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China Mobile Profit Expected to Grow Strongly

Posted In: Business | AT&T

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BEIJING (AP) — Analysts say China Mobile’s 2008 earnings should rise by up to 32 percent, but it could face challenges as market growth slows and it rolls out third-generation service based on a homegrown Chinese standard.

China Mobile, the world's largest phone carrier by subscribers, is due to report annual earnings Thursday.

JP Morgan's Jimmy Cheong forecasts 32 percent growth, while Michael Meng and Anand Ramachandran of Citigroup were looking for 29 percent. Royal Bank of Scotland's Wendy Liu expects 27 percent.

Future earnings growth is clouded by slowing growth in Chinese demand for mobile service and the challenges of using a homegrown 3G phone standard that was assigned to China Mobile by regulators, they said.

"Slowing mobile usage growth has been evident since November 2008," Meng and Ramachandran said in a report. They said the industry's "revenue trend could be alarmingly weak."

China has the world's largest population of mobile phone users, with 650 million accounts, according to the government. China Mobile has more than 450 million of those accounts.

China Mobile shares are up nearly 22 percent from their November low on the end of uncertainty about the outcome of an industry restructuring carried out last year.

The Beijing-based company has long been China's dominant carrier as mobile service exploded in popularity. Beijing rearranged its state-owned carriers into three groups last year to revive competition, assigning both fixed and mobile assets to each one.

China Mobile was assigned the homegrown TD-SCDMA mobile standard, which has never been used elsewhere, in an apparent effort to see that it succeeds. Rivals China Telecom and China Unicom were assigned the global standards CDMA 2000 and W-CDMA.

The Chinese standard might limit China Mobile's ability to serve customers who want high-speed data access, Liu said.

"We believe China Mobile shares are entering a lull for two or three years," she said in a report.

More FirstNews 03/18/09:

•  Apple Unveils iPhone OS 3.0
•  Analyst: iPhone OS Upgrades Reflect on Upcoming Model
•  In-Stat: 3G, 4G Subs to Nearly Triple by 2013
•  ChaCha Secures $12M in Financing, Reduces Staff
•  HipCricket Expands to Mexico
•  China Mobile Profit Expected to Grow Strongly
•  FirstNews Briefs for March 18, 2009

 

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