China Mobile earnings drop most since 1999 on network expenses, iPhone subsidies

“China Mobile Ltd., the world’s largest phone company, posted its biggest decline in profit since 1999 on rising costs to build out high-speed networks and attract new users. Shares dropped,” Bloomberg News reports. “Net income fell 16 percent to 30.2 billion yuan ($4.9 billion) in the fourth quarter, according to figures derived from full-year results released by the Beijing-based company today. That missed the 33.4 billion-yuan average of three analyst estimates compiled by Bloomberg.”

“Chief Executive Officer Li Yue is counting on a rapid shift to fourth-generation networks and introduction of popular devices like Apple Inc.’s iPhone to stem declining market share and boost data sales. The push is raising costs for everything from new equipment to smartphone subsidies as instant messaging apps like Tencent Holdings Ltd.’s WeChat cut sales from voice and texts,” Bloomberg reports. “China Mobile, which has 775.6 million subscribers, is the last of the nation’s three state-owned carriers to report results for the period. China Telecom Corp., the third-largest, yesterday reported fourth-quarter profit rose 18 percent to 2.8 billion yuan. Second-ranked China Unicom (Hong Kong) Ltd. on Feb. 27 reported net income rose 24 percent to 2.03 billion yuan. Both the smaller carriers offered the iPhone before China Mobile. That helped them lure users and cut the largest operator’s share of the nation’s 1.24 billion wireless accounts to 62 percent at the end of February, from 72 percent in October 2009.”

“To stem the decline, China Mobile began building out a faster network last year. The carrier reached agreement with Apple to offer the iPhone in December after six years of negotiations and sales of the device at China Mobile outlets started Jan. 17. Subsidies for all phones will rise 29 percent to 34 billion yuan this year with introduction of the iPhone being part of the reason, CFO Xue said.,” Bloomberg reports. “‘This is our first year with the iPhone so we are increasing the level of spending on subsidies,’ Xue said. ‘This will establish a good foundation for our long-term development.'”

Read more in the full article here.

MacDailyNews Take: You’ve got to spend money to make money.


  1. Kudo’s to Steve Job’s and then Tim Cook. As is typical in China, CM tried to stick it to Apple to gain access to China. Apple had the balls to show discipline which no other American or European company has done that I know off. GE gave away the family jewels to get into China, as did Boeing, GM, Ford, Westinghouse (to a huge degree) to name only a few.

    1. Oh for fuck’s sake, Apple is selling mobile phones in China no different from Samsung, Nokia and a host of other companies, including home grown companies like ZTE and Xiaomei. Given that the iPhone runs the worst mobile OS in the market, iOS 7, Apple gave nothing away. On the contrary Cook must have sucked a few dicks along the way to get China Mobile to open up.

      Jesus, it’s not like Boeing which manufactures jet aircraft, and GE jet engines that are an order of magnitude more complex engineering wise than a mobile phone. Get off your Apple high horse and see things in a real light.

  2. Good investment for China mobile or they would have seen their business gradually erode.
    Good business for Apple since they maintained their margins and puts more pressure on the other vendors to find other ways to grow.

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