With growth slowing, telecom seeks 3G boost

09:59, March 19, 2010      

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China Mobile, the world's largest telecom operator by subscribers, announced Thursday that it will release more than 80 handset models based on the domestically-developed 3G TD-SCDMA standard this year as part of its plan to bolster its 3G business development.
All told, roughly 180 TD terminal models, including handsets, laptops and wireless cards, are to be launched this year, the company said. China Mobile's 3G services subscribers totaled 3.9 million by January, accounting for around one third of the country's total 3G subscribers.
China Mobile's 3G network is planned to cover all prefecture- and county-level cites and areas with high data demand in developed counties in the eastern region by the end of this year.
The company will reduce its capital expenditure (CAPEX) from 129.4 billion yuan ($18.94 billion) in 2009 to 123 billion yuan ($18.01 billion) this year. The CAPEX will be further cut to 98 billion yuan ($14.35 billion) in 2011 and 80.4 billion yuan ($11.77 billion) in 2012. The company has stated its expenditures will drop as its growth rate slows.
Its 3G expansion plans were released when China Mobile announced its financial results for the 2009 fiscal year.

The telecom giant, which has long held a dominant position in the market, saw its profit growth shrink substantially last year, due to fiercer competition from its rivals.

The company's net profit totaled 115.2 billion yuan ($16.86 billion) for the fiscal year that ended in December 2009 from 112.6 billion yuan ($16.48 billion) for 2008, according to the financial results it released yesterday. Its net profit growth rate hit 2.3 percent last year, down from 29.6 percent in 2008.

The company's average revenue per user, a measure of telecom operators' long-term growth rate, decreased to 77 yuan ($11.27) last year from 83 yuan ($12.15) in 2008.

China Mobile won't likely sustain as high a growth rate as in the past, since a reorganization of the country's telecom carriers and the launch of 3G commercial use will reduce the company's competitive edge, said Fu Liang, an independent telecom sector analyst.

The company needs to rely more on exploring potential demand among old subscribers, as it cannot expect a continued high growth rate among new subscribers given its already huge customer base and its rivals' increasing mobile penetration rate, Fu said.

China Mobile's total number of customers rose 14.2 percent to exceed 522 million in 2009, compared with a rise of 23.8 percent to 457 million in 2008, according to the company.

China Mobile also highlighted new opportunities. "The flourishing Mobile Internet and the 'Internet of Things' concept, as well as the integration of mobile payments into the financial system, have all created new revenue stream possibilities," Wang Jianzhou, chairman and CEO of China Mobile, said in a statement released Thursday.

Fu believes the company will maintain its dominant position in the market over the next three to five years, given its accumulated strength and a subscriber base much larger than its rivals.

The company's stock rose 1.19 percent to close at HK$76.40 ($9.84) Thursday.

Source: Global Times
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