China’s three state-run mobile operators bounced back from weak or falling earnings in 2016, with solid gains in their bottom-line in the first half of the year on top of continued rapid data and 4G uptake.
The three operators made a combined H1 net profit of CNY77.6 billion ($11.6 billion) compared with a profit of CNY127.6 billion for all of 2016.
They clocked up 123.5 million 4G subscriber gains in the January-June period, taking their total LTE user base to 885 million. China Mobile and China Telecom are nearing 70 per cent 4G penetration, with China Unicom lagging by at least 14 percentage points.
Mobile ARPU inched up sequentially during the period (3.4 per cent to CNY48 at China Unicom and 2.3 per cent to CNY56.80 at China Telecom), but 4G ARPU slipped across the board – down 13 per cent at China Unicom, 7.7 per cent at China Telecom and 3.9 per cent at China Mobile.
China Mobile, the market leader with a 64 per cent share of total subscribers (67 per cent of 4G users), noted its 4G ARPU is still 1.6-times higher than 2G/3G ARPU.
The operators ended June with 3.47 million 4G base stations – China Mobile had 1.65 million, followed by China Telecom (1.05 million) and China Unicom (770,000). China Mobile plans to add an additional 120,000 4G sites in H2, while China Telecom said it will deploy another 110,000 by year-end.
Despite sharp drops in mobile voice revenue, the companies all managed to grow mobile service revenue by at least 5 per cent.
China Telecom led the way with a 12 per cent year-on-year jump in mobile turnover in H1 to CNY75.7 billion, driven by a 24 per cent increase in mobile data to CNY55.3 billion. Voice was down 12 per cent from H1 2016 to CNY20.4 billion, and sales of handsets fell 16 per cent to CNY16 billion.
China Mobile reported a 27 per cent year-on-year drop in voice revenue to CNY88 billion, but a 34 per cent rise in mobile data to CNY185 billion more than offset the decline. Its SMS/MMS business began to stablise, falling 4 per cent year-on-year in the half to CNY15.1 billion.
China Unicom’s mobile data revenue rose 21 per cent to CNY43.5 billion, helping to boost mobile service turnover 5.2 per cent despite a 17 per cent decline in voice revenue to CNY21.7 billion. Total service turnover was up 3.2 per cent to CNY124 billion, but consolidated revenue was down 1.5 per cent.
Together, the three operators signed up 23.7 million 4G subscribers in July, taking the country’s total to 908 million. China Mobile said it aims to close 2017 with 630 million 4G subs, a target it should easily surpass – in July it picked up another 12.3 million, double its H1 average of 6 million 4G adds a month.
At this pace, China will end the year with well over 1 billion 4G connections, or more than 40 per cent of the 2.45 billion global LTE connections GSMA Intelligence forecasts by end-December.
* China Mobile didn’t break out mobile service revenue in its H1 results. Mobile World Live estimated the figure by adding up mobile data, voice and SMS/MMS revenue.
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