China Mobile profit dips but telecom stocks soar

Business | Stella Zhai 14 Aug 2020

China Mobile (0941) yesterday said net profit in the first half dipped 0.5 percent lower from a year ago to 55.8 billion yuan (HK$62.32 billion) but shares still jumped 3.6 percent on market hopes of a joint 5G network construction with its peers.

Shares of China Unicom (Hong Kong) (0762) also soared 25.6 percent to close at HK$5.74, the highest ever rise for the company.

And China Telecom (0728) also rose 11.1 percent to HK$2.60.

China Mobile's earnings per share were 2.72 yuan during the first half, and the company declared an interim dividend of HK$1.53 per share.

Earnings before interest, taxes, depreciation and amortization totaled 145.7 billion yuan for the first six months, a 3.6 percent drop from a year before. Operating revenue grew 0.1 percent to 389.9 billion yuan, with that from telecommunications services growing 1.9 percent to 358.2 billion yuan, it said.

The number of mobile customers totaled 947 million as of the end of June, among which 70.2 million were 5G package subscribers.

Chairman Yang Jie said China Mobile has built 188,000 5G base stations in over 50 mainland cities as of the end of June, and the company plans to build 300,000 5G base stations for the whole year.

The company recorded capital expenditure of 101 billion yuan during the first half, rising 18.5 percent year-on-year, with 55.2 billion yuan for 5G constructions, Yang said, adding that the full-year CapEx estimate is 179.8 billion yuan, with 105 billion yuan from 5G business.

For the first half, mobile average revenue per user per month went down by 3.7 percent year-on-year to 50.3 yuan. Yang said the decrease has narrowed mainly due to the growth in premium 5G users, and the company has raised its target to have a total of 100 million 5G users this year.

The company is assessing the impacts of the proposed US Clean Network plan, and its US business takes up only a small part of total revenue, he said.

This came as investment houses raise their targets for China Unicom, which has partnered with China Telecom in the 5G field, after it recorded a better-than-expected interim profit. Jefferies analysts also predict there is potential for the three mainland telecom giants to co-build a rural 5G network.

Besides, China Mobile has entered into a partnership with the National Radio and Television Administration for 5G construction and is discussing the details, but they may not set up a joint venture, Yang added.

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