China Mobile (Hong Kong) Ltd, the world's largest cellular operator by subscribers, recorded a double-digit net profit increase, year-on-year, in 2004.

The Hong Kong-listed firm yesterday said its net profit for 2004 reached 42 billion yuan (US$5 billion), representing an increase of 18.1 per cent compared with 2003.

Earnings per share in 2004 stood at 2.14 yuan (26 US cents).

Sales in 2004 increased to 192.4 billion yuan (US$23.2 billion) from 158.6 billion yuan (US$19.2 billion) in 2003.

The firm attributed the strong sales growth mainly to its mid-year acquisition of provincial networks from its State-run parent.

Despite stiff competition, the firm said it maintained relative stability in its high-value customer base and fairly high growth in new markets, and managed to slow down relatively the decrease in its average revenue per user (ARPU) per month.

Besides, new services such as SMS (short messaging service), and "color rings" had greatly boosted total revenue growth.

Such new businesses' contribution to the firm's total revenues surged 76.5 per cent year-on-year in 2004.

New businesses accounted for 15.5 per cent of China Mobile's total proforma combined revenue last year.

The Board recommended payment of a final dividend of HK$0.46 (5.9 US cents) per share for the financial year ended on 31 December, 2004.

Company chairman Wang Jianzhou expects competition in the Chinese mainland's cellular market to become more rational.

And the maturing of mainstream Third Generation Mobile Communication (3G) technology and products and the issuing of 3G licenses in the Chinese mainland may result in changes in the industry's environment, Wang said.

China Mobile will "actively prepare for 3G's construction and development," he said in a statement.

The Chinese Government has yet to indicate when to award operators the licenses to build 3G networks.

The industry widely expects the licensing to occur in the second half of this year.

Lea Cai, an analyst with Norson Telecom Consulting, said China Mobile will start investing in the 3G network build-out this year while curbing its investment in 2G GSM (global system for mobile communications) networks.

Source: China Daily