China Mobile Posts First Profits Decline in 14 Years
Published on: 20th Mar 2014
By: Ian Mansfield
China Mobile the world's largest mobile network operator by subscriber base has reported its first drop in annual profits for 14 years as the company was hurt by the dual pressures of OTT services and 4G deployments.
The company said that full year profits fells by 16 percent to RMB 121.8 billion, its first decline since 1999. Operating revenue however rose by 8.3 percent to RMB630.2 billion.
Although overal data use rose, the company posted a 6.5% decline in SMS and MMS revenues as the company was hurt by the rising use of OTT services.
The company is raising capital spending on its network this year by 22 percent to RMB 225 billion (USD36.3 billion) of which a third will go on expanding its 4G network. Capital spending is not expected to decline until 2016, when most of the upgrades have been completed.
The company also said that it intends to have 50 million 4G users by the end of this year, although with sales of at least 100 million 4G-capable phones, it is looking to next year for its big subscriber push as customers migrate to the 4G network.
"The exponential growth in mobile Internet...brought forward fiercer competition across the industry and an era driven by data traffic operation," China Mobile's Chairman Xi Guohua. said in the statement.
The company however also hinted that sales of Apple's iPhone had proven to be less popular than expected. The company only started selling the Apple device a few months ago after years of delay, and there was some uncertainty if it would meet its sales expectations.
China Mobile ended the year with 776 million customers, of which 28 percent are using its 3G network, and the rest are on the GSM service. A small number use the 4G service.