China Mobile

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

PUBLISHED : Thursday, 20 October, 2016, 9:12pm
UPDATED : Thursday, 20 October, 2016, 10:58pm

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.”

Combining China Mobile’s results over the past three quarters, however, showed some gains. The operator reported a 3.1 per cent year-on-year increase in net profit to 88.1 billion yuan in the nine months to September, while ebitda was up 1.3 per cent to 200.4 billion yuan.

The group is at a critical stage of transformation in its development
Shang Bing, China Mobile chairman

Revenue for the same period grew 4.3 per cent year on year to 542.7 billion yuan.

At the end of September, China Mobile had 844 million total mobile subscribers, including 481 million 4G users. Its fixed-line broadband users reached 74.2 million.

“The group is at a critical stage of transformation in its development,” Shang said. “There is a relatively high demand for resources from various fronts, including the growth of 4G business, the development of wireline broadband as well as the deployment of digital services.”

In March, Shang said China Mobile’s 31.9 billion yuan acquisition of China TieTong Telecommunications Corp would help drive the expansion of its fixed-line broadband services.

He said that strategy would tap into the opportunities presented by the central government’s bold “Internet Plus” policy, in which internet technologies become deeply integrated into traditional industries to make them more efficient.