China Mobile profit falls as rivals encroach

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Beijing - China Mobile Ltd, China's largest telecom provider, saw first-half net income slide 8.5 percent as fierce competition from rival carriers and Internet-based service providers heaped pressure on its slowing business.

Net profit was 57.7 billion yuan (R99 billion), largely in line with a consensus analyst estimate of 55.7 billion yuan, according to Thomson Reuters SmartEstimate, but represented the fourth consecutive quarter of year-on-year profit decline.

The past year has been unusually trying for China Mobile, which reported its first annual profit drop in 14 years in March.

Even though it now claims over 790 million users, the company acknowledged on Thursday how the relentless rise of over-the-top services, namely Tencent Holdings Ltd's WeChat texting app, and government policies including a new value-added tax scheme have clouded its prospects.

While customers are signing up for costlier devices, the company is steadily wringing less money from each subscriber.

China Mobile's average revenue per user (ARPU) during the quarter fell to 64 yuan compared to 66 yuan a year ago.

China Mobile's ARPU reached 77 as recently as 2010.

“Even though ARPU is declining, it's also stabilising because of 4G. The number of 4G users has been accelerating month on month,” said executive director Zhou Jinquan at a press conference in Hong Kong, adding that an increase of data usage would help ARPU rebound.

Analysts were more sceptical.

“At this point the probability of profit recovery is low and they'll likely continue to slide,” said telecoms expert Wu Chunyong.

“If they don't come up with a new product or services, it will be bad.” - Reuters

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