 China's mobile phone market is the biggest in the world |
China Mobile's profit growth has fallen slightly short of expectations after it expanded in less affluent rural areas. The biggest mobile phone operator in China said profit between January and March rose to 24.1bn yuan ($3.4bn; �2.2bn), up 37.2% on the previous year. But the rise was below forecasts and average revenue per user fell as many of the 22.8 million customers added in the period signed up to cheaper rates. Saturation in cities has driven a land grab for subscribers in rural China. "The rapid growth in China's economy and the vigorous demand for telecommunications services continued to create a prosperous environment for the group," said China Mobile's chief executive Wang Jianzhou. He said the average monthly net additional subscribers for the first quarter reached 7.60 million, representing an increase of 33.9% compared with the average monthly net additional subscribers of 5.68 million of last year. Growing competition At the end of March, the group's subscriber base reached 392.14 million "However, as the new subscribers are mainly low-end users and tariff adjustments are steadily and gradually introduced in the first quarter, average revenue per minute of usage recorded a decrease," Mr Wang added. Average revenue per user, which is seen as a key indicator of performance, had fallen to 82 yuan per month by the end of March, compared with 91 yuan at the end of December. Future earnings growth for China Mobile and its smaller rival Unicom could come from the eventual arrival of next-generation mobile telephony which will offer speedier internet access and better video streaming. Licences are expected to be issued by the government before the Beijing Olympics in the summer. But challenges include the long-awaited shake-up of China's telecoms sector, which could see the market becoming fiercely competitive with the entry of fixed-line and broadband providers China Telecom and China Netcom. China is the world's largest mobile market with about 520 million mobile phone users. The number could reach 600 million by 2010, according to the government.
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As the new subscribers are mainly low-end users, average revenue per minute of usage recorded a decrease
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