China Mobile profits squeezed; “severe challenges” from internet players

China Mobile profit squeezed; “severe challenges” from internet players

22 APR 2014

Profit at China Mobile, the world’s biggest mobile operator, have fallen sharply as internet-based competition takes its toll.

In selected and unaudited KPIs released by China Mobile for the three months ended 31 March, profit attributable to equity shareholders – year-on-year – slumped 9.4 per cent, to CNY25.2 billion ($4 billion).

EBITDA margin, a guide to operational efficiency, shrunk from 42.6 per cent to 37.2 per cent over the same period.

China Mobile, in a statement, said the group “experienced severe challenges in its operations and development as the impact of mobile Internet on the traditional communications business became more evident, the traditional communications market became more saturated and horizontal competition among operators in the industry became increasingly fiercer”.

The extent to which competition has become fiercer from so-called OTT players is shown in the decline of both SMS and voice usage.

The number of SMS messages sent over China Mobile’s network fell from 163.8 billion (Q1 2013) to 153 billion, while voice usage shrank by more than 50 billion minutes.

ARPU fell from CNY68 to CNY62.

Revenue continued to grow – up 7.8 per cent, to CNY154.8 billion – helped by the launch of commercial 4G in December and China Mobile’s continued ability to rake in millions of additional 3G customers.

As of 31 March, China Mobile had attracted 2.79 million customers to its TD-LTE 4G network. Net additional 3G customers numbered 33.35 million over the quarter, taking the total 3G base to 225 million.

Total mobile customers hit 781 million.

Against the backdrop of growing competition and falling ARPU is the rapid growth in data traffic volumes – a combination which puts pressure on margins.

During Q1, wireless data traffic (cellular data and wireless LAN data), year-on-year, increased by 48.1 per cent. Cellular data traffic volume rocketed 83.8 per cent over the same period.

Author

Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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