China Mobile's profit rises 0.3 percent

Intense competition and mobile apps are hurting the company's earnings

China Mobile, the country's largest wireless carrier, reported weak profit growth in the first quarter as it struggled to squeeze more revenue out of existing customers.

For the quarter ended on March 31, China Mobile said its net profit reached 27.9 billion yuan (US$4.5 billion), 0.3 percent up on the same period last year.

Revenue in the quarter reached 134.7 billion yuan, up 5.7 percent year over year. China Mobile added 16 million customers during the period, bringing the total number to 726 million, it said Monday.

The carrier, however, said it continues to face unprecedented competition from rival telecom carriers. Unlike its competitors, the company has yet to offer Apple's iPhone as part of its smartphone offerings, an untapped opportunity according to analysts.

In addition, popular apps from local Internet companies are eating away at potential revenue from China Mobile's traditional voice and message services. Among them is WeChat, a Chinese-developed app that lets users send text and voice messages, potentially saving on phone bills.

China Mobile said its average revenue per user per month declined quarter-over-quarter from 71 yuan to 63 yuan . Over the same period, wireless data traffic also fell by over 7 percent. In its earnings report, the carrier noted that its number of "low usage customers" continues to increase.

Despite the weak growth, China Mobile's earnings could receive a lift in the near future with the upcoming launch of the country's 4G networks. China's tech regulators have said they will issue the 4G commercial licenses some time this year. In preparation, China Mobile unveiled four smartphones in February that will run on the future networks.

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Michael Kan

IDG News Service
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