China had 282 million cellphone subscriptions at the end of February, almost the size of the U.S. population. China Mobile and its state-owned parent have about two-thirds of the market. Unicom has the remainder

2 May 2004

HONG KONG China Mobile (Hong Kong), the world's largest cellphone operator by customers, on Tuesday reported that first-quarter net income rose 4.6 percent after the company signed up a record number of new subscribers.
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Net income climbed to 9.39 billion yuan, or $1.1 billion, for the three months ended March 31, the Hong Kong-listed China Mobile said on its Web site. Sales rose 12 percent to 42.1 billion yuan.
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China Mobile used lower-priced packages and subsidized handsets to take customers from China Unicom, a smaller rival, and sign up new lower-income users, adding a record 8.6 million subscribers during the quarter. The company invested more in its own land lines to cut the cost of leasing transmission capacity from fixed-line phone companies.
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Monthly average revenue per user, an industry measure of the size of a phone bill, fell 7.6 percent to 97 yuan from the first quarter of last year. The decline was bigger than the 5.7 percent drop analysts expected. New customers in China, where one in five people owns a cellphone, tend to be lower-income earners who use the phone less.
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The median forecast by five analysts surveyed by Bloomberg was for a first-quarter profit of 9.4 billion yuan.
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China Mobile customers' spending was half that of subscribers of Hong Kong's SmarTone Telecommunications Holdings, and less than a fifth of customers of NTT DoCoMo of Japan.
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Shares of China Mobile have dropped a fifth in the past six weeks on concern that a planned share sale by China Telecom, the nation's largest fixed-line phone company, will increase supply of telecom stock. The shares fell 1.4 percent to 21.85 Hong Kong dollars, or $2.80, in Hong Kong. China Mobile posted earnings after the market closes.
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China Mobile's profit slowed for a fourth consecutive year as the company added users who ran up smaller phone bills. More than half of people in most big cities already have cellphones.
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First-quarter profit margin, before interest, tax, depreciation and amortization, climbed by 1.8 percentage points to 57.6 percent from the previous quarter, China Mobile said. That may have reflected lower handset and lease line costs, said analysts including Kelvin Ho at Nomura International (H.K.).
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China had 282 million cellphone subscriptions at the end of February, almost the size of the U.S. population. China Mobile and its state-owned parent have about two-thirds of the market. Unicom has the remainder.
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China Mobile had 150.3 million subscribers at the end of March. Vodafone Group, the world's largest wireless company by revenue, had 130 million users worldwide at the end of 2003. Vodafone owns a 3.27 percent stake in China Mobile.
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Last month, China Mobile raised this year's capital spending budget by 18 percent to $5.8 billion to try to ward off intensifying competition. China Mobile also plans to buy 10 networks from parent China Mobile Communications this year to complete nationwide coverage.
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Hutchison-Telstra talks fail
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Hutchison Telecommunications Australia, which started the nation's first high-speed cellular service, and Telstra failed in talks to share the network and merge their second generation services.
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The talks finished without an agreement, Hutchison, which is controlled by the Hong Kong billionaire Li Ka-Shing, told the Australian stock exchange.
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The Australian newspaper earlier reported Telstra was considering paying Hutchison about 250 million Australian dollars, or $186 million,, for Orange, the second generation service.
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Telstra, Australia's largest phone company, Hutchison, Singapore Telecommunications' Optus unit, Vodafone and Virgin Mobile all compete for the nation's 15 million mobile users.
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"Consolidation in Australia's mobile market is inevitable, but the major players haven't been able to agree on price," said Paul Budde, a telecommunications analyst with market researcher Paul Budde Communication.