China Mobile 1Q Net Profit

HONG KONG (Dow Jones)--China Mobile (Hong Kong) Ltd. (CHL) said Thursday that first-quarter net profit rose 28% because its subscriber base continued to grow rapidly.

The listed arm of China's largest mobile carrier by subscribers said net profit for the three months ended March 31 was CNY14.36 billion, up from CNY11.25 billion in the year-earlier period.

The result is in line with expectations. According to the average estimates of four analysts in a poll by Dow Jones Newswires, China Mobile's first quarter result was expected to be CNY14.38 billion.

China Mobile's first-quarter earnings before interest, tax, depreciation and amortization rose 21% to CNY35.78 billion from CNY29.62 billion. Its EBITDA margin improved to 55% from 54% in the year-earlier period.

JP Morgan analyst Tim Storey said in a research report that China Mobile's EBITA margin will remain stable in 2006 as there is "the lack of competitive pressure" this year.

However, Storey said China Mobile could face the risk of competition from 3G, which will naturally increase competition.

Analysts said the country's two fixed-line operators - China Netcom Group Corporation (Hong Kong) Ltd. (CN) and China Telecom Corp. Ltd. (CHA) are more likely to take up the responsibility of developing the homegrown 3-G mobile phone standard, TD-SCDMA, while China Mobile is more likely to adopt WCDMA, which have been adopted by some European countries.

Beijing is widely expected to award licenses for TD-SCDMA this year, ahead of other 3G standards.

China Mobile's revenue in the three-month period increase 19% to CNY65.02 billion from CNY54.86 billion a year earlier.

In the three-month period, China Mobile added 12.63 million subscribers, compared with the 11.78 million new users it gained in the fourth quarter of 2005.

It gained 4.30 million subscribers in March - the largest monthly addition for the company since it first reported monthly operation figures in January 2003.

The mobile carrier added 4.20 million subscribers in February.

The company had 260.65 million subscribers as of the end of March.

Average revenue per user per month in the first quarter fell to CNY86 from CNY92 in the fourth quarter.

It said 227.2 million subscribers were using mobile data services, up from 206.7 million in the previous quarter.

The company's network utilization rate was 82.0% during the period, up from 81.6% in the fourth quarter.

Meanwhile, the mobile phone giant is keenly looking to expand offshore, especially in high-growth emerging market where it can leverage its experience in China.

It's mainland parent China Mobile Communications Corp is planning to join the final round of bidding for telecommunications operator Millicom International Cellular SA (MICC), The Wall Street Journal Asia reported, citing a person familiar with the situation.

The move comes after China Mobile last year failed in its attempt to buy a 26% stake in Pakistan Telecommunications Co., won instead by United Arab Emirates-based Emirates Telecommunications Corp. (ETISALAT.AD).

Nasdaq-listed Millicom, which hired Morgan Stanley in January to consider several unsolicited takeover approaches, is accepting final bids this week, according to the person.

China Mobile's interest in Millicom was reported by the Financial Times Thursday.

For China Mobile, Millicom's most attractive assets are its mobile telecom services in high-growth emerging markets in Africa, Asia and Latin America.

The company has more than 8.9 million customers in 16 emerging markets, according to its Web site.

A spokeswoman for the Hong Kong company told Dow Jones Newswires Thursday that neither the listed company nor its Chinese parent was involved in the Millicom bidding.

"The Hong Kong-listed company isn't involved in the bidding process...we haven't heard that our mainland parent is involved in the process," said Rainie Lei, a corporate communications manager for China Mobile (Hong Kong) Ltd.