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Aug. 19, 2007

As more and more users switch to mobile phones, China Mobile has posted a better-than-expected 28 percent increase in its quarterly earnings.

These news came despite the carrier sacrificing profit margins in order to bring on poorer rural customers.

Both China Mobile and its competitor China Unicom have adopted this rural customer approach scenario to help with subscriber growth.

For its second quarter, China Mobile posted net profits of 20.34 billion yuan ($2.68 billion) versus 15.84 billion yuan in 2006, beating an average forecast of 19.195 billion yuan.

Full-year net profit is expected to rise 18% to 77.9 billion yuan.

The longer-term prospects for China's mobile operators depend on when the country's home-grown 3G technology – TD-SCDMA – is sucessfully implemented.

Licenses were expected to be awarded in advance of the 2008 Olympics scheduled to take place in Beijing.

However, some industry analysts, including UBS analyst Jinjin Wang, are questioning whether that will indeed happen as time continues to slip by, and that no progress has been done to date.

But after posting the positive quarterly results, China Mobile's Chairman and CEO Wang Jianzhou said he was raising the company's 2007 capital expenditure by 10 percent, possibly signaling optimism of the upcoming licensing.

China Mobile's parent company has been testing TD-SCDMA technology in eight cities in China, including Bejing, Shanghai and Shenzhen.

According to Jianzhou, the trials should wrap up by October this year.

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Source: Wireless Week