China Mobile grew its 4G customer base by 99.6 million in the first half of 2015 as operating revenue expanded 4.9 per cent. However, its net profit fell 0.8 per cent.

EBITDA increased to CNY126.9 billion ($19.8 billion), while its net profit fell to CNY57.3 billion, due mainly to the impact of the country’s VAT reform introduced last year, which raised the tax rate from 3 per cent to 6-11 per cent. Its EBITDA margin rose 0.8 points to 37.2 per cent.

The market leader’s turnover hit CNY340.7 billion, with telecoms service revenue up just 0.5 per cent to CNY299.5 billion. Data revenue again drove the modest growth, increasing 24.3 per cent to CNY151.5 billion and now making up 50.6 per cent of service revenue – up from 41 per cent a year ago.

But voice revenue continued to fall, dropping 16.4 per cent to CNY138.6 billion, and messaging revenue declined 12 per cent to CNY16 billion.

Revenue from sales of products, including devices, increased 54 per cent to CNY41.2 billion.

4G growth
Its 4G user base soared from 14 million to 190 million over the past year (it also today reported that its 4G user base hit 209 million by end-July, almost on a par with its 3G base).

Over the past two quarters China Mobile accounted for 75 per cent of the country’s new 4G additions. 4G connections now represent 23 per cent of its 817 million connections, which rose 3.4 points in the last year, and the company sold 140 million 4G handsets in the first half of this year. 4G mobile data traffic increased to 62 per cent of the actual data traffic. Half of its customers are still on 2G devices.

The operator, which has a 63 per cent market share, said 4G ARPU is 1.6 times higher than its blend ARPU, which dropped 3 per cent to CNY62.

Mobile data traffic increased 154 per cent over the past year.

4G capex accounted for 53 per cent of H1 capex of CNY69.7 billion. Its capex budget for 2015 is almost CNY200 billion. It added 190,000 4G base stations in H1, bringing its total to 940,000.

Operating expenses rose 6 per cent to CNY278.2 billion and represented 81.7 per cent of revenue – up from 80.8 per cent in H1 2014.

China Mobile Chairman Xi Guohua once again said it is facing “severe challenges from intensified competition”, particularly pressure from internet companies. He noted that growing domestic competition is “shortening our leading window period in 4G. In addition, changes in customer demand is leading to adjustments of tariff policy and will bring considerable impact on our development”.

Xi also repeated previous statements that the company is looking for appropriate external investment opportunities in an active, but cautious manner, and aims to broaden its presence in the market to support its transformation and development.

Unlike rival China Telecom – which yesterday reported disappointing H1 earnings – China Mobile said it will pay an interim dividend of HK$1.525 (US$0.2) per share.

The country’s second largest mobile operator, China Unicom, reports financials tomorrow (Friday).