China Mobile Beats Q3 Estimates on Strong Rural Growth

| About: China Mobile (CHL)
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The world's number-one wireless-telephone carrier, China Mobile, posted Monday a 30% gain in profits and added a record number of subscribers after it cut prices and focused on untapped rural areas. Net income rose to 21.97.9 billion yuan ($2.93 billion) from 15.97 billion yuan a year ago; sales were up 22% to 258.5 billion yuan. Analysts polled by Reuters had been expecting net profit of 21.09 billion yuan. China Mobile added a net average of 5.4 million customers/month from January to September, and now serves 350 million users (more than the population of the United States). But the company said average revenue per user [ARPU] will likely fall as the company continues to sign up more rural customers who tend to opt for low-end packages. The battle between China's two biggest carriers, China Mobile and China Unicom, has increasingly shifted to rural areas as subscriber growth in big cities slows. "Benefiting from the rapid growth of the economy of China, enormous demand in the telecommunications market and rationalized competition environment, the Group maintained a rapid and healthy business development in the first three quarters of 2007. The Group made great efforts to extend the rural market," the company said in a press release. Shares of China Mobile are up almost 52% in Q3 alone, ahead of Unicom's 20% and a 25% gain in the Hang Seng. China Mobile closed down 3.9% Monday to HK$142.20 before the numbers were released, slightly worse than the Hang Seng's 3.7% percent drop.

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