China Mobile Users Pass 600 Million, Fueled by Rural Areas
April 21, 2011, 4:26 AM EDTBy Bloomberg News
(Updates with closing share price in second-to-last paragraph.)
April 21 (Bloomberg) -- China Mobile Ltd. became the world’s first phone company to exceed 600 million subscribers as it signed up more rural customers in the first quarter.
China Mobile added 16.8 million subscribers in the first quarter, an almost 3 percent increase from the 584 million customers at the end of December, the company said yesterday.
With mobile devices now accounting for 75 percent of China’s 1.2 billion phone users, the Beijing-based carrier is getting most of its new additions from customers in the countryside who spend less on their monthly phone bills. As a result average revenue per user, or ARPU, for the three months ended March 31 dropped to 67 yuan ($10.3), from 76 yuan at the end of December, the company said yesterday.
“This subscriber number is pretty good,” said Jim Tang, an analyst at Shenyin Wanguo Securities Co. in Shanghai who rates the shares “neutral.” “It’s mostly low-end subscribers, which is why you see single-digit profit growth.”
First-quarter net income climbed 5.4 percent to 26.9 billion yuan, from 25.5 billion yuan a year earlier, China Mobile reported. Sales rose 8.3 percent to 118.2 billion yuan.
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.
‘Low Usage Customers’
“The new customers were mainly low usage customers,” Chairman Wang Jianzhou said yesterday. “ARPU and average revenue per minute of usage continued to decline.”
Wang aims to battle the decline in per-user revenue by expanding sales of value-added data services such as music downloads to high-end smartphone users.
China Mobile said 549 million customers made use of value- added services in the first quarter, and 476 million used its wireless music service. The value-added services were “the driving force” of sales growth in the first quarter, it said.
Wang 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 on 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.
‘Data Revenues’
China Unicom this week reported it added 9.6 million subscribers in the first quarter, taking its total to 320.9 million at the end of March.
“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.”
China Mobile fell 0.9 percent to HK$71.95 at the 4 p.m. close of trading in Hong Kong. The stock has fallen 6.8 percent this year.
China Unicom and China Telecom will report earnings next week.
--Edmond Lococo, Editors: Suresh Seshadri, Chua Kong Ho
To contact Bloomberg News staff for 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
