2004 a good year for China Mobile

11 Mar 2005

China’s largest cellular operator, China Mobile, has posted a 28% rise in 2004 second-half net profit to CNY23.2 billion (USD2.8 billion). Full year net profit rose from CNY35.6 billion in 2003 to CNY42.0 billion last year, while annual turnover increased 21.3% to CNY192.4 billion. Although the rise in sales and profits beat most analysts’ expectations, there are signs that growth in the Chinese mobile market is slowing. China Mobile’s average revenue per user fell to CNY90 per month in the second half of 2004 from CNY93 a year earlier as it signs more and more low-end subscribers. EBITDA profit margins were also down, from 58.2% to 55.7%. The difficult market conditions have worried investors, with the telco’s share price slipping more than 5% this year.

China Mobile signed up 38.179 million net new customers in 2004 and ended the year with 204.292 million subscribers. Rival operator China Unicom had 112.081 million subscribers at the same date. Both companies are preparing for the introduction of 3G services, with licences due to be awarded this year. There has been a great deal of speculation that the Chinese government is preparing to shake up the country’s telecoms markets to ensure that 3G investments do not overlap too much, possibly merging mobile operators with fixed line companies to create a smaller number of full service providers.