* 2012 net income seen rising just 1.2 pct to 127 bln yuan
* Slowest growth since profits fell in 1999
* Has more than 10 mln iPhone users on its network
* Pinning hopes on next iPhone to support its 4G technology
By Lee Chyen Yee
HONG KONG, March 14 China Mobile Ltd
hopes to tap pent-up demand for Apple Inc smartphones
by rolling out new 4G technology this year and having an iPhone
model that will finally run on it.
The world's largest mobile carrier - with more than twice as
many subscribers as there are people in the United States -
already has more than 10 million of its customers owning an
iPhone even though the gadget doesn't properly work with the
Chinese firm's homegrown TD-SCDMA 3G technology, which is not
compatible with global technologies.
That inferior technology, and the failure to offer customers
an iPhone contract - which its main rivals do - has been a key
reason for China Mobile's slowing profit growth.
The company, valued at $220 billion or half an Apple, is
expected to say on Thursday that its net income rose just 1.2
percent last year to 127.4 billion yuan ($20.5 billion),
according to a Reuters poll of 13 analysts - the slowest growth
since profits actually fell in 1999.
While many of China Mobile's iPhone users have found clever
ways around some of the carrier's limitations, the company wants
to close the gap with its two smaller rivals - China Unicom
and China Telecom - which already offer
iPhone compatible technology.
Industry experts expect Apple's next iPhone will support
China Mobile's TD-LTE 4G technology, even though this will be
less widely used than the FDD-LTE standard.
"Apple's iPhones will be like a killer app for China Mobile
once its gets its 4G up and running," said Huang Leping, an
analyst at Nomura International in Hong Kong. "That will
definitely boost user numbers, though it will weigh on the
bottomline in the first year or so as China Mobile will most
probably have to provide heavy handset subsidies for the
China Telecom, which signed up to sell the iPhone last year,
increased its spending on handset subsidies by 50 percent in the
first half of last year, and has seen its profits fall in the
last three quarters on higher marketing and subsidy costs.
Most of China Mobile's 715 million subscribers are no-frills
users attracted to its wide network coverage across the vast
country. Only a small number are premium, tech-savvy consumers.
Just 13 percent of its users are on 3G, compared with one
third at China Unicom and 44 percent at China Telecom, which use
other variants of CDMA 3G technologies developed by global
players such as Japan's NTT Docomo and Qualcomm Inc
Using the iPhone on China Mobile's homegrown 3G network can
be as sluggish as being hooked up to a 2G network, but many
users take advantage of the carrier's many wi-fi hot-spots for
heavier data-crunching applications such as playing games and
Demand for the iPhone has spawned a cottage industry, with
some local phone vendors selling SIM card cutters that act like
a hole-punch to trim bigger cards to fit the smaller iPhone
slots. Some China Mobile sales outlets offer on-the-spot
SIM-trimming services as well as wi-fi cards that iPhone users
can use in most hot-spots.
China Mobile is aggressively pushing for 4G to improve the
user experience in a market where chatting on Tencent Holdings
Ltd's WeChat and checking microblogs on Sina Corp's
Weibo are the norm among smartphone users.
Analysts expect China Mobile to spend $3 billion this year
on developing its 4G network, from a total capex budget of
around $35 billion. The company's chairman Xi Guohua said at the
Mobile World Congress in Barcelona this year that the carrier
planned to build a TD-LTE 4G network with 200,000 base stations
to cover more than 100 Chinese cities, home to 500 million
While Beijing is likely to grant 4G licenses as early as the
second half of this year, it will take at least 18 months for
the technology and the handset market to be mature enough for
large-scale commercialisation, SWS Research analyst Jim Tang
wrote in a recent report.