Tuesday, March 19, 2019
Martin Hennecke

China Mobile net rises but ARPU slides
China Mobile (0941) yesterday posted an interim net profit of 65.6 billion yuan (HK$75.51 billion), up 4.73 percent year on year, higher than expected. The company declared an interim dividend of HK$1.826 per share. Basic earning per share was 3.21 yuan. Earnings before interest, taxes, depreciation and amortization was 145.9 billion yuan, up 3.68 percent year on year. Average revenue per user of mobile business dropped 6.6 percent yearly to 58.1 yuan, among which ARPU of 4G business declined 9.6 percent to 64.4 yuan. Household broadband blended ARPU climbed 7.3 percent to 34.8 yuan yearly. Revenue from telecommunications services grew 2.35 percent to 356.12 billion yuan yearly, revenue from sales of products and others dropped 12.73 percent to 35.71 billion yuan yearly. Chairman Shang Bing said he believes that ARPU performances this year are still under pressure, and that the company will strive to achieve a leading position of ARPU in the industry. It also has plans to launch unlimited data plans. The company will continue to proactively roll out trial tests on the 5G network and other tests on 5G applications in the second half of 2018. The 4G penetration rate of China Mobile's mobile customers has reached 74.7 percent in the first half, with a net increase of 27.32 million 4G customers. The total number of mobile customers was 906 million, representing a net addition of 18.61 million. The total number of wireline broadband customers was 135 million, adding 22.39 million. When asked about China Tower (0788), Dong Xin, executive director, vice president and chief financial officer said China Mobile's shareholding has decreased to 28.5 percent from 38 percent. He believed the company would raise more than two billion yuan profit from listing of China Tower, which he expected would be reflected in the income statement for the second half. Shares of China Tower grew 1.59 percent to HK$1.28 on the second trading day as it will be included in the MSCI index. Deutsche Bank and Credit Suisse retained the 'buy' and 'outperform' ratings of China Mobile. Morgan Stanley said the company's service income, revenue, and return on equity are expected to be stable, retaining a target price of HK$70 with "underweight" rating. Shares of China Mobile rose 1.7 percent, closing at HK$71.30 yesterday.

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