BEIJING (Reuters) - Quarterly revenue at China Mobile Ltd (0941.HK) fell year-over-year for the first time since at least 2009 as China’s largest telecom provider continued to stumble in the face of rising competition from popular Internet-based messaging apps.
China Mobile reported on Monday operating revenue of 481.24 billion yuan ($78.59 billion) for the first nine months of the year. The cumulative figure implied revenue of 156.6 billion yuan during the June-September quarter - or down 2 percent from a year prior - marking the first time in years that quarterly revenue has declined, according to a Reuters calculation.
The reversal, coming after years of sizzling growth as China’s middle class snapped up cell phones, highlights the mounting pressure on China Mobile.
In a statement issued on Monday, the carrier acknowledged that the effects of competition from smartphone apps, which deliver messages and voice memos over the mobile Internet, have become “more evident” as voice calls and text messages - two traditional money-makers - have fallen sharply. Usage of messaging apps such as Tencent Holdings Ltd’s (0700.HK) Weixin, for instance, have boomed.
China Mobile said it saw a 0.3 percent decrease in voice usage and a whopping 20.2 percent drop in text messages from a year prior. Meanwhile, mobile data traffic nearly doubled.
Net income for the first three quarters of 2014 fell 9.7 percent to 82.6 billion yuan from a year earlier, China Mobile said.
The carrier, however, has enjoyed a significant first-mover advantage leading China’s next-generation 4G telecom network roll-out. While 4G service at rivals China Unicom Hong Kong Ltd (0762.HK) and China Telecom Corp Ltd (0728.HK) remain in testing, China Mobile said the number of 4G customers, who pay more for the faster service, reached 41 million by the end of September.
Total customers reached 799.13 million compared with 755.19 million a year earlier, although the carrier warned that China’s mobile market has become saturated.
“The mobile communications sector in Mainland China was already in the phase of high penetration rate, and the room for development in traditional communications business was severely restricted,” China Mobile said.
After lagging for several quarters, China Mobile shares have been boosted in recent weeks by news that it would cut handset subsidies to raise profitability. The stock closed up 0.9 percent in Hong Kong ahead of the earnings release, versus a 0.2 percent rise in the benchmark index .HSI.
The carrier is expected to benefit from sales of Apple Inc’s (AAPL.O) new iPhone 6, which launched in China last week.
(1 US dollar = 6.1233 Chinese yuan)
Reporting by Gerry Shih