China Mobile 1H net up 4.2%, names new CEO
China Mobile Ltd., the world’s biggest mobile operator by subscribers, reported Thursday a small profit growth for the first half as competition intensified and it added low-income subscribers from rural areas.The mobile giant also named 51-year-old Executive Director Li Yue as its chief executive, replacing Wang Jianzhou. Wang, 61-years old, will remain as chairman and executive director.
The management reshuffle enables the company to have better corporate governance of separating the roles of chairman and chief executive, China Mobile said. Li’s appointment didn’t come as a surprise–since Wang turned 60 in December 2008, industry watchers widely expected Li would replace Wang as chief executive because top officials in mainland China usually retire at that age.
Earnings growth momentum for China Mobile has
been slowing because of increasing competition from rivals China Unicom Ltd. and China Telecom Corp. Higher marketing and depreciation expenses for its third-generation mobile services are also likely to continue to weigh on its profitability this year.
For the six months ended June 30, China Mobile reported net profit rose to CNY57.64 billion ($8.49 billion) from CNY55.33 billion a year earlier, beating analysts’ expectations of CNY56.29 billion. Revenue rose 7.9% to CNY229.82 billion from CNY212.91 billion. Average revenue per user–a key industry barometer to determine the long-term growth rate of telecom firms–slipped to CNY72 from CNY75 a year earlier.
Li said the company’s ARPU is stabilizing and China Mobile won’t compete on price to gain market share in the second half of the year.
“Despite rising competition, we are confident that our net profit will continue to grow as growth in valued-added services such as mobile reading and music outpace the decline in voice tariff,” Li said at a press conference.
Wang said China Mobile is still growing as it is adding 4 million to 5 million new mobile subscribers a month.
After the commercial launch of its 3G mobile service in January 2009, China Mobile has been striving to improve its network coverage and handset quality to boost the number of 3G subscribers.
China Mobile said Thursday the company still sees vast growth potential in the Chinese market, driven by rising rural income and urbanization. Wang said the company aims to increase the penetration level for mobile Internet services such as mobile reading, video and games and it is expanding into the Internet search-engine business. China Mobile’s parent signed on Aug. 12 a framework agreement with state-run Xinhua News Agency to launch a media and search-engine joint venture.
Despite its ample cash reserve of CNY282.65 billion at the end of June, Wang said the company has no plans to pay a special dividend this year and it plans to maintain its full-year dividend payout ratio at 43%.
China Mobile recommended a first-half dividend of HK$1.417, up from HK$1.346 a year earlier
“We have to reserve cash for network investments and telecom investment opportunities,” said Wang.
Apart from organic growth, China Mobile is also keen on overseas expansion.
China Mobile said in March it plans to buy a 20% stake in Shanghai Pudong Development Bank Co. for CNY39.80 billion as the mobile operator seeks to diversify into mobile financial services to boost its revenue. China Mobile joins telecommunications operators in Japan and South Korea, which already have agreements with banks to offer payment services via cellphones.
However, China Mobile’s plan to invest NT$17.7 billion in Far EasTone Communications Co. remains in limbo as Taiwan bars Chinese investment in the island’s phone-services providers.
Wang also said the mobile carrier hasn’t reached deal with Apple Inc. to offer the iPhone but it is still interested in selling a homegrown 3G version of the iPhone and iPad tablet computer.
source: total telecom
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