Yesterday China Mobile reported its first drop in net profit since 1999 because of rising competition from rivals China Telecom and China Unicom and its weak 3G performance.
Analysts had previously forecast a net profit of 31.4 billion yuan for the period. The world’s biggest Telco posted a net profit of 30.1 billion yuan in the second quarter, compared with 30.6 billion yuan a year ago.
China Mobile said in a statement “A macro-economic slowdown, a rising mobile communications penetration rate and changes in the competitive environment of the telecommunications industry in China have posed challenges to the development of the business in the first half.”
China Mobile’s monthly average revenue per user, a key index of the industry to monitor a telco’s profitability, was 75 yuan in the first half, about 10 percent less than a year ago.China Mobile added 35.87 million users in the first half to total 493 million by the end of June. The telco had 957,000 3G users since it started a trial 3G service in April.
The company said China Mobile took 66% of the total new additional mobile users, compared with 85 percent a year ago, due to the “changed competitive landscape, in the first half.
Wu Wenzhao, a telecommunications analyst of Analysys International said “The gap between China Mobile and other rivals will become narrow but it will still dominate the market for about two years.”