China Mobile has continued its sizzling pace of growth, becoming the world's biggest mobile phone firm and again posting profits ahead of expectations.

The company, which last month expanded its network on the mainland with the acquisition of eight local operators, said it now had 105.4 million users, nosing ahead of Britain's Vodafone, which has 103.8 million worldwide.

Excluding those eight networks, China Mobile made a profit of 15.2bn yuan (�1.2bn; $1.8bn) during the first half of the year, compared with 13.8bn yuan a year earlier.

Amid reports that the Chinese market was starting to slow down, analysts had predicted a profit of less than 15bn yuan for the period.

Although Chinese mobile subscriber numbers continue to grow strongly, with penetration reaching even isolated rural areas, China Mobile has been plagued by plunging per-user revenues, as it cuts prices to gain market share.

Money worries

Over the past three months, China Mobile earned average revenue per user of 123 yuan; two years ago, the firm was bringing in 247 yuan per subscriber.

But the firm argued that the pace of decline in per-user revenue was slowing.

While subscribers are spending less, China Mobile is also fighting competition from China Unicom - competition that will become more fierce as the market deregulates.

Since China's entry to the World Trade Organisation last year, the government has announced sweeping changes to the long heavily regulated telecoms market.

State incumbent China Telecom is to be split into two, and the resulting pair are to compete across all markets with China Mobile and China Unicom.

Despite rising revenues and profits, China Mobile's shares have lost one-third of their value over the past year.