China Mobile sees profit drop in "increasingly fierce" environment

Chinese operator China Mobile has reported an increase in operating revenue in 1Q14, although profit suffered as the firm struggled with cost control measures in an “increasingly fierce” environment.

Operating revenue for the quarter grew 7.8 per cent year on year, from RMB143.63bn ($23.02bn) to RMB154.83bn. However, profit attributable to shareholders fell 9.4 per cent year on year from RMB27.88bn to RMB25.24bn under “continuously increasing pressure in infrastructure resources allocation and cost control”.

Despite the decline in profit, China Mobile said it saw an increase of 13.88 million subscribers since 4Q13, to reach 781.08 million in total. However, average revenue per user declined since the previous quarter, from RMB68 to RMB62.

The firm also noted that the traditional communications market in China has become more saturated this quarter due to competition. China Mobile rued the impact made by over the top (OTT) service providers to its business blaming such players for the decline it saw in total voice usage growth, which increased just 0.6 per cent since the previous quarter.

“Against the background of accelerating strategic transformation and capacity enhancement, the Group faced continuously increasing pressure in infrastructure resources allocation and cost control,” the firm said in a statement.

It added that, going forward, it aims to better control costs and “endeavour to achieve a low-cost, highly efficient operation”.

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