China Mobile 2014 profit down 10%


TD-LTE network build contributes in part to China Mobile profit loss

China Mobile’s 2014 profit fell 10%, slightly below market expectations and marking the company’s biggest annual profit drop since 1999.

Large expenditures on next-generation network development were the biggest culprits behind the declined earnings. Profit attributable to shareholders slipped 10.2% to $17.6 billion in 2014. The results sent the stock tumbling by 3.3% on March 19 and another 1.5% on March 20.

On the plus side, China Mobile said it acquired about 40 million new subscribers in 2014, and by year’s end the group’s TD-LTE customer base exceeded 90 million. The carrier began rolling out its TD-LTE network in February 2014, and as of mid-March 2015 had 123.4 million 4G subscribers, according to Forbes.

China Mobile’s business income from data plans jumped by 22.3% to $40.7 billion during the same period, making it “the primary driver of revenue growth,” the carrier said. It was still facing challenges around Internet-based messaging apps considering that “the substitution effect of [over-the-top] business has become more intensified.”

Forbes contributor Chuck Jones said that China Mobile’s explosive growth was a positive thing for Apple considering the latter’s China revenue grew 12% in the March 2014 quarter, 26% in the June quarter and 70% in the December quarter.

China Telecom sees net profit climb by 1% in 2014
China Telecom earlier this week announced that its net profit rose slightly by about 1% year-over-year to $2.84 billion in 2014.

Cost-savings measures offset sluggish wireless subscriber growth. Expenses related to the maintenance of network operations increased by 29.3% over 2013 due to China Telecom’s efforts to improve its wireless network quality. Mobile terminal sales declined more than 16% to $5 billion.

China Telecom added about 15.5 million 3G and LTE subscribers in 2014. However, this was only 8.3% of the total high-speed user additions in China in that period (186 million), noted Forbes.

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Mary Ann Azevedo

Mary Ann Azevedo is an award-winning journalist based in Austin, Texas. She has covered business and technology issues for Silicon Valley Business Journal, San Francisco Business Times, The Network, Venture Capital Journal and the Houston Business Journal.