China Mobile blames rivals, OTT products for slip in profits

22 Oct 2013

China Mobile, the world’s largest cellco by subscribers, has attributed a decline in EBITDA and net profits to increasing competition from local wireless providers and over-the-top (OTT) products, after registering a 1.9% slide in net profits for the first nine months of 2013. The cellco saw revenues increase by 9.4% year-on-year to CNY463.008 billion (USD75.554 billion) for the period under review, buoyed by strong subscriber growth, particularly in the 3G segment. The influx of low-usage customers has led to an increase in operating costs, whilst the company has invested heavily in driving the sales of handsets compatible with its home grown 3G platform TD-SCDMA, and the deployment of 4G Time Division Long Term Evolution (TD-LTE) networks. As a result, EBITDA dipped by 0.9% to CNY185.672 billion and net profits fell 1.9% to CNY91.495 billion.

China Mobile’s subscriber base increased by 8.1% y-o-y to 755.19 million as at end-September 2013, of which 169.5 million were 3G users, more than double the 75.6 million reported a year earlier. Increases in data usage fell slightly short of that expansion, as the proportion of low-use subscribers on the network grew: data use for the three months ended 30 September 2013 was 459.6 billion MB, up 94.1% from 236.8 billion MB a year earlier. Counteracting the impact of OTT services on its traditional business, China Mobile employed precision marketing to drive up voice usage, which edged up to 3.220 trillion minutes in the nine-month period, from 3.122 trillion minutes a year earlier.

China, China Mobile