China Mobile on Thursday admitted that competition has begun to bite in the 4G market, as revenue increased but profit slipped during the first half of 2015.
"We are facing intensified competition in three aspects," said Xi Guohua, chairman of China Mobile, in a letter to shareholders.
The three ‘aspects’ are competition from over-the-top (OTT) service providers, equipment manufacturers including device makers – which Guohua said are "attempting to enter the field of operation" – and rival operators, which are ramping up their 4G businesses.
China Mobile’s "leading window period in 4G is shortened under the growing competition," Guohua added.
Guohua probably doesn’t need to panic just yet, given the vast lead China Mobile has established in the 4G market.
The company boasted 189.66 million 4G customers at the end of June. By the end of July, China Mobile’s 4G customer base had grown by 19.15 million to reach 208.81 million.
By comparison, China Telecom revealed on Wednesday it added 22 million 4G customers during the first six months of 2015, ending June with 29 million in total. China Unicom, which is due to publish its first half results on Friday, does not currently distinguish between its 3G and 4G customer bases.
On the financial side, China Mobile’s first half operating revenue grew 4.9% year-on-year to 340.7 billion yuan (€47.6 billion). This was thanks to continued strong growth of mobile data revenue, which increased to CNY100.9 billion, up 40.1% on last year.
Meanwhile, EBITDA increased 7.3% from a year ago to CNY126.9 billion, while net profit edged down 0.8% to CNY57.3 billion (€8 billion).
"The board believes that the company’s favourable profitability and healthy cash flow generating capability will be able to provide sufficient support to its future development, while providing shareholders with a favourable return," said Guohua.
