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China Mobile H1 profit up 1.5 percent, warns of competition

World's largest telco by subscriber base hit US$10.3 billion profit in the first half of the year. It warns of intensifying competition from OTT players and the "substitution effect" from the Internet business.
Written by Ellyne Phneah, Contributor

China Mobile's first half net profit rose 1.5 percent, to 63.1 billion yuan (US$10.3 billion) from 62.2 billion yuan (US$10.1 billion) the previous year.

According to earnings released Thursday, the telco with more than 700 million mobile subscribers, attributed the net profit increase for the first six months ending June 30, 2013, to the intensifying competition especially from the Internet business.

"We also face a number of challenges including slower macro economic growth, more complex competition in the ICT industry, greater impact from OTT products, and more intense horizontal competition due to the continued increase in mobile penetration," Xi Guohua, chairman of China Mobile, said in a statement.

He added the challenges posed a threat to the group's market position and an increasing downward pressure on its development.

Moving forward, Xi said he expects continued competition in the communications market, but noted China Mobile will continue looking for investment opportunities in an active but cautious manner and striving to grow its presence in a braoder market.

The telco also saw 303.1 billion yuan (US$49.6 billion) in revenue from 266.53 billion yuan (US$43.6 billion) a year ago. Its revenue growth was helped in the first half by strong sales of smartphones using its TD-SCDMA mobile standard, Xi said, adding the company sold 66 million handsets in the first half of this year.

In its Q2 results released Thursday, China Mobile's net income rose 2.5 percent to 35.2 billion yuan (US$5.8 billion) from 34.4 billion yuan a year earlier, while sales rose 15 percent to 168.4 billion yuan (US$27.5 billion) in the quarter, Bloomberg reported. In comparison, Q1 profit released in April only rose 0.3 percent to 27.8 billion yuan (US$4.5 billion), with sales rising 5.7 percent to 134.7 billion yuan (US$21.7 billion).

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