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Telco's net rises 30% but rate to slow

CHINA Mobile, the world's No. 1 mobile carrier, posted a 30-percent growth in net profit in 2008, thanks to its dominant market position and new subscribers from rural areas, the telco said yesterday.

But China Mobile is expected to experience a slower growth due to intense competition and a weakening economy, analysts said.

In 2009, the telco will spend 133.9 billion yuan (US$19.7 billion) to upgrade existing networks and build the next-generation mobile, or 3G, networks. China Mobile will also seek overseas investment opportunities in 2009, said Chairman Wang Jianzhou.

China Mobile reported a net profit of 112.80 billion yuan last year, up from 87.10 billion yuan in 2007. Revenue rose 16 percent to 412.34 billion yuan. The net profit was slightly lower than the average 115.07 billion yuan forecast by analysts.

China Mobile is facing new challenges as the rising penetration rate of mobile phones, the restructuring of the country's telecommunications industry and the issuance of 3G licenses have changed the domestic telecom industry's structure and increased competition, Wang said.

"China Mobile is going to be the only telecommunications carrier in China with net profit growth but the rate will slow down due to competition," said Chen Haofei, an analyst at China International Capital Ltd.

In the fourth quarter, the telco's net profit rose 11 percent, only one-third of the annual growth rate.

Analysts expect China Mobile to maintain its domestic market dominance over the next two to three years, despite increased competition from China Unicom and China Telecom. China Mobile has 70 percent of the country's mobile phone users and 50 percent of the total telecom income by the end of last year, said the telco and the Ministry of Industry and Information Technology.



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