numbers at China's No1 mobile firm

Average monthly spending by China Mobile's customers fell below the key 100-yuan level in the first quarter  as the company clocked up record subscriber growth.

China's No1 mobile firm yesterday said its average revenue per user (arpu) - a benchmark for measuring the size of phone bills - was down 3 per cent to 97 yuan a month in the first quarter.

The firm's arpu has been on a downward path in recent years, falling from 141 yuan in 2001 to 115 yuan in 2002 and  102 yuan last year, as the company added growing numbers of low-end users.

However, profitability and subscriber numbers have hit record highs. In the first quarter, China Mobile reported 4.6 per cent growth in net profit to 9.38 billion yuan,  derived from a  subscriber base of 150.26 million, up 6.1 per cent.

The mobile firm added 8.64 million subscribers in the period, two consecutive months of which saw more than three million subscribers enrol.  It added 3.09 million subscribers last month.

Main rival China Unicom managed to add 1.9 million subscribers last month.

The No2 mobile firm added  748,000 CDMA subscribers last month,  down from 804,000 in February. The picture was brighter on the GSM front, where it added 1.15 million subscribers in March, up from 949,000 newcomers in February.

China Unicom's disappointing growth figures  have led analysts such as BOC International's Allan Ng to revise down year-end CDMA targets.  Subscriber growth has lost momentum since the latter half of last year, when the company was adding an average 1.15 million CDMA subscribers a month.

Both China Unicom and China Mobile are trying to maintain subscriber growth rates by  offering competitive voice packages.  Last year, the number of mobile-phone users in China grew 25 per cent to 222.44 million.

China Mobile said most of its new subscribers were low-usage, low-arpu customers,  who had dragged down average spending in the first quarter.

However, these new subscribers  cost less to service because of their lower volume usage and have  made a 'positive contribution to the growth of the group's operating revenue and net profit'.

First-quarter turnover was up 11.9 per cent to 42.1 billion yuan.

Analysts said China Mobile's result was largely in line with expectations.

CLSA analyst Francis Cheung said: 'There is a big positive for subscriber numbers but arpu had a 3 per cent decline, still meeting our expectations.'

He said he expected arpu at the firm to continue to fall, to about 92 yuan by the end of the fourth quarter.

Shares of China Mobile fell 1.35 per cent yesterday to a four-month low of $21.85. It announced its first-quarter result after the market closed.



China Mobile signs up low-end subscribers