Add to del.icio.us     Digg this

Aug. 21, 2009

The world's largest phone company by subscribers, China Mobile, says its first-half profit increased 1.4 percent from 2008's level as growth slowed a bit due to increased competition and the global recession.

Overall, profit growth dropped rapidly from 45 percent for the comparable period last year and 5.2 percent for the second half of 2008.

The company blamed China's economic slowdown, more intense competition and rising mobile phone penetration in China, which makes acquiring new customers more difficult.

Net profit for the 6 months ending June 30 was 55.3 billion yuan ($8.1 billion), the Beijing-based wireless carrier said. Revenues rose 8.9 percent to 212.9 billion yuan ($31 billion).

China Mobile's chairman Wang Jianzhou said in a statement "we believe the group's solid capital structure and financial strength will provide a solid foundation for sustainable future development."

The mobile service provider has benefited from explosive growth of wireless services in China, where many first-time customers opt for a mobile phone instead of fixed-line service.

However, China's regulators intervened in 2008 to revive competition by better restructuring the industry into 3 distinctive groups centered around China Mobile and rivals China Telecom Ltd. and China Unicom Ltd., each with fixed-line and mobile assets.

Nationally, the total number of China Mobile accounts rose by 35.8 million over the first six months of this year, raising the total to 493 million, the wireless carrier said.

The Chinese companies were awarded licenses for 3G service last December, a move that is expected to kick-start new revenue growth as mobile users gain access to video and other offerings supported by the new system.

It still isn't clear for now if China Mobile is gearing up to soon provide 4G and LTE service to its subscribers.

Wireless industry analysts everywhere are now expecting the overall level of competition to increase in China, as rivals all line up to get a bigger share of the rapidly growing Chinese market.

After China, another rapidly growing market is India, although India has been hit harder by the economic downturn than China. Still, some are now predicting that mobile sales growth should be set to resume in India sometime next year.

Add to del.icio.us     Digg this

    This article was featured on Business 5.0 and on Tech Blog.

Source: China Mobile.