People enter a store to pay their China Mobile bills. The company's chairman, Wang Jianzhou, said increasing mobile penetration in China will further intensify competition in the telecommunications sector. Nelson Ching / Bloomberg

Company cites intensifying competition after reporting net profit growth of 3.9% to 119.6b yuan

China Mobile Ltd, the world's biggest mobile carrier by number of users, plans to boost its capital expenditure (capex) to 132.4 billion yuan in 2011 from 124.3 billion yuan in the previous year after its net profit grew 3.9 percent in 2010.

The company said intensifying competition in the mobile segment of the market was the reason for the increase in its capex.

The past year saw the company's net profit rise 3.9 percent to 119.64 billion yuan from a year ago, as its operating revenue rose 7.3 percent year-on-year to 485.23 billion yuan on surging data traffic and as it signed up more customers.

The company's earnings per share also rose 3.9 percent to 5.96 yuan. The board proposed a final dividend of HK$1.597 per share, taking the full-year dividend to HK$3.014 per share compared with HK$2.804 per share in 2009. The payout ratio remained unchanged at 43 percent.

The company saw the net addition of 61.73 million users in the past year, taking its customer base to 584 million. Voice usage continued to grow and totaled 3,461.62 billion minutes, up 18.6 percent from the previous year. Meanwhile, average minutes of usage per user per month stood at 521 minutes, 5.4 percent more compared with 2009.

But the downtrend of China Mobile's average revenue per user per month (ARPU) - a key industry barometer among telecoms firms - was not stopped, falling to 73 yuan in 2010 from 77 yuan a year earlier. In 2008, its ARPU was 83 yuan.

"Increasing mobile penetration in China will further intensify competition in the telecommunications sector," Chairman Wang Jianzhou told a media conference Wednesday.

To prevent a further slide in ARPU, the company will particularly focus on the development of data services, which not only are "in hot demand" but also "promise higher returns", said Li Yue, China Mobile's CEO.

The company plans capital expenditure of 132.4 billion yuan for 2011, up from 124.2 billion yuan last year. A large part of that will be used to enhance data services, according to Li.

China Mobile's Internet access usage soared 1.12 times in 2010, generating revenue of 30.53 billion yuan, 49.4 percent more than 2009. Driven by the fast-growing mobile Internet usage, it said its value-added business grew to account for 31.2 percent of the company's revenue in 2010 from 29.1 percent previously. Looking ahead, the company expects a boost to its revenue as smart phones proliferate and people download more videos, music and the like on their mobile devices, Li noted.

"There will be significant revenue growth opportunities derived from rapid growth in mobile data traffic," said Wang.

The company has set targets to add 25 million 3G users in 2011. As of end-2010, the company had 20.7 million people subscribe to its 3G network, compared with China Unicom's 14.06 million and China Telecom's 12.3 million.

China Mobile shares fell 1.66 percent to HK$71.05 at the close of Wednesday trading in Hong Kong.

China Daily

(HK Edition 03/17/2011 page3)