China Mobile, the world’s largest cellco by subscribers, has registered a 5.9% decline in annual net profits for 2013, as operating expenses and investments in infrastructure eroded the operator’s profitability. The cellco’s revenues grew 8.3% year-on-year to CNY630.18 billion (USD102.23 billion), but an increase in operating expenses from 73.8% to 78.5% of operating revenues led to a 5.2% dip in EBITDA to CNY240.43 billion. Net profits fell by a similar amount, sliding 5.9% y-o-y to CNY121.69 billion. China Mobile attributed the slump to a ‘modest’ increase in investment in infrastructure resources in 2013 to ‘provide better support for the explosive growth in data traffic, satisfy the company’s business expansion needs and build up core competitiveness.’ The cellco also noted that over-the-top (OTT) substitution was having an impact on its top line, reporting that growth rates for voice and SMS/MMS revenues fell from 5.9% and -0.9% respectively in 2011 to -3.4% and -6.5% in 2013.
Offsetting that slump somewhat, data service revenues expanded by 24.4% in 2013 to CNY206.89 billion, or 35% of service revenues, driven mainly by a 58.6% increase in turnover from wireless data traffic to CNY108.24 billion. Indeed, China Mobile saw continued expansion in the data segment, booking a 93.6% increase in wireless data traffic to 2.012 trillion MB. Helping fuel the growth, the cellco has expanded its portfolio of TD-SCDMA handsets, adding 515 new devices in 2013 including two self-branded products. Sales of TD-SCDMA devices increased from 50 million to 150 million, of which more than 95% were smartphones. On the 4G front, Mobile has activated Time Division Long Term Evolution (TD-LTE) networks in 16 cities and had signed up 1.34 million LTE subscribers by the end of February 2014.