China Mobile profit down 9.4 percent

BEIJING (AP) -- China Mobile Ltd., the world's biggest phone carrier by number of subscribers, said Wednesday its quarterly profit declined 9.4 percent from a year earlier despite a rise in customer numbers as spending per account declined.

The state-owned carrier said it earned 25.2 billion yuan ($4.2 billion) in the three months ending March 31. Total revenue rose 7.8 percent to 154.8 billion yuan ($25.8 billion) but revenue and minutes of usage per user declined.

In a statement, the company said it experienced "severe challenges" due to the rapid evolution of mobile Internet and growing competitive pressure from other Chinese carriers.

China's three major state-owned phone carriers — China Mobile, China Telecom and China Unicom — have been squeezed by the expense of rolling out fourth-generation service.

China Mobile's results "were not pretty but could have been worse," said Barclays analysts in a report.

They cited growth in adoption of 3G and 4G service, which will drive sales of data services. China Mobile said data traffic grew 48.1 percent in the first quarter compared with a year earlier.

"The crucial issue, to our mind, is when this will start to drive profit growth again," said Barclays.

Beijing restructured its phone industry in 2008, reorganizing state-owned companies into three groups each with mobile and fixed-line assets in order to promote competition. That has been reflected in steadily narrowing profit margins for all the carriers.

China Mobile said it added 4.6 million new accounts in the quarter to raise the total to 781 million.

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China Mobile: www.chinamobileltd.com/en/global/home.php