China Mobile Back in Profit-Growth Column on Strong 4G Gains

(Beijing) — China Mobile Ltd., the world’s biggest wireless carrier, said it returned to profit growth in the first quarter of 2017, as it posted strong gains in data usage after aggressively promoting its high-speed 4G service.

China’s dominant mobile service provider said its profit rose 3.7% to 24.8 billion yuan ($3.6 billion), reversing an 11% profit decline in last year’s final quarter. Quarterly revenue rose by a similar 3.7% to 184 billion yuan, according to its report released on Thursday after markets closed.

China Mobile shares were flat when Friday trading began for its Hong Kong-listed shares.

China Mobile and its peers are in the midst of a major transformation as revenue from their older voice and text messaging services declines, and data services that power applications like video streaming become their major new growth engine. At the same time, China’s broader mobile market is rapidly maturing as most of the nation’s more than 1.3 billion people now have service, meaning upgrades to newer 4G plans are a primary growth driver.

“The group is at a critical stage of transformation of its development, with a relatively high demand for resources from various fronts including the growth of 4G business, the development of wireline broadband, the expansion of the corporate customer market as well as the deployment of emerging business,” China Mobile said in a statement with its results. “The group will spare no effort in enhancing cost efficiency across its operations and promoting more efficient use of resources.”

China Mobile said it had 856 million customers at the end of March, up less than 1% from the end of last year. But its 4G subscribers grew at a much-faster 6% rate to 568 million, as the company spent heavily on promotions to encourage people to upgrade their service plans.

As a result of such promotions and upgrades, China Mobile said its mobile data traffic doubled in the first quarter from a year earlier. The company also posted strong 10% subscriber growth for its newer fixed-line broadband service, with 85.7 million users at the end of March, following its recent arrival to a business previously dominated by its two main rivals, China Unicom (Hong Kong) Ltd. and China Telecom Corp. Ltd.

Contact reporter Yang Ge (geyang@caixin.com)