China Mobile flags profits boost on iPhone popularity

China Telecom has beaten earnings expectations for the nine months ending September, flagging growth in revenues and profits thanks to surging consumer interest in the iPhone and mobile data services.

The smallest of China’s three national mobile operators, the company said revenues were up by 13.4%, to RMB238 billion ($39 billion), compared with the same period last year, while net income rose by 17.1%, to RMB14.8 billion.

China Telecom has beaten earnings expectations for the nine months ending September, flagging growth in revenues and profits thanks to surging consumer interest in the iPhone and mobile data services.

The smallest of China’s three national mobile operators, the company said revenues were up by 13.4%, to RMB238 billion ($39 billion), compared with the same period last year, while net income rose by 17.1%, to RMB14.8 billion.

The operator has been capitalizing on the advantage it enjoys from having an iPhone distribution agreement with Apple (Cupertino, CA, USA) – something chief rival China Mobile (Beijing, China) still lacks – and has added another 20.52 million mobile customers this year to give it 181.14 million in total.

The operator also reported that some 96.48 million customers are using 3G services, up from 59.72 million in September 2012, thanks to upgrades by existing subscribers besides sales to new customers.

Despite the heady gains, China Telecom (Beijing, China) stills lags both China Telecom and China Unicom (Beijing, China) on mobile market share.

China Mobile currently serves 755 million mobile customers – and added about 45 million over the first nine months of the year – while China Unicom caters to some 273 million.

Nevertheless, China Mobile reported a dip in profits over the first nine months, compared with the same period in 2012, owing to the cost of subsidizing handsets and rolling out a new 4G network.

China Telecom has been able to realize significant cost savings by acquiring network assets from parent company China Telecom Corp, a deal it announced in August this year.

Accordingly, expenses related to network operations and support were down by 21.8% over the first nine months, compared with the same period of 2012.

On the downside, China Telecom flagged a rise in depreciation and amortisation costs related to the acquisition and said financing costs were up by 181.9% over the same period, with debt financing used largely to fund the purchase.

Although, like China Mobile, the operator failed to increase average revenue per user over the period, it did report a slight rise in average minutes of voice usage per customer per month.

In reporting its own nine-month figures, China Mobile had appeared to blame a slight fall in usage on the rising popularity of over-the-top services.