E-Commerce News: Telecom: China Mobile Profit Leaps 37 Percent on New Rural Accounts

China Mobile's first-quarter profit rose 37.2 percent to about $3.4 billion and its number of subscribers grew 6 percent to 392 million during the period. Meanwhile, China Telecom's earnings increased by only 0.5 percent to about $880 million and its number of accounts fell by 3.2 million.

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China Mobile, the country's biggest mobile phone carrier, said Monday its first-quarter profits surged while China Telecom, the country's main fixed-line carrier, reported essentially flat earnings, reflecting a shift in consumer tastes.

Consumers in China increasingly view fixed-line service as impractical, opting instead to use only mobile phones.

China has the world's biggest population of mobile users, with some 520 million accounts, and the government says that number should reach 600 million soon.

New Rural Business

"The rapid growth in China's economy and the vigorous demand for telecommunications services continued to create a prosperous environment," said a China Mobile statement.

China Mobile said profits for the three months ending March 31 rose 37.2 percent over the same period of 2007, to 24.1 billion yuan (US$3.4 billion). It said the number of subscribers rose 6 percent to 392 million.

China Telecom said its earnings edged up 0.5 percent from the year-earlier quarter to 6.2 billion yuan ($880 million). However, the number of accounts fell by 3.2 million, to 217.2 million.

China Mobile said the rate at which it signs up new accounts accelerated by 33 percent to 7.6 million per month in the quarter, driven mostly by new business in rural China.

With many of the more prosperous eastern Chinese cities saturated, rural areas are the new target.

New Opportunities

Beijing is believed to be on the verge of approving licenses for third-generation, or 3G , mobile service to support mobile video, Web access and other services. That is expected to boost revenues further for mobile carriers as it opens up new opportunities.

China Mobile launched trial service this month of a homegrown Chinese 3G standard, known as "TD-SCDMA" (Time Division-Synchronous Code Division Multiple Access), in Beijing and seven other cities.

China Telecom's results were hurt by "intense market competition and the increased diversity in communication means," the company said.

China Telecom said it would focus on value-added services such as Internet access and on companies and mid- to high-end households, while minimizing sales to low-end customers.