China Mobile Profit Rises 7%, Beats Estimate on Data Traffic
August 18, 2011, 5:46 AM EDTBy Bloomberg News
(Adds analyst’s comments in fourth paragraph.)
Aug. 18 (Bloomberg) -- China Mobile Ltd., the world’s biggest phone carrier by users, posted a 7 percent gain in second-quarter profit that beat analysts’ estimates after data traffic rose on demand for smartphone games and videos.
Net income rose to 34.4 billion yuan ($5.4 billion) from 32.2 billion yuan a year earlier, according to figures derived from first-half earnings reported to the Hong Kong stock exchange today. The company was projected to post profit of 33.2 billion yuan according to the average of four analysts’ estimates compiled by Bloomberg. Sales rose 9.3 percent to 131.9 billion yuan.
China Mobile Chairman Wang Jianzhou is using popular titles such as Rovio Entertainment Oy’s “Angry Birds” to attract customers, helping the carrier maintain its lead over China Unicom (Hong Kong) Ltd. in subscribers. China Mobile’s Mobile Market store had 86 million customers who recorded 260 million downloads in the first half of this year, the company said today.
“Data service is definitely driving the growth,” Paul Wuh, head of Internet research at Samsung Securities Co. in Hong Kong, said in a phone interview today. “Data as a percentage of average revenue per user is increasing, which is a positive because data tends to have better margins.”
Second-quarter sales were seen at 128.8 billion yuan, the average of six analysts’ estimates.
Apple Deal
China Mobile fell 0.6 percent to close at HK$75.15 in Hong Kong trading. The stock has dropped 2.7 percent this year while the benchmark Hang Seng Index has dropped 13 percent.
China Unicom, the nation’s only carrier that now offers Apple Inc.’s iPhone with a service contract, has failed to use that advantage to surpass China Mobile in 3G users.
China Mobile’s 3G network is incompatible with the iPhone, yet the company attracted 7.4 million iPhone users to its second-generation network, many of whom access the Web over its Wi-Fi network, Wang said at a press conference in Hong Kong.
Wang wants a deal with Apple to offer the iPhone “as soon as possible,” he said at the press conference. Wang, who said he meet with Apple Inc. Chief Operating Officer Tim Cook in China, said he couldn’t give a time frame for when there could be an agreement with Apple.
Apple may make a fourth-generation iPhone when the company rolls out its TD-LTE network, and indicated the two companies may work on “more current’ products as well, he said without giving details.
Data Usage
China Mobile’s subscribers with iPhones make use of twice as much data each month as the company’s other smartphone subscribers, and three times the company’s average, Samsung’s Wuh said.
China Mobile had a total of 616.8 million mobile-phone subscribers at the end of June after adding more than 5 million subscribers every month this year. The total includes 35 million 3G users, the company said last month.
That exceeds China Unicom’s 181.6 million mobile customers and the 24 million users of its 3G service at the end of June. China Telecom Corp. was in third place with 108.4 million mobile subscribers in the same period.
China Unicom and China Telecom will report earnings next week.
China Mobile’s wireless data sales jumped 43 percent to 19.3 billion yuan in the first six months of this year, and accounted for 7.7 percent of operating revenue in the period, the company said today.
‘‘Obviously the data service section is stronger than we expected,” Jim Tang, an analyst at Shenyin Wanguo Securities Co. in Shanghai, said in an interview today. “Data demand is there.”
--Edmond Lococo, with assistance from Mark Lee in Hong Kong. Editor: Nicholas Wadhams, Anand Krishnamoorthy.
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
