China Mobile First-Quarter Profit Rises 5.4% on Data Sales
April 20, 2011, 5:39 AM EDTBy Bloomberg News
(Updates with sales in the second paragraph.)
April 20 (Bloomberg) -- China Mobile Ltd., the world’s biggest phone carrier by users, reported an 5.4 percent increase in first-quarter profit as sales were lifted by mobile Web users downloading music and games on smartphones.
Net income climbed to 26.9 billion yuan ($4.1 billion), from 25.5 billion yuan a year earlier, the carrier said in a statement to the Hong Kong Stock Exchange today. Sales rose 8.3 percent to 118.2 billion yuan.
Chairman Wang Jianzhou expects the data business will be a significant source of future revenue growth and plans to boost capital spending 6.5 percent this year to bolster services. China Mobile will spend as much as 132.4 billion yuan to invest in the network and add wireless hotspots as it aims to keep attracting smartphone users and help maintain its lead over China Unicom (Hong Kong) Ltd. and China Telecom Corp.
“It is data revenues that are increasing sharply,” Colin McCallum, an analyst with Credit Suisse Group AG in Hong Kong, wrote in an April 15 report. “This looks to be a very healthy ratio of revenue to volume, which China Mobile’s management has put down to a conscious strategy of avoiding unlimited data packages.”
Profit in the first quarter was projected at 26.8 billion yuan, on sales of 119 billion yuan, according to the median of four analysts’ estimates in a Bloomberg News survey.
3G Service
China Mobile rose 0.8 percent to HK$72.60 at the 4 p.m. close of trading in Hong Kong before the earnings announcement. The stock has fallen 6 percent this year.
China Mobile had a total of 584 million mobile-phone subscribers at the end of last year, including 20.7 million users of the high-speed, third-generation service that smartphones use to surf the Web, the company said in February.
That outpaced China Unicom’s 311.3 million total subscribers and 14.1 million users of its 3G service. China Telecom was in third place with 90.5 million total subscribers.
To continue attracting high-end data users, Wang said last month the company would boost subsidies for handsets by 15 percent to 17.5 billion yuan this year.
China Unicom and China Telecom will report earnings next week.
--Edmond Lococo. Editor: Suresh Seshadri, Chua Kong Ho.
To contact the Bloomberg News staff on this story: Edmond Lococo in Beijing at elococo@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
