China Mobile 2007 net jumps 32% on user growth
China Mobile (Hong Kong) Ltd. reported Wednesday a bigger-than-expected 32% increase in 2007 net profit on a robust increase in subscribers and strong growth in revenue from value-added services.
China's largest mobile operator by subscribers reported a net profit of CNY87.10 billion (US$12.32 billion) for the 12 months ended Dec. 31, up from CNY66.03 billion in 2006.
Its earnings were higher than the average CNY84.40 billion forecast of 12 analysts surveyed earlier by Dow Jones Newswires.
"The continued rapid growth in China's economy, rising consumer purchasing power and the development of the rural economy is driving tremendous demand for communications and information services," Chairman and Chief Executive Wang Jianzhou in a statement.
China Mobile said it expects its capital expenditure this year to be CNY127.2 billion, compared with CNY105.1 billion last year. It said it would focus capital spending on the development of value-added businesses and network maintenance.
The company's revenue rose 21% last year to CNY356.96 billion from CNY295.36 billion in 2006.
It said its subscribers totaled 369.34 million at the end of last year, up 23% from 301.23 million at the end of 2006.
Revenue from its value-added business grew 32% to CNY91.61 billion from CNY69.31 billion. This accounted for 26% of the company's total revenue, 2.2 percentage points higher than in the year-earlier period.
Value-added services include mobile music, news and information services and instant messaging.
Average revenue per user slipped to CNY89 last year from CNY90 in 2006.
"I expect the ARPU will continue to decline in the future mainly because voice tariffs will fall further and because of an increase in rural users," said Wang during a press briefing in Hong Kong.
Wang said nearly half of the new subscribers last year came from rural parts of the country, which have a lower ARPU, as mobile penetration rates in cities such as Shanghai and Beijing are already high.
China Mobile reiterated that it plans to list yuan-denominated A-shares in mainland China, and that its parent company plans to sell some of the shares it owns in the unit in the offering.
But Wang said the company doesn't have a timetable yet. He said the company is cash-rich, so it doesn't need to raise a large amount of funds from the offering.
He also said the company hasn't received a timetable from the government on the long-awaited restructuring of China's telecommunications industry.
The announcement of the restructuring plan would benefit the telecommunications market as it would eliminate uncertainty and utilize resources more efficiently, he said.
China is expected to restructure the country's six major telecommunications operators into three integrated mobile and fixed-line services providers through mergers and acquisitions.
DBS Vickers Securities analyst Steven Liu said the company's net profit was 5.1% above his forecast.
"The satisfactory results suggest that China Mobile is benefiting from greater-than-expected economies of scale," he said, adding that these came in depreciation, selling and administrative expenses.
The company declared a final dividend of HK$1.16 a share, up from HK$0.763 a year earlier, and said it plans to maintain a dividend payout ratio of 43% this year.
It also declared a special dividend of HK$0.016 a share, down from HK$0.069 in the previous year.