China Mobile, the nation's largest mobile operator, is expected to deliver 20 per cent growth in first-half net profit on Thursday even after cutting tariffs in the period, thanks to strong customer growth in rural areas, analysts said.
Net profit increased to between 35.6 billion yuan and 37 billion yuan, or 18 per cent and 22 per cent, from the same period last year as revenue grew about 19 per cent to about 163 billion yuan, they said.
Market focus will be on the profit margin of the company's operation in the reported period.
Any change in the margin of earnings before interest, tax, depreciation and amortisation will indicate the impact of the change to a 'calling party pays' pricing mechanism and various promotional offers to subscribers.
'The ebitda margin for China Mobile should be higher in the second quarter, at over 56 per cent,' said Wong Chi-man, an analyst at brokerage Everbright Securities. The measure was 52.4 per cent on the first quarter.
Credit Suisse estimated that China Mobile's ebitda margin improved to 53.3 per cent in the second quarter. The company's management was aware of investors' concerns and would closely monitor the selling and marketing expenses to ensure healthy margins, the broker said in a research report.
