China Mobile network build-out contributed to profit loss
China Mobile, which reported a 10% decrease in profits for 2014, plans to cut back on its capital expenditures for 2015.
In 2014, China Mobile, the largest carrier in China and the world, spent big on expanding its next-generation mobile networks, which was cited as a major contributor to the profit slip. The company currently operates some 720,000 4G base stations.
In December, China Mobile and national competitors China Telecom and China Unicom spun-off a company called China Tower with plans for the new firm to build 1 million new towers by 2016 for shared-use among the operators.
According to reports, China Mobile will cut capex by 6.46% to a still staggering $32.17 billion, and specific to 4G LTE, China Mobile representatives said the capex will decrease by 10.42% to $11.63 billion.
China Mobile’s reported decrease in profit is the largest drop the carrier has reported since 1999.
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.
