Low-spending users drive China Mobile

China Mobile, the Hong Kong-listed wireless giant serving all 31 mainland provinces, signed up 8.91 million new subscribers during the third quarter but said the growth was driven by low-usage, low-spending customers.

The company has the largest subscriber base in the world with 194.38 million active users.

Many of these users are frugal spenders, however, especially those acquired from the purchase of 10 provincial networks from its parent company in July. The purchase included networks in provinces such as Heilongjiang and Jilin, where per capita spending is low.

The company yesterday said its net profit for the first nine months of the year rose 10.3 per cent to 28.89 billion yuan, up from 26.19 billion yuan in the same period last year, when the carrier only operated in 21 provinces.

Operating revenue for all 31 provinces was 137.78 billion yuan in the nine-month period, up 17.9 per cent from 116.85 billion yuan a year ago.

Although the customer profile in the 10 new provinces was less favourable, analysts said the results were largely in line with expectations.

Compared with the second quarter, ebitda (earnings before interest, tax, depreciation and amortisation) increased 2.5 per cent to 28.7 billion yuan from 28 billion yuan. Average revenue per user (arpu) in the third quarter continued to decline, to 92 yuan from 93 yuan in June and 102 yuan at the end of last year, but CSFB analyst Edison Lee said the deterioration was likely to ease soon.

'Data growth will improve next year with increased penetration of [2.5G] in China,' he said. 'If voice tariffs do not deteriorate, the steep drop in arpu seen previously will flatten out.'

Wallace Cheung of DBS Vickers was less optimistic about China Mobile's outlook. He said growing capital expenditure would increase the mobile giant's depreciation and amortisation charges and thus weigh on its margins.