China Mobile’s net falls on 4G costs and VAT
Print Edition
CHINA Mobile Ltd’s net profit fell in the first half of this year because the world’s biggest telco invested more in next-generation 4G technology while a government tax reform eroded its profit margin.
The company made a net profit of 57.7 billion yuan (US$9.4 billion) in the first six months, down 8.5 percent year on year. The revenue grew 7.1 percent to 324.7 billion yuan in the period.
China Mobile’s results were also affected by the imposition of the new value-added tax from June. The VAT reform will push the tax rate for telecommunications carriers from 3 percent to about 7 percent, analysts said.
As the first telco to offer 4G services on the Chinese mainland since the end of last year, China Mobile, which offers users handset subsidies for 4G services, increased investment in high-speed 4G services and built 4G networks in the first six months of this year, Chief Executive Li Yue said in a statement yesterday.
At the end of June, China Mobile had 410,000 4G base stations in 300 cities across the country. The telco said it had 790.6 million subscribers at the end of June, including 238.5 million on 3G services and 13.9 million on the 4G network.
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