China Mobile Grows Profits on 4G Gains
China Mobile has reported another quarter of explosive growth in 4G subscriber numbers, with those gains fueling a rise in sales and profitability over the first nine months of the year.
The operator, which is the largest of China's three state-backed service providers, said it made 542.7 billion ($80.5 billion) in revenues between January and September -- 4.3% more than in the year-earlier period -- while profits (attributable to equity shareholders) rose by 3.1%, to RMB88.1 billion ($13.1 billion).
China Mobile Ltd. (NYSE: CHL) has added another 7 million mobile customers since reporting figures for the first six months, giving it 844 million in total, and it continues to extend its 4G lead over smaller rivals China Unicom Ltd. (NYSE: CHU) and China Telecom Corp. Ltd. (NYSE: CHA). (See China Mobile's 4G Boom Fuels Profit Growth.)
Figures show that 481 million customers are now using 4G services, 52 million more than in June.
The company has continued to dominate the 4G market despite the best efforts of its two competitors, which now lag China Mobile by some distance.
Yet to report results up to September, China Unicom issued a profit warning earlier this week in which it revealed that about 88.9 million customers are now in its 4G network. At the end of June, China Unicom had 72 million 4G customers and 261 million mobile customers in total.
China Telecom, which is also due to publish earnings later this month, had 210.5 million mobile customers at the end of August -- according to monthly updates -- including 101.4 million 4G customers. Since the start of the year, it has been adding 4G customers at a rate of about 5.4 million per month, making it look relatively pedestrian alongside China Mobile.
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Nevertheless, while China Mobile has extended its 4G lead, its average revenue per user (ARPU) has been dropping as services are adopted by less affluent customers.
Monthly ARPU over the January-to-September period fell to RMB60 ($8.9) from RMB61.5 ($9.1) a year earlier.
The operator also said it was stepping up its efficiency measures to cope with growing demands on its business.
"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," it said in a statement. "The group proactively enhanced cost efficiency across its operations, deepened transformation of its sales and marketing model, and promoted more efficient use of resources."
Although it has trailed China Telecom in the fixed-line sector, China Mobile is also becoming increasingly active in this market, adding 8.4 million fixed broadband customers since the end of June to give it 74.24 million in total.
ARPU in that market has fallen slightly to RMB33 ($4.9) per month from RMB33.4 ($5) in the first nine months of 2015.
The company's share price closed down about 1% in Hong Kong earlier today, which could reflect the lingering investor concern about a slowdown in the Chinese market and what this means for China Mobile's prospects in coming months.
— Iain Morris, , News Editor, Light Reading