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Hongkong Earnings Analysis: 
China Mobile Earnings Up 32%
Author: 123jump.com Staff
123jump.com
Last Update: 12:04 AM EDT March 21 2008

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The largest mobile phone carrier in the world reported 21% increase in revenue to Rmb 356 billion ($50 billion) after it added 5.7 million new subscribers a month in 2007. The company increased its market share to 69% in 2007 from 68% in 2006 as it added subscribers in the rural area. Monthly churn rate in 2007 fell to 2.64% from 2.73% in 2006. China Mobile plans to spend Rmb 127 billion in network infrastructure in 2008 and Rmb 119 billion in 2009. China Mobile has 384 million subscribers.

 
Revenue Composition

Usage fees formed the largest part of 2007 revenue with 63.5% share of the total revenue, value added services contributed 26.7%, monthly fees added 5.9% and other services provided 5% of the revenues. To the value added services, SMS contributed 11.8%.

Management of the company

In July 2007, credit agencies Moody’s and Standard & Poor’s upgraded the company’s ratings to A/Positive and A/Stable respectively.

The Company improved its raking to 16th in the ‘‘FT Global 500’’ by the Financial Times from 38 in 2006.

Outlook

China Mobile spent Rmb 105.1 billion ($14.8 billion) in network equipment and upgrades. The company plans to spend Rmb 127.2 billion in 2008, Rmb 119 billion in 2009 and Rmb 109 billion in 2010. The company estimates dividend payout ratio of 43% in 2007 to be maintained in 2008.

China at the end of January 2008 had 559 million mobile subscribers and China Mobile added 7 million subscribers in the month. In February, China Mobile added 7.97 million new subscribers with the total subscribers totaling to 384.35 million.
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