China Mobile's revenue reverses

Quality revenue at China Mobile fell year on year for the first time since at least 2009 as China's largest telecom carrier continued to stumble in the face of rising competition from popular Internet-based messaging apps.

China Mobile reported Monday an operating revenue of 481.24 billion yuan (US$78.6 billion) for the first nine months of this year.

The cumulative figure implied revenue of 156.6 billion yuan during the July-September quarter — or down 2 percent from a year prior — marking the first time in years that quarterly revenue has declined, according to a Reuters calculation.

The reversal, coming after years of sizzling growth as China's middle class snapped up mobile phones, highlights the mounting pressure on China Mobile.

In a statement issued yesterday, the carrier acknowledged the effects of competition from smartphone apps, which deliver messages and voice memos over the mobile Internet, have become "more evident" as voice calls and text messages — two traditional moneymakers — have fallen sharply. Usage of messaging apps such as Tencent Holdings Ltd's WeChat, for instance, have boomed.

China Mobile said it saw a 0.3 percent dip in voice usage and a whopping 20.2 percent drop in text messages from a year prior. Meanwhile, mobile data traffic nearly doubled.

Net income for the first three quarters of 2014 fell 9.7 percent to 82.6 billion yuan from a year earlier, China Mobile said.

The carrier, however, has enjoyed a significant first-mover advantage leading China's next-generation 4G telecom network rollout. While 4G service at rivals China Unicom and China Telecom remain in testing, China Mobile said the number of 4G customers, who pay more for the faster service, reached 41 million at the end of September.

Total customers reached 799.13 million, up from 755.19 million a year earlier, although the carrier warned that China's mobile market has become saturated.

China Mobile said the mobile communications sector on China's mainland "was already in the phase of high penetration rate, and the room for development in traditional communications business was severely restricted."

After lagging for several quarters, shares in China Mobile have been boosted in recent weeks by news that it would cut handset subsidies to raise profitability.