China Mobile, the world's largest telecom operator by subscribers, is losing steam as a maturing market and intensifying competition eat into its profits.
The company raked in a net profit of 29.6 billion yuan ($4.4 billion) from July to September, representing a modest growth of 3.5 percent year on year, down from 6.8 percent in the second quarter.
Revenues grew 7.8 percent to 352.6 billion yuan ($52.6 billion) in the first nine months as the company added 41.47 million new customers, bringing the total customer base to 569 million.
"We are experiencing a slowdown in growth because of the widening penetration of mobile services and an increasingly competitive market," said a China Mobile statement. "In addition, most of our new users live in the countryside, where customer spending is typically lower."
The average revenue per user—a key barometer for long-term growth prospects—slipped to 72 yuan ($10.6) in the first three quarters from 75 yuan ($11) a year earlier.
In an attempt to keep its dominant position, the company plans to increase spending on handset subsidies this year to 15.5 billion yuan ($2.3 billion) from 11.7 billion yuan ($1.7 billion) in 2009. This has helped consolidate the customer foundation, but has also undermined profit margins, said Jin Tang, an analyst at the Shanghai-headquartered Shenyin & Wanguo Securities Co. Ltd. |