China Mobile unveils 5G push, says net profit fell 0.6 per cent for 2015

PUBLISHED : Thursday, 17 March, 2016, 8:10pm
UPDATED : Thursday, 17 March, 2016, 8:10pm

China Mobile, operator of the world’s biggest 4G network, expects to step up preparations this year for the roll-out of advanced 5G services across the country in 2020, while developing its fixed-line broadband operations.

At a press conference on Thursday, China Mobile executives said that the strategy would tap into the opportunities presented by the central government’s bold “Internet Plus” policy, in which internet applications and new technologies are widely integrated into traditional industries.

“We plan to increase investment in technological innovation and establish new businesses,” China Mobile chairman Shang Bing said.

He added that 4G network expansion remains a major focus of the company this year as it entices more 2G and 3G subscribers to adopt 4G data plans.

“Our data business has become our main revenue driver, reflecting the changes in user habits,” Shang said.

China Mobile reported a 0.6 per cent drop in net profit to 108.54 billion yuan (HK$129.93 billion), down from 109.22 billion yuan in 2014, as it followed the government’s tariff-reduction initiative.

The company said it introduced a policy that permitted customers to carry over unused data to the next month. That led to a 43 per cent decrease in smartphone data traffic, but helped stimulate greater data usage.

Total revenue was up 2.6 per cent last year to 668.33 billion yuan from 651.51 billion yuan in 2014.

At the end of December, China Mobile had 826.24 million total subscribers. That included 312.28 million 4G users.

It reached a milestone of 1.1 million 4G base stations last year, covering most of the mainland.

Total capital expenditure this year is forecast to reach 186.2 billion yuan, of which 75.7 billion yuan will be for 4G network expansion.

“China Mobile’s market position at the moment seems unassailable,” Bernstein Research senior analyst Chris Lane said in a report. “The company’s guidance of more than 500 million 4G subscribers by the end of this year will likely prove conservative.”

Its momentum has led to efforts in developing 5G service, which is estimated to deliver internet download speeds of up to 10 gigabits per second. That beats the theoretical download speeds of the most advanced 4G networks at 300 megabits per second.

“This year will see more testing and experiments on 5G,” China Mobile chief executive Li Yue said.

Li expected increased promotional activity by 2018 and commercial roll-out in 2020.

Swedish telecommunications equipment supplier Ericsson, a partner of China Mobile in 5G testing, had earlier predicted that 5G could serve as an efficient wireless platform to manage the estimated 50 billion mobile-connected devices worldwide by 2020.

Shang said China Mobile’s acquisition last year of China TieTong Telecommunications Corp, formerly known as China Railway Communications, would drive its expansion into more advanced fixed-line broadband services.

“Our total number of wireline broadband customers has exceeded 55 million,” Shang said.

China Mobile’s shares ended 2.1 per cent lower on Thursday at HK$84.55.