China Mobile, the largest mobile operator in the world, warned of a limited upside for data traffic as the market becomes saturated, and stressed the need to find new growth as it reported declines in both profit and revenue in the first six months of 2019.
Yang Jie, China Mobile chairman, said: “We witnessed ever-intensifying competition within the telecoms industry and from cross-sector players. When this is combined with the continued implementation of the national policy on speed upgrades and tariff reductions, the operating environment has become more complex and is full of uncertainty.”
In a statement, the operator said the overall industry declined, with its revenue and profit inevitably squeezed, noting the communications market is becoming almost saturated; the upside of data traffic is rapidly diminishing; and it is increasingly difficult for operators to boost operating results by relying on traditional growth drivers alone.
Net profit fell 14.6 per cent year-on-year to CNY56.1 billion ($7.9 billion), with telecoms service revenue slipping 1.3 per cent to CNY351 billion. Mobile turnover dropped 6.1 per cent to CNY252 billion as handset data revenue dipped 1.5 per cent to CNY195 billion.
Mobile ARPU fell 10.1 per cent to CNY52.20.
Its mobile subscriber base rose 3.2 per cent to end June with 935 million. LTE penetration reached 78.5 per cent after the operator increased 4G subs by 8.4 per cent.
Looking at its aggressive 5G plans, the operator said it will develop non-standalone (NSA) and standalone (SA) networks concurrently with the latter its ultimate goal, making full use of 4G sites and transmission resources to “achieve low-cost and high-efficiency network construction”.
IoT revenue increased 43.8 per cent to CNY5.2 billion, as it added 142 million connections to take the total to 693 million at end-June.
Capex reached CNY85.2 billion, which was 7 per cent higher than in H1 2018. The budget for 2019 is set at CNY166 billion, with 48 per cent allocated to mobile networks.
For the full year, the operator aims to boost 4G subcribers by 45 million and add 300 million IoT connections.