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China Mobile sees profit surge

By Lillian Liu and Hui Ching Hoo (China Daily)
Updated: 2007-03-22 09:09

China Mobile, the world's largest mobile phone operator by users, yesterday posted a 23 percent jump in net profit for 2006, benefiting from a robust subscriber growth and value-added business as well as improved operations in the mainland market.

China Mobile's net profit for 2006 soared to 66 billion yuan from 53.5 billion yuan in 2005, beating analysts' expectation of 65 billion yuan. Revenue stood at 295.4 billion yuan, up 21.5 percent from 243 billion in 2005.

The Hong Kong-headquartered China Mobile registered over 300 million subscribers in 2006, 22 percent higher than the year before.

"The group's subscriber base continued to grow rapidly and voice usage volume achieved a notable increase," said Wang Jianzhou, chairman of China Mobile.

Revenue attributable to its value-added businesses grew 38.1 percent year-on-year to 69.3 billion yuan. It accounted for 23.5 percent of the group's total operating revenue in the year, 2.9 percentage points higher than in 2005, Wang said.

China Mobile's value-added services such as SMS (short messaging service) recorded robust growth last year, with messages reaching nearly 1 billion a day, he said.

Wang said the group actively explored market opportunities and developed new customers, with particular focus on the development of the rural mobile telecommunications market in China.

Over half of China Mobile's new subscribers last year were from rural areas, a new market expected to become a growth driver for the company.

The country's top cellphone company has been aggressively seeking network expansions in rural areas as big-city markets become saturated. However, the move arouses analysts' concern that China Mobile's exploration of rural markets will add pressures on the profit margin because the less affluent users will be more cautious with their phone bills than their urban counterparts.

But Lai Wai Shing, a Hong Kong-based independent stock analyst, said he is optimistic about China Mobile's outlook because the enormous amount of users will translate into healthy revenue.

Fulbright Securities General Manager Francis Lun said the result fell slightly short of market expectations, but he thought China Mobile would still be ahead of the other mainland telecommunication operators because of its wide market coverage.

The total usage volume topped 1.25 trillion minutes at the end of 2006, the company said in a statement. The monthly usage per subscriber was 381 minutes and average revenue per user per month was 90 yuan.

China Securities Regulatory Commission Vice-Chairman Fan Fuchun had earlier told reporters on the sidelines of the annual session of the National Committee of the CPPCC that China Mobile could float shares on the Shanghai bourse this year.

With expectations of a good result, China Mobile shares surged for five days in a row. It settled at HK$73.5 yesterday.

Its shares rose 22 percent in the fourth quarter, compared with Unicom's 48 percent gain and a 14 percent rally by the benchmark Hang Seng Index.