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China Mobile Q1 flat as costs offset customer growth

World’s biggest wireless carrier by subscribers sees net profit up 0.3 percent to 27.8 billion yuan (US$4.4 billion) as rising cost of handset subsidies erode gains from its aggressive 3G user acquisition.
Written by Ryan Huang, Contributor

China Mobile has posted largely flat growth for its first quarter net profit as higher costs from handset subsidies eroded the gains from its aggressive 3G user acquisition.


According to earnings released Monday, net profit rose up 0.3 percent to 27.9 billion yuan (US$4.5 billion). This was on the back of sales rising 5.7 percent to 134.7 billion yuan (US$21.7 billion). The company was expected to report sales of 134.1 billion yuan, according to estimates in a Bloomberg survey.

Xi Guohua, chairman of China Mobile, said in the statement the company in the first quarter of 2013 faced various difficulties and challenges arising from the increasing mobile penetration rate, unprecedentedly intense market competition and more significant substitution of its traditional communication business by new technologies and new businesses.

However, he noted China Mobile was optimistic over the favourable growth of its data business, particularly the wireless data traffic business, which played an important role in stabilizing the company's growth.

The carrier has been reporting roughly flat to single-digit percentage rises for its quarterly net profit over the past year, according to Reuters.

The telco has over 700 million mobile subscribers. It is also the only operator in China without a contract to carry Apple's iPhones due to its incompatible proprietary TD-SCDMA network, noted the news wire.

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