S&P: No Change of Rating on China Mobiles

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Last updated at: (Beijing Time) Thursday, August 14, 2003

S&P: No Change of Rating on China Mobiles

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Standard & Poor's Rating Services said Wednesday that its rating on China Mobile (Hong Kong)Ltd. (CMHK) would not be affected by the company's recent announcement of improved first-half 2003 earnings.

Its earlier rating on the company was BBB/Positive/-.

The rating services said CMHK's revenue in the first half of 2003 grew by 39 percent over the corresponding period in 2002 to 76.7 billion yuan (9.27 billion US dollars). The strong growth wasprimarily driven by revenue contributions from eight provincial subsidiaries that CMHK acquired from its parent, China Mobile Communications Corp., in July 2002.

Standard & Poor's said as most of the growth came from low usage, prepaid customers, net income only increased by 13 percent to 17.5 billion yuan (2.11 billion US dollars). Tariff rates have been under pressure because of increased competition.

CMHK's total subscriber base reached 129 million at the end of June in 2003, compared with 117.7 million at the end of 2002. After years of rapid expansion, the company's subscriber number growth appears to be slowing as a result of high mobile penetration rates and intense competition.

In the event that more mobile licenses are issued within the next two years, competition is expected to intensify further, the rating services said.

However, Standard & Poor's believes that CMHK will remain its dominant position, particularly among higher-end customers, as a result of its extensive network coverage and the lack of number portability in the Chinese mainland.

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