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| Edited By: |Source: Reuters |Updated: Mar 17, 2018, 05:05 AM IST
China Mobile, the world's biggest mobile operator, on Thursday reported a 7% rise in second-quarter earnings, beating expectations, as growth in its value-added services helped push revenue higher.
The company posted an April-June net profit of 32.12 billion yuan ($4.7 billion), up from 30.1 billion yuan a year ago, and better than the average forecast of 30.42 billion yuan from three analysts polled by Reuters.
But China Mobile chairman Wang Jianzhou warned in a statement to the Hong Kong stock exchange that the group's development faced "new challenges amid the already high mobile penetration rate and the intensifying competition in China's telecommunications market."
In a separate filing, the company also said Wang would step down as chief executive to be replaced by vice-president Li Yue from Thursday. However, Wang will keep his executive director and chairman titles.
The move solidifies Li's ascent in the company and follows moves by the state-run parent of China Mobile in May, which named Li as its new president to replace Wang.
Monthly average revenue per user, or ARPU, a widely watched industry indicator, rose to 72 yuan from 70 yuan in the first quarter, reversing a downward trend as the company puts more emphasis on higher-paying 3G customers.
Earnings before interest, tax, depreciation and amortisation (EBITDA) margin, a key indicator of a telecoms operator's profitability, fell to 50.7% from 51.6% a year ago.
China is the world's largest mobile market, with nearly 800 million subscribers, according to data from the nation's three main carriers. But it is also highly competitive, with profits eroding as the trio tap less affluent rural areas for growth.
All three major carriers are looking to third-generation (3G) mobile services, launched last year, to breath new life into top and bottom lines that have seen anemic growth in recent quarters.
China Mobile's results bode well for rivals China Unicom and China Telecom, who are also expected to post declining or flat profits when they report their earnings next week.
China Mobile is the world's largest mobile operator by market capitalisation and number of users. Its subscriber base of over 500 million users is bigger than the population of the United States, Australia and Germany put together.
Despite worries about growth in its home market, China Mobile shares have risen about 16% this year compared with a 3% decline in the benchmark Hang Seng Index.
The shares this week rose to their highest level in a year and analysts say investors tend to flock to the blue-chip stock, which is seen as something of a safe-haven when the broader market is weak.
