Subscriber growth boosts China Mobile

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China Mobile, the country's biggest wireless operator, reported sharp jumps in first-half profit and revenue thanks to strong subscriber growth. The numbers, better than expected, sent its shares up 7.3 per cent to a four-year high.

The company expected second-half performance to continue to be robust as demand for mobile services remained strong while competition settled down. China Mobile on Wednesday said net profit for the first six months of this year rose 27.7 per cent to Rmb24bn ($2.96bn), compared with Rmb18.8bn in the same period last year. Revenue jumped 32.5 per cent from Rmb86.4bn a year ago to Rmb114.5bn.

The company, which now serves about two in three mobile users in China, added 19.4m subscribers in the first six months of 2005 after completing the acquisition of 10 networks from its state-owned parent last year.

Average revenue per user fell slightly from Rmb92 a year earlier to Rmb90, as operators dealt with fierce price competition, which has been hurting profitability. Wang Jianzhou, chairman and chief executive, said the company would face “great opportunities and challenges at the same time” due to more rational competition and the issuing of third-generation mobile phone licences in China.

He said he did not know when China would issue those licences, although the company was already “actively” preparing for the launch and could roll out its services in major cities in six to 12 months after approval. Mr Wang said China Mobile, which currently uses GSM technology, would prefer the WCDMA standard for its 3G services. It plans to begin coverage in major coastal cities in the initial roll-out, while allowing 2G and 3G networks to co-exist for “a considerable period of time”. China Mobile's shares finished at HK$34.45 in Hong Kong on Wednesday, the highest since August 2001.

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