China Mobile, the world’s largest mobile carrier by subscribers, reported a mere 1.5% rise in net profit for the first half, amid the fierce 3G competition and greater impact from OTT services on the traditional telecoms industry.
Net profit for the six months ended June 30 rose to 63.1 billion yuan ($10.32 billion) from 62.20 billion yuan a year earlier, with growth in mobile data consumption offsetting declines in voice and SMS revenues.
Speaking at a press conference for the company’s interim results in Hong Kong yesterday, China Mobile chairman Xi Guohua said the growing substitution effect brought on by the OTT products, such as Tencent’s popular WeChat service, have caused more intense cross-sector competition, and these challenges pose a threat to the company’s market position and an increasing downward pressure on its development.
In the first half, voice-services revenue dropped 1.2% year-on-year to 175.1 billion yuan, while SMS and MMS revenues down 5.8% to 20.9 billion.
“The substitution of OTT services [on traditional text and voice services] is a progress [of technology advancement] and China Mobile is not immune [to such a trend],” Xi Guohua said, noting that the company expects a growing impact of OTT services on its text and voice services.
Despite that, data business sustained growth momentum, with revenue of 95.4 billion yuan, up 25.5% over the same period last year, and as a percentage of revenue from telecoms services increased to 33.5%. Among them revenue from wireless data traffic reached 47.4 billion yuan, up 62.2%, while wireless data traffic jumped 129% to 891.4 billion megabyte.