22 March 2004

China Mobile (Hong Kong) added a record 2.48 million subscribers in January 2004, helped by short-term additions during the Lunar New Year holiday, while rival China Unicom's numbers slowed as it may have cut promotions to improve profitability.

China Mobile said the new subscribers to its GSM (global system for mobile communication) service represented an 8.8 per cent rise from December.

China Unicom said its GSM and the newer CDMA (code division multiple access) services added a total of 2.11 million users last month. Stripping out nine newly acquired provincial networks from the parent in November, it added 1.86 million subscribers - the smallest increase in five months.

``We believe the slower growth in CDMA subscribers can be attributed to management's focus on the profitability of the CDMA operation, and to some extent the Lunar New Year holiday'' as it relied more on direct sales to corporate customers, said Daiwa Institute of Research analyst Jenny Szeto.

China Unicom, which has been cutting prices to win market share, said this month it would not engage in a price war with China Mobile as it hoped to turn around two years of loss for its CDMA operations. The CDMA business lost 570 million yuan (HK$535.8 million) before tax in the first nine months of 2003.

China Mobile, on the other hand, said the week-long holiday may have helped push up short-term subscribers. Thousands of urban workers returned to their families in rural areas during the holiday, which could have helped sales of prepaid cards.

``The strength in January's number was driven by increases in prepaid subscribers, with net adds of 2.3 million representing 94 per cent of subscriber growth for the month,'' Goldman Sachs analyst Tim Storey said.

Overall, China Mobile had 144.1 million subscribers at the end of January, compared with Unicom's 93.6 million.

China had 269 million mobile subscribers at the end of last year, making it the world's largest market, the Ministry of Information Industry said.

Shares of China Mobile rose 1.29 per cent to close at HK$27.45 yesterday while Unicom's shares were unchanged at HK$10.