China Mobile missed forecasts with an 11 per cent rise in quarterly earnings as subscription and usage growth slowed faster than expected, and it warned of rough times ahead as the global downturn dampens its home market.
Analysts said growth for the world's largest mobile carrier by users would slow even more this year as its rivalry with China Unicom and China Telecom heats up and China's economy loses steam amid the global financial crisis.
“The high growth phase of China Mobile has passed as intensified competition will put pressure on its tariffs,” said Tiffany Feng an analyst at Guotai Junan Securities.
“Since the company has already had a huge number of users, it will be difficult to see substantial growth in subscribers.”
The stock extended its losses to 1.5 per cent at HK$67.1 after the results and against a 0.2 per cent fall before the midday break in Hong Kong trading.
China Mobile, which is pushing out from the cities into less lucrative rural areas, also warned of a tougher year ahead for the economy and the telecom sector.
“The influence of the financial crisis that swept across the globe in 2008 will likely widen and deepen, and its impact on China's economy will continue. The telecommunications industry will be affected," chairman Wang Jianzhou said in a statement.
China Mobile earned 30.2 billion yuan ($4.42 billion) in October-December net profit, up from 27.2 billion yuan a year earlier. The 11 per cent gain lagged the latest consensus forecast for a rise of 16.5 percent as subscriber growth and usage eased.
Total subscribers increased 23.8 per cent for the full year.
Earnings growth slowed from the year-on-year profit jump of 26 per cent in the third quarter. On an interim basis the company's profit growth of 18 per cent in the second half of 2008 was its slowest growth rate since the first half of 2007.
But China Mobile is seen remaining ahead of its rivals in the coming years given its strong cash flow, broad subscriber base, and the support measures in place for its homegrown 3G service TD-SCDMA.
Reflecting that confidence, shares in China Mobile rose 1.2 percent in the fourth quarter of 2008, beating a 20 per cent slide in Hong Kong's benchmark index. China Unicom fell in line with the Hang Seng Index, while China Telecom dropped 7.7 per cent.
China Mobile said it will leverage on its industry leadership to capture opportunities during its migration to the third-generation (3G) wireless business.
It earmarked 375.4 billion yuan for capital spending between 2009 and 2011 as it switches to the more advanced 3G network, which offers the kind of data-rich, multi-media services already available in many other countries. Total capex was 136.3 billion in 2008.
Reuters