China Mobile profits take a hit, despite strong 4G expansion

21 Oct 2014

China Mobile has booked a 3.9% year-on-year increase in turnover for the nine months ended 30 September 2014, with the group noting that it has experienced a further slowdown in revenue growth due to the transformation from business tax to value-added tax and adjustments to interconnection settlement standards. Mobile continued to see a decline in its voice and SMS business, which declined by 0.3% and 20.2% respectively, the latter heavily impacted by the increasing popularity of over-the-top (OTT) messaging apps such as WhatsApp and Tencent’s WeChat. Data usage, however, increased by 98.6% for the first three quarters of 2014 compared to the same period of 2013 and continues to see rapid expansion, with mobile data traffic increasing 27.3% quarter-on-quarter from 236.4 billion MB in Q2 2014 to 300.9 billion MB in Q3. Mobile data growth has been fuelled by Mobile’s heavy investment and first-mover advantage in the 4G segment, with the cellco claiming 40.95 million Time Division Long Term Evolution (TD-LTE) users at the end of September, compared to 13.94 million at 30 June 2014. 3G expansion has slowed as a result, but continues to see strong growth, and Mobile added 5.94 million net new 3G users in the third quarter. The group registered operating revenue of CNY481.24 billion for the period, compared to CNY463.01 billion in 3Q13. EBITDA dipped by 5.0%, however, to CNY176.34 billion, with EBITDA margin slipping to 36.6% from 40.1%. Meanwhile, net profits slumped by 9.7% to CNY82.60 billion.

China, China Mobile