China Mobile Limited
), the world's largest mobile operator by subscriber base,
announced first quarter 2014 results with adjusted net income of
RMB 25.24 billion ($4.13 billion) that fell 9.4% year over year
due to operational challenges and stiff competition. Net income
margin for the quarter came in at 16.3% compared with 19.4% in
the first quarter of last year.
Revenues & EBITDA
In the first quarter, total revenue climbed 7.8% year over
year to RMB 154.83 billion ($25.31 billion). The carrier
continues to build its 4G (Time Division-LTE) network and plans
to build a superior 4G LTE network. Meanwhile the company also
enhanced its 3G/4G marketing capabilities by increasing the sale
of devices and optimizing its tariff structure.
EBITDA came in at RMB 57.59 billion ($9.42 billion), down 5.9%
from the prior-year quarter. EBITDA margin was 37.2%, down 540
basis points from first quarter of 2013.
In Dec 2013, the company inked a long-term co-operation
) to sell iPhone models through its TD-LTE and TD-SCDMA
China Mobile added 13.88 million new subscribers to reach
781.08 million at the end of the first quarter. Subscribers grew
1.81% from the year-ago quarter.
China Mobile's 3G business is growing at a fast pace since its
introduction and has become one of the major drivers of revenue
growth. The company's total 3G subscriber base reached 224.98
million, with 33.35 million new customers added in the reported
China Mobile received TD-LTE (Time Division Long Term
Evolution) license in Dec 2013 and since then commercialized
TD-LTE in different cities of China. The company desires to
become the world's largest 4G network with 500,000 base stations
that will cover rural and urban China by 2014. At the end of Mar
2014, total LTE customers reached 2.79 million.
ARPU and MOU
Average Revenue per User (ARPU) per month was RMB 62 ($10.14)
during the quarter. Average Minutes of Usage (MOU) per user per
month during the relevant period declined 20 minutes to 456
China Unicom Hong Kong Limited
), China's second largest mobile operator, reported adjusted net
income of RMB 3.30 billion ($540.0 million) that surged 73.8%
year over year. Total revenue (excluding deferred fixed-line
upfront connection fee) for the company climbed 8.3% year over
year to RMB 76.5.0 billion ($12.5 billion) in the first
China Telecom Corporation Limited
) reported adjusted net income of RMB 5.5 billion ($900 million),
representing a 17.9% rise. Revenues increased 6.9% to RMB 83.2
billion ($13.6 billion) during the first quarter of 2014.
China Mobile will continue to leverage from its leading
position in the Chinese wireless market owing to strong customer
adaptation of its recently launched LTE service and its expansion
will be accretive to the company's subscriber growth.
However, we remain concerned about the drop in quarterly
profit and rise in competition. Further, higher costs to achieve
its LTE rollout target can impact its profitability. China Mobile
currently carries a Zacks Rank #4 (Sell).
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