China Mobile 2015 Profit Misses Estimates, Shares Decline

  • Government request to lower mobile phone rates erodes profit
  • Carrier books 10.1 billion yuan gain on sale of tower assets

China Mobile Ltd.’s annual profit fell, missing analyst estimates, as cheaper plans damped revenue growth at the world’s largest phone carrier. The shares fell after the announcement.

Net income dropped 0.6 percent to 108.5 billion yuan ($16.7 billion) in 2015, the company said Thursday. That compares with the 112.8 billion yuan average of analyst estimates. Sales rose 2.6 percent to 668.3 billion yuan. Dividend for the year is HK$2.721 per share, down from HK$2.92 a year earlier, represents payout ratio of 43 percent as planned.

China Mobile, which has a more than 60 percent share of the market, added a price plan that lets users carry over unused data capacity from one month to the next in response to government request for lower mobile phone tariffs. The move reduced handset data tariffs 43 percent, the company said.

The carrier’s shares dropped 2.1 percent to close at HK$84.55 in Hong Kong, after trading as high as HK$87.30 before earnings were announced.

Telecommunications is among the state-controlled sectors being overhauled in China to raise efficiency. In October, the nation’s three major wireless carriers agreed to transfer about $35 billion of their network assets into a newly formed company called China Tower Corp. in exchange for stakes in the infrastructure firm.

China Mobile booked a 10.1 billion yuan one-time gain on the sale of transmission tower assets last year. The sale to a company that will operate the facilities on a shared basis among carriers is intended to reduce operating cost. The company booked 5.6 billion yuan leasing-fee for 2015 after it agreed to transfer tower assets to China Tower last October. And it is expecting to book about 35 billion yuan leasing-fee in 2016.

Government policies aimed at increasing network speeds, decreasing tariffs and improving information services will create some pressure in the current year, China Mobile said in the earnings statement.

Average revenue per user, or ARPU, for mobile service fell 3 yuan from 2014 to 56 yuan. ARPU is expected to be stable in 2016, Chairman Shang Bing told reporters on Thursday. Shang also said overseas expansion is important for China Mobile, and the company is open to possibilities for it.

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