China Mobile Limited
), the world's largest mobile operator by subscriber base,
announced the results for full-year 2013 with adjusted net income
of RMB 121.69 billion ($19.65 billion) that fell 5.9% year over
year owing to higher infrastructure cost and stiff competition.
The reduction in earnings affected the stock price as it declined
6.23% after market close on NYSE on Thursday.
Revenues & EBITDA
In 2013, total revenue climbed 8.3% year over year to RMB
630.17 billion ($101.77 billion). Telecommunication service
revenues, comprising roughly 93.75% of total revenue, were RMB
590.81 billion ($95.41 billion), up 5.4% year over year. Steady
revenue growth was attributable to rapid growth of wireless data
revenue, which was up by a massive 58.6%.
EBITDA came in at RMB 240.43 billion ($38.83 billion), down
5.2% from the prior year. EBITDA margin was 38.2%, down 540 basis
points from 2012.
In Dec 2013, the company inked a long term co-operation
) to sell iPhone models through its TD-LTE and TD-SCDMA
China Unicom added 56,910 million new subscribers to reach
767.21 million at the end of 2013. Subscribers grew 8% in 2013
from the previous year. However, the company's market share
declined to 62.1% from 63.9% in 2012.
China Unicom'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 over 190
million, with 104 million new customers added in 2013. Over 150
million TD-SCDMA handsets were sold, of which 95% were
China Mobile received TD-LTE (Time Division Long Term
Evolution) license in Dec 2013 and since then commercialized
TD-LTE in 16 different cities in 2013. 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 Feb
2014, total LTE customers reached 1.34 million.
Total expenses crept up 15.24% year over year to RMB 494.53
billion ($79.87 billion) in 2013, due to higher selling expenses,
subsidy, leased expenses and other operating expenses. Selling
and marketing expenses increased 14.5% year over year to RMB
91.83 billion ($14.83 billion), mostly due to higher promotional
spending on handsets and applications.
China Unicom exited 2013 with cash and cash equivalents of RMB
44.93 billion ($7.26 billion) compared with RMB 70.91 billion
($11.45 billion) at the end of 2012. Net debt at the end of 2013
was RMB 4.99 billion ($805.8 million) as compared to RMB 28.619
billion ($4.62 billion) at the end of 2012.
Operating cash flow declined 2.5% year over year to RMB 224.98
billion ($36.33 billion) in the reported year. Free cash flow was
much worse at RMB 40.1 billion ($6.47 billion), down almost
The company proposed a final dividend of HK$1.615 (21 cents)
per share and has paid an interim dividend of HK$ 1.696 (22
cents) per share totaling 2013 yearly dividend of HK$ 3.311 (43
cents) per share.
China Mobile wants to push for VoLTE (voice over LTE) live
network testing to realize the commercialization of VoLTE service
by the end of 2014, thus grabbing the first mover advantage in
The company's planned dividend pay-out ratio for 2014 is
China Unicom Hong Kong Limited
), China's second largest mobile operator, reported adjusted net
income of RMB 10.4 billion ($1.68 billion) that surged 46.7% year
over year. Total revenue (excluding deferred fixed-line upfront
connection fee) for the company climbed 18.5% year over year to
RMB 295.0 billion ($47.65 billion) in 2013.
China Mobile will continue to leverage from its leading
position in the Chinese wireless market along with a healthy cash
flow generating ability, which is expected to generate solid
returns in 2014. Further, 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 yearly profit
and rise in operating costs due to roll out of infrastructure.
Higher costs to achieve its LTE rollout target can impact its
China Mobile currently carries a Zacks Rank #4 (Sell). A
better-ranked stock in this sector includes
SK Telecom Co Limited
), which carries a Zacks Rank #1 (Strong Buy).
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CHINA MOBLE-ADR (CHL): Free Stock Analysis
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