China Mobile, the world’s largest mobile operator, said it would cut 4G prices by as much as 50 per cent next month amid shareholder concern about profitability and high network investment.

At a shareholder meeting in Hong Kong, reported by the Wall Street Journal, China Mobile chairman Xi Guohua tried to allay fears by saying network upgrades and renewed marketing efforts were essential for future growth.

“Our net profit can continue to grow for another two years if we don’t make investments in new business now. But then the company would be over,” said Xi.

China Mobile has committed to invest CNY225.2 billion ($35.7 billion) during 2014, up more than 20 per cent from last year. Nearly half of that sum is allocated to mobile networks. The plan is to complete the rollout of more than 500,000 TD-LTE 4G base stations by the end of 2014, covering more than 340 cities.

The sharp drop in 4G tariffs follows a decision by the Ministry of Industry and Information Technology (MIIT) that operators – and the “market” – would determine tariff pricing. Previously, the government set pricing bands.

And the market is heating up. MVNOs look set to intensify competition, while the enormous growth of so-called OTT players – particularly the WeChat messaging app owned by Tencent Holdings – continues to eat away at traditional revenue streams.

The number of SMS messages sent over China Mobile’s network fell from 163.8 billion (Q1 2013) to 153 billion in the first three months of 2014.

To try and recover ground, CEO Li Yue said China Mobile plans to develop new services that integrate traditional communications services with new mobile applications.

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.

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