China Mobile Posts Profits Decline As OTT Eats into Revenues
Published on: 22nd Apr 2014
By: Ian Mansfield
China Mobile has posted a sharp drop in profits as the country's largest mobile network continues to be hammered by the effect of OTT services.
The company reported that its first-quarter profits fell by 9.4 percent to RMB 25.24 billion (USD4 billion), which was below market expectations.
However, revenues rose by 7.8 percent to RMB155 billion (USD24.8 billion).
"In the first quarter of 2014, the group experienced severe challenges in its operations and development as the impact of mobile Internet on the traditional communications business became more evident, the traditional communications market became more saturated and horizontal competition among operators in the industry became increasingly fierce," China Mobile's Chairman Xi Guohua said.
China Mobile saw its average revenue per user decline to RMB62 per month from RMB68 per month a year ago. This was put down to the declining use of text messaging and voice services as users switch to free OTT platforms.
The company is also being hit by the high costs of upgrading its network for 4G services and increased smartphone handset subsidies.
The mobile network added 14 million new customers in the three months to the end of March, taking its total customer base to 781 million. Of that, 2.8 million are already signed up to the LTE network.