China Mobile Ltd., the world's biggest phone company by users, increased third-quarter profit less than analysts estimated.
Net income rose 26 percent to 27.8 billion yuan (US$4 billion) from 22 billion yuan a year earlier, according to figures derived from nine-month earnings reported by the Beijing-based company yesterday. Profit missed the 29 billion yuan median of six analysts' estimates in a Bloomberg News survey.
China Mobile's profitability narrowed as the company added lower-spending users in rural areas and its call volume slowed after the government ordered some businesses to shut in August for the Beijing Olympic Games, Bloomberg News reported.
Competition will intensify, with China Telecom Corp and China Unicom (Hong Kong) Ltd. stepping up efforts to win a share of the world's biggest phone market after a state-led industry revamp.
"The Olympics would have had some effects, as we can see in the decline in average usage data," said Victor Yip, who rates China Mobile shares "buy" at UOB Kay-Hian Ltd. in Hong Kong. "We are a little disappointed by the earnings, which fell from the previous quarter."
Sales rose 14 percent to 104.9 billion yuan, 0.9 percent below the lowest of six analysts' estimates in the survey. China Mobile's second-quarter profit rose 51 percent to 30.8 billion yuan, according to figures the wireless carrier reported in August.
In the first three quarters, average use fell to 493 minutes per user a month, compared with 496 minutes in the first six months, according to China Mobile.
China may have lost as much as 3 percent of its gross domestic product by shutting down factories in Beijing and surrounding areas for two months as part of preparations for hosting the Olympics, Tao Dong, Credit Suisse Group AG chief Asia economist, said in August. Gross domestic product in China grew 9 percent in the third quarter, the government's statistics bureau said yesterday, the slowest pace of economic expansion since the second quarter of 2003. This missed the median estimate of 9.7 percent from 12 analysts in a separate Bloomberg survey.
China Mobile shares, which rose 7.6 percent to HK$71.10 (US$9.16) in Hong Kong yesterday before the announcement, have dropped 45 percent since May 23, when the government ordered an industry reorganization to improve competition. The stock has underperformed the Hang Seng Index, which lost 39 percent in the same period.
(Shanghai Daily October 21, 2008)
