Leading mobile operator reports 3.1% increase in net profit for 2018
China Mobile, the country’s largest mobile operator by number of subscribers, said on Thursday that it posted a 3.1 percent rise in 2018 net profit, beating market expectations on a one-time windfall from the listing of mobile-tower builder China Tower Corp in August.
The company is the latest of China’s wireless carriers to have revealed better-than-expected performances last year, which may reduce some financial pressure as they are ready to build the network for 5G, or the fifth-generation mobile communication technology, experts said.
China Mobile said its net profit for 2018 hit 117.8 billion yuan ($17.63 billion), beating the market estimates of 115.4 billion yuan.
The Beijing-based company said the August listing of China Tower helped add 13.86 billion yuan in income from investments. Its revenue for 2018 grew just 1.8 percent year-on-year to 736.8 billion yuan.
The announcement came shortly after its rival China Unicom said it had posted a 457.8 percent hike in net profit for 2018 to 10.19 billion yuan, as a result of strong data revenue growth and benefits from the company’s mixed ownership reform.
The surging numbers marked what China Unicom called a “V-shaped rebound in profit” following its financial woes in 2016. The company’s operating revenue grew 5.8 percent to 290.88 billion yuan, beating the market expectation of 287 billion yuan.
Xiang Ligang, director-general of the Information Consumption Alliance, said despite the increasing pressure to cut the rates for broadband and mobile network services, telecom carriers are maintaining relatively good performance in profits.
“But challenges lie ahead, for they have not recouped their gigantic investments in 4G network construction, and are now under pressure to roll out the 5G network,” Xiang said.
Wang Xiaochu, chairman of China Unicom, said at an investor conference earlier this month that 5G is still in its infancy, and more time is needed to experiment with application scenarios and solve existing problems.
The company plans to invest 6 to 8 billion yuan on 5G spending in 2019, and it will decide the investment scale in 2020 based on how 5G trial networks run this year, Wang added.
China Telecom, the smallest wireless carrier by mobile subscribers in China, also said earlier this month that its budget for 5G in 2019 stands at around 9 billion yuan.
China Telecom’s net income for 2018 grew by about 14 percent to 21.21 billion yuan, driven by growing wireless and wireline broadband subscriber base as well as lower equipment related costs.
According to the company, it is working hard to explore how to use the next-generation superfast technology in smart cities, self-driving vehicles, and industrial internet. It will also explore how to build a proper business mechanism to match the big potential of 5G.
Wang Yanhui, secretary-general of the Mobile China Alliance, said the three mobile carriers need to lower operating costs to prepare for upcoming big investment on 5G network construction.