As the saying goes, "Short term pain for long term gain." It's the philosophy that China Mobile has to take as they've just reported their first financial loss in 14 years as they surge ahead with the buildout of their new 4G network. Mobile China only began selling Apple's iPhones very late in December which couldn't boost their yearend profits. If Apple's future iPhone 6 is a winning design, it will be most welcomed by China Mobile as it needs to pay for their buildout of the largest 4G network in the world.
It's being reported in China today that China Mobile Ltd, the world's largest mobile carrier by subscribers, reported late on Thursday that they experienced their first annual profit decline in 14 years, sending its shares down 3.6 percent in Hong Kong trading.
The carrier's net profit for 2013 was 121.7 billion yuan (US$19.55 billion), down 5.9 percent from a year earlier, the company said in a financial statement.
In December 2013, China Mobile became the first of the three mainland carriers to start offering 4G services, and the number of its 4G subscribers amounted to 1.34 million by the end of February, it said. The carrier plans to build 500,000 4G base stations across the country by the end of 2014, which would constitute the world's largest 4G network.
Its two rival carriers have also followed quickly. China Telecom launched 4G services in February and China Unicom launched its 4G services on Tuesday, offering monthly package plans at slightly cheaper prices than the other two carriers.
China Mobile is now depending on 4G services to retain its high-end customers and win back those that it has lost to the other two carriers during the 3G era.
China Mobile blamed its profit decline on increasing competition from over-the-top (OTT) services and rival carriers, as well as heavy expenditure on telecom infrastructure.
Analysts said the popularity of OTT services such as Tencent's free messaging app WeChat has undercut the mobile carrier's revenue from text and voice services. Tencent said Wednesday it had 355 million monthly active users of WeChat by the end of 2013, nearly half of China Mobile's total subscribers.
According to one analyst, "More than half of China Mobile's revenue comes from voice services, so it will face increasing downward pressure in the 4G era."