Slow growth in China

21 Oct 2003

China Mobile Hong Kong (CMHK) has reported its slowest rate of growth in more than four years thanks to a combination of tariff cuts and new users spending less. The modest returns are a result of the company’s recent strategy of signing up subscribers in China’s less wealthy provinces and offering discounts in a bid to stop nearest rival China Unicom from accumulating market share. Net profit for the first nine months of the year rose just 4.4% to CNY26.196 billion, while total revenue climbed 9.1% to CNY116.853 billion. CMHK’s customer base grew by 1.55%, or roughly two million, during the month of September, to take its total to 135 million. While still the largest provider in the People’s Republic, rival China Unicom has been quietly adding similar amounts of customers, signing up an extra 1.89 million users in September to boost its base to 74.92 million.

CMHK management has begun to acknowledge that the competitive landscape in China is changing, with saturation at the top end of the market becoming much more of an issue. Furthermore, the mid and low-end users are now targetted by ‘Xiaolingtong’ service providers. The company hopes to protect revenues by promoting SMS and other data services. As it stands CMHK’s average revenue per user (ARPU) is stable, falling only slightly in the third quarter of 2003 from CNY104 to CNY103.

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