* China Mobile Q3 net up 1.3 pct, better than estimates
* Heavy handset subsidies pressure bottomline - analysts
* Market still awaiting deal with Apple on iPhone - analysts
By Lee Chyen Yee
HONG KONG, Oct 22 China Mobile Ltd,
the world's biggest mobile operator by subscribers, posted a 1.3
percent gain in third-quarter net profit, beating estimates
slightly, after luring new users to its network with cheap
handsets and low call rates.
China Mobile, which has more than two times as many
subscribers as the population of the United States, said average
monthly net additional customers exceeded 5.4 million and that
the company continued to lead the industry.
By offering handset deals and ultra-cheap voice plans, China
Mobile has built up a vast rural subscriber base. But hefty
handset subsidies and a lack of premium customers on its 3G data
network, which does not support older models of Apple Inc's
iPhones, have kept its net profit growth in the single
digits in the past three years.
China Mobile earned 31.1 billion yuan ($4.9 billion) in
July-to-September, according to calculations by Reuters based on
nine-month profit data released on Monday. That compares with an
average forecast of 30.5 billion yuan in a Reuters poll of nine
analysts and a net profit of 30.7 billion yuan a year earlier.
"Even with iPhones, the bottomline will still be pressured
because of the increasing rebates in mobile phones," said Philip
Mok, a Hong Kong-based analyst at Phillip Securities. "(The key
risk) will be slower-than-expected growth in its 3G customer
Earlier this year, China Mobile increased its full-year
handset subsidies to 26 billion yuan from the originally planned
20 billion yuan to attract new users.
In the first six months, China Mobile spent the equivalent
of 4.5 percent of its revenue on handset subsidies, company data
That is less than the 8.3 percent for China Telecom Corp Ltd
, which started selling iPhones earlier this year in
the hopes of securing more data subscribers.
China Unicom (Hong Kong) Ltd , which
started marketing iPhones three years ago, spent the least as a
percent of its revenues, at around 2.9 percent.
China Mobile shares ended 1.1 percent higher on Monday,
before the earnings announcement. They beat the main Hang Seng
Index's 0.7 percent gain.
China Mobile had a net profit of 93.31 billion yuan in the
first nine months compared with 91.98 billion yuan a year
earlier, the company said after the Hong Kong market close.
Operating revenue rose 6.4 percent to 408.6 billion yuan,
but average revenue per user (ARPU), a key industry gauge, fell
to 4.3 percent to 67 yuan from a year earlier.
Chinese wireless carriers have been trying to boost their
ARPUs by selling smartphones and offering premium plans to users
willing to pay more to surf the Internet, download data and play
Currently, more than 80 percent of China's 1 billion mobile
phone users are still on slower, low-end 2G networks.
Only around 10 percent of China Mobile's overall subscribers
are 3G users, less than China Unicom's nearly 30 percent and
China Telecom's almost 40 percent, data from carriers showed.
China Mobile has been lagging China Telecom and China Unicom
in attracting higher end 3G users because of its technology.
China Mobile uses its own unique homegrown standard for its
3G service that is not compatible with older models of the
iPhone. The latest iPhone 5 contains a Qualcomm Inc
chip that supports China Mobile's TD-SCDMA standard.
However, analysts said a contract with Apple might not be
imminent as negotiations on terms are expected to be tough.
China Mobile also carries smartphones that run on Google
Inc's Android operating system, including smartphones
produced by Samsung Electronics Co Ltd, HTC Corp
, Huawei Technologies Co Ltd and ZTE Corp