China Mobile Ltd, the world's biggest mobile operator by subscribers, posted a 1.3 percent gain in third-quarter net profit, beating estimates slightly after luring new users to its network with cheap handsets and cutting phone call rates.
China Mobile, which has more than two times as many subscribers as the population of the United States, earned 31.1 billion yuan ($4.9 billion) in July-to-September, according to calculations by Reuters based on nine-month profit data released on Monday.
That compares with an average forecast of 30.5 billion yuan in a Reuters poll of nine analysts and a net profit of 30.7 billion yuan a year earlier.
China Mobile, by offering handset deals and ultra-cheap voice plans, has built up a vast rural subscriber base. But hefty handset subsidies and a lack of premium customers on its 3G data network, which does not support older models of Apple Inc's iPhones, have kept its net profit growth in single digits in the past three years.
Earlier this year, China Mobile increased its full-year handset subsidies to 26 billion yuan from the originally planned 20 billion yuan, helping to expand its subscriber base to almost 700 million. But the higher subsidies have in turn weighed on its average revenue per user (ARPU).
"The increased subsidy expenses will hammer the company's EBITDA margin while its effect of lifting 3G revenue and ARPU may still need time to materialise," UOB Kay Hian said in a report before the release of the earnings report.
China Mobile spent the equivalent of 4.5 percent of its first-half revenues on handset subsidies in the first six months, company data showed.
That is less than the 8.3 percent for China Telecom Corp Ltd, which started selling iPhones earlier this year in the hopes of securing more data subscribers.
China Unicom (Hong Kong) Ltd, which started marketing iPhones three years ago, spent the least as a percent of its revenues, at around 2.9 percent.
Shares in China Mobile have has risen more than 12.6 percent this year, better than China Telecom's 10.7 percent gain and China Unicom's 16.3 percent drop.
China Mobile shares ended 1.1 percent higher, before the earnings announcement.
The company had a net profit of 93.31 billion yuan in the first nine months compared with 91.98 billion yuan a year earlier, the company said after the Hong Kong market close.
Bloomberg
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263 Registration Number: 130349 
