China Mobile to boost capex by 49% to $31b

Fiona Chau
15 Mar 2013
Daily News

China Mobile will lift its spending by as much as 49.3% this year to 190.2 billion yuan ($30.6 billion), from 127.4 billion yuan in 2012.

The proposed increase in capex comes as the mobile giant prepares for the rollout of 4G services and amid intensified competition from rivals and OTT players, which have been eroding the operator’s voice and SMS revenues.

China Mobile said Tuesday it will continue building its mobile networks and enhance transmission network capability as part of its strategic transformation.

About 52% or 41.5 billion yuan of its mobile network spending will be on building “commercial-ready” TD-LTE networks, while the remaining being for 2G networks and Wi-Fi, chairman Xi Guohua told a media briefing in Hong Kong yesterday.

But financial pundits expect this hefty capex budget to drag the company to its first decline in full-year profit since a writedown in 1999, according toBloomberg.

With the government not set to allocate LTE licenses until later this year at the earliest, China's LTE spending will probably not generate revenue this year. As a result, analysts on average expect the operator to report a roughly 2% decline in net profit for 2013.

China Mobile last year carried out large-scale TD-LTE trials in 15 cities in China with about 20,000 base stations, and has built 4G networks to a pre-commercial standard in Hangzhou, Guangzhou and Shenzhen.

The company plans to expand commercial-ready TD-LTE networks to 100 cities and add more than 200,000 base stations this year, Xi noted.

He said China may issue licenses for commercial 4G services at around the end of this year.

The mobile giant has lagged behind its rivals China Telecom and China Unicom in 3G competition and is hoping its 4G network could help lure more high-end mobile subscribers.

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