China Mobile’s net profit for the first half of the year fell 8.5 per cent to CNY57.742 billion ($9.38 billion) as its traditional voice and messaging businesses faced continued pressure from social media firms.
The profit drop comes six months after the company posted its first annual profit decline in 14 years.
As well as “Over-The-Top products”, China Mobile said the challenging conditions were also being generated by its operator rivals, “an increasingly saturated… market,” as well as recent government and regulatory decisions.
Overall revenue increased 7.1 per cent to CNY324.7 billion, but voice revenue decreased 5.3 per cent year-on-year to CNY166 billion and SMS/MMS sales fell 13 per cent to CNY18 billion.
The good news was that wireless data revenue, now accounting for 24 per cent of total telecom service revenue, grew 52 per cent to CNY70 billion during the period. Data traffic was up 91 per cent to 426.5 billion megabytes. ARPU fell only slightly to CNY64 ($10.40) from CNY66 a year ago.
China Mobile added another 61 million connections, bringing its total user base to 790.6 million (a 6.8 per cent increase).
The company’s EBITDA fell 4.4 per cent as its net profit margin dropped to 17.8 per cent from 20.8 per cent in 1H 2013.
To make up for declines in voice and messaging income, China Mobile has been aggressively pushing into 4G. As of end-June, the company said it had rolled out 410,000 4G base stations (covering more than 300 cities), sold 22 million 4G handsets through all distribution channels and signed up nearly 14 million 4G customers. It sold five million 4G handsets in June. It described this 4G development as “rapid growth momentum.”
Furthermore, the operator today also released a statement saying its 4G subscriber base as of end-July was more than 20 million, a sequential monthly growth rate of 47 per cent.
While it’s well on its way to reaching its goal of deploying 500,000 base stations this year, it has a long way to go to hit targets of 50 million subscribers and selling 100 million 4G phones. But uptake is expected to strengthen as the number of 4G handset models has increased from just 19 in January to 242 in June, while the average unit price has plunged from CNY5,000 ($812) to CNY1,900.
The company has so far invested only 38 per cent of its 4G CAPEX for the year – spending CNY116.6 billion in the first half. Almost half of the investment has been in mobile networks.
It announced a dividend of HKD1.54 ($0.198) per share.