China Mobile profits from strong subscriber growth

The World’s Biggest Carrier by Subscribers, China Mobile, notched up a 30 per cent increase in annual profit for 2008, as it continued to expand its subscriber base by picking up new customers in rural areas.

For the full year 2008, China Mobile’s profit hit RMB112.8bn (Eur12.2bn), while revenue jumped 15.5 per cent year on year to RMB412.3bn.

The number of new subscribers added per month topped out at over 7.3 million, taking the carrier’s total subscriber base to 457 million. Tariff restructuring also drove voice usage, with the average minutes of usage per user per month (MOU) hitting 492 minutes. Average revenue per user per month (ARPU) was RMB83.

With China’s restructuring of the telecoms industry well underway and 3G licensing paving the way for more infrastructure rollouts, equipment spending by Chinese mobile operators estimated to hit $41bn over the next two years, and vendors are falling over themselves to accommodate the country’s technology initiatives.

Earlier this month Nokia Siemens Networks said China Mobile and China Unicom had signed framework agreements valued at RMB7.6bn (Eur880m), to purchase 2G and 3G mobile equipment and services during 2009.

Under the framework agreements NSN will roll out WCDMA networks for China Unicom in 11 provinces across China, and will provide China Mobile with TD-SCDMA and GSM networks.

According to Informa analyst Paul Lambert, popular opinion has it that China Mobile has been saddled with a major burden because it has to roll out a 3G network using TD-SCDMA technology. China Unicom and China Mobile, by contrast, are seen to be lucky in that they can roll out 3G networks using established global standards.

But the analyst argues this couldn’t be further from the truth. In fact, it’s China Telecom that bears the biggest burden, because it has to build a network using 1xEV-DO technology. Although EV-DO is well established and is an excellent technology, CDMA operators that would be expected to choose it are turning against it in droves.

China’s government has therefore boxed China Telecom into a corner, where it has a dwindling number of operators for company. Ultimately, China Telecom will have to spend more on building its network than China Mobile or China Unicom will.

China Mobile will offer services using China’s homegrown TD-SCDMA standard, China Unicom will use WCDMA, and China Telecom will use EV-DO, according to the Ministry of Industry and Information Technology.