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China Mobile posts weak third quarter earnings

World’s largest wireless network operator seeks greater balance in its 4G mobile and fixed-line broadband initiatives

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China Mobile chairman Shang Bing said the promotion of flat-rate packages turned out to have a negative impact on revenue growth. Photo: Nora Tam

China Mobile is aiming to achieve a more balanced development in its 4G mobile and fixed-line broadband businesses following a sluggish financial performance in the quarter to September 30.

The world’s largest wireless network operator on Thursday reported a 2 per cent decrease in third-quarter net profit to 27.5 billion yuan (HK$31.6 billion), down from 28.2 billion yuan in the same period last year, on lower smartphone sales and tariff adjustments.

In a filing with the Hong Kong stock exchange after the market closed, China Mobile chairman Shang Bing said the company stepped up the promotion of flat-rate packages, which turned out to have “a negative impact on revenue growth”.

Earnings before interest, taxes, depreciation and amortisation (ebitda) – a measure of a firm’s operating profitability – inched up to 66.1 billion yuan in the third quarter from 65.5 billion yuan a year earlier.

Revenue was flat at 172.3 billion yuan, compared with 172 billion yuan a year ago.

“It was a slightly weak result,” Bernstein Research senior analyst Chris Lane said. “Ebitda was a 1.9 per cent miss versus consensus [market] estimates and net profit was a bit more, at 5.4 per cent below estimates.”

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