China Mobile 9-month profit falls 10%

21 Oct 2014
Daily News

China Mobile has reported a 9.7% decline in profit for the first nine months of 2014, as its quarterly profit fell for the fifth straight quarter.

Total revenue for the first nine months of the year grew 3.9% to 481.2 billion yuan ($78.3 million). But data substitution led to a 0.3% decline in voice usage and 20.2% fall in SMS usage. Increased spending on the operator's 4G rollouts also impacted earnings.

But the spending is starting to pay off. By the end of the third quarter, 4G customers accounted for just under 41 million of the operator's 799 million customers. Mobile data traffic also nearly doubled year-on-year.

For Q3 profit fell for a fifth-straight quarter, declining 12% to 24.9 billion yuan. Revenue fell 2% to 156.6 billion yuan.

Blomberg notes that rising costs associated with China Mobile's 4G rollout have led analysts to predict a 10% decline in net income for the whole of 2014. This would be the biggest decline since 1990.

The Chinese government has instructed the nation's three state-owned operators – China Mobile, China Telecom and China Unicom – to cut back on subsidy spending and marketing costs to improve profitability.

Last month, China Mobile revealed it will abolish $2 billion in subsidy spending as part of this initiative.

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