We are developing and conducting our 4G business based on the TDD mode long-term evolution, or TD-LTE, technology.
On December 4, 2013, the MIIT granted to CMCC, China Telecom and China Unicom permissions to operate TD-LTE businesses,
and CMCC received permission to operate a TD-LTE business through us. We have subsequently launched our 4G services and
rapidly expanded our 4G network. As of March 31, 2015, the number of 4G customers reached approximately 143.1 million.
However, we expect that we will face intense competition in the delivery of 4G services from China Telecom and China Unicom,
which have received permits to operate their 4G services based mainly on FDD-LTE technology. Since FDD-LTE technology is more
widely used globally than TD-LTE technology and enjoys more mature value chains in terms of both chips and terminals, we expect
that our competitors’ use of FDD-LTE technology will pose competitive challenges to our 4G business. As a result, we cannot assure
you that our implementation of TD-LTE technology and provision of telecommunications services based on TD-LTE technology will
achieve the expected results.
In addition, we expect to make substantial investments in the development of our 4G services, including construction of
infrastructure networks and base stations. Accordingly, the amount of our capital expenditures in future years could remain high. See
“Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources — Capital Expenditures” for more
information on our expected capital expenditures. If we are unable to provide 4G services in a commercially viable manner, our
ability to realize benefits from our significant capital investment and expenses in our networks and 4G services will be limited, and
our operating revenue and profit from operations could decrease materially.
In the first quarter, China Mobile added 53 million 4G subscribers, a record net add. By the end of March, China Mobile had 143 million 4G subscribers. “On the current run rate we expect they will reach 320 million 4G users by the end of the year,” on track to beat the management’s own target of 250 million, said Bernstein Research‘s Chris Lane and team. 3G and 4G subscribers are now 46% of China Mobile’s total subscriber base, up from 29% a year ago.
Data continued to grow strongly. Total mobile data traffic and traffic per subscriber increased by 158% and 146% from a year ago.
Mobile average revenue per user rose 3.2% from the last quarter, better than the 6.7% quarterly decline seen in December quarter. Total revenue rose 3.9% from a year ago to 160.9 billion yuan. Earnings before interest, taxes, depreciation and amortization, or EBITDA, grew by 2.8%, better than the company’s flattish EBITDA guidance.
"We started up 720,000 4G base stations and established the world's largest quality 4G network covering a population of more than one billion people," it said in the filing, adding that it was "facing severe challenges from intensified competition".
HONG KONG: China Mobile said Thursday (Mar 19) that net profit for 2014 fell more than 10 per cent, its largest annual drop in over a decade, because of increased spending as the company upgraded to the 4G network.
The firm's net profit was 109.28 billion yuan (S$24.4 billion) last year - a 10.2 per cent drop from 121.69 billion yuan in 2013, failing to meet analysts expectations. Costs incurred to promote the faster 4G network dragged profits down, Bloomberg News reported.
The world's biggest mobile operator by subscribers started selling Apple iPhones for the first time in January of last year and was granted a licence to operate the faster 4G data network in China in 2013.
"The results are slightly below my expectations for both sales and net," Ricky Lai, a Hong Kong based analyst with Guotai Junan International Holdings told Bloomberg. "The company had to launch incentive programs to migrate 2G subscribers to its 4G network."
It comes despite a 5.1 per cent increase in customers to over 800 million, it said in a filing to the Hong Kong stock exchange, where it is listed. Operating revenue was up 1.8 per cent at 641.45 billion yuan, while operating expenses were up nearly six per cent to 524.11 billion yuan.
Sales in the fourth quarter fell 4.2 percent to 160.2 billion yuan. That compares with the 165.8 billion-yuan average of four analyst estimates compiled by Bloomberg.
China Mobile had 800 million subscribers at the end of December, which included more than 90 million on the new 4G network, the company said. China Mobile projects capital spending this year will drop about 6.5 percent to 199.7 billion yuan, from the 213.5 billion yuan spent last year, Xi said.