Updated at 5.50pm: China Mobile (Hong Kong) - the world's largest mobile operator in terms of subscriber numbers - on Friday reported a net profit of 42 billion yuan (HK$39.6 billion) for last year; up 18.1 per cent from 35.5 billion yuan in 2003. Sales increased 21.3 per cent to 192.4 billion yuan from 158.6 billion yuan previously. Before the results were announced, analysts had predicted last year's net profit would be 40 billion yuan. China Mobile said a better-than-expected increase occurred because the number of subscribers jumped 44 per cent to 204.2 million last year. The company said it also recorded a rapid expansion in new services such as 'Short Message Service' (SMS), WAP and 'Colour Ring'. 'Even with fairly intensive market competition, the group still achieved relative stability in its high-value customer base and fairly high growth in new markets,' China Mobile said. The firm also managed to moderate the decline in average revenue per user. China Mobile chairman Wang Jianzhou said despite intense competition and tougher regulations, there was great potential for developing the mainland mobile telecommunications market. 'Looking to the future, the company will face great opportunities and challenges at the same time,' he said. Mr Wang said the maturing of the third-generation (3G) technology and products, as well as the issuing 3G licences in China, could change the industry. 'The group will fully utilise its existing competitive advantages in terms of its network, technology and resources, its market experience and its market leading position to actively prepare for 3G's construction and development,' he said. The company announced it would pay a final dividend of 46 cents per share. China Mobile's share price rose 2.6 per cent to $25.60 on the Hong Kong Stock Exchange on Friday afternoon.