China Mobile Reports 22 Percent Rise In Q1 Profit, Eyes Overseas Acquisitions

China Mobile has reported that its net profit for the first quarter 2007 rose 22 percent to 17.56 billion yuan (US$2.28 billion) from 14.36 billion yuan (US$1.8 billion) for the same period in 2006. Its earnings before interest, taxes and depreciation rose 13.8 percent to 40.72 billion yuan (US$5.2 billion) from 35.78 billion yuan (US$4.5 billion) in 2006 and its revenue increased to 77.71 billion yuan (US$10.07 billion), from 65.02 billion yuan (US$8.42 billion) a year earlier, reports TelecomAsia.

Despite these numbers being pretty impressive they were less than expected by analysts who were expecting a net profit of nearly 18 billion yuan according to Forbes, and the company’s share price dropped accordingly.

China Mobile signed up 14.9 million new customers in the quarter, a lot of them from rural areas. Bloomberg‘s piece quoted Louis Wong, a fund manager at Phillip Securities Ltd. in Hong Kong: “China Mobile’s revenue growth will remain strong as it continues to sign up customers…Profitability may drop as most of the new users are from rural areas, where spending is lower.”

Growing Internationally: Another Bloomberg story details China’s plans for expanding into Asia and Africa where growth rates are still high (because the proportion of people using mobiles is small), with some encouragement from the Chinese government. The government wants Chinese companies to move international as more overseas companies enter the Chinese market — and would hope that an expansion by China Mobile will result in TD-SCDMA networks in countries other than China. The company had several acquisitions fall through, but did get an 89 percent stake in Pakistan’s Paktel for $284 million. China Mobile CEO Wang Jianzhou has said the company will invest $400 million in extending its network in Pakistan, including building a data transmission system, reports Antara News.

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