China Mobile's Sales Slow in 2008 as Competition Heats up

China Mobile on Thursday reported its slowest annual sales growth in at least six years as competition intensified and the global recession took a toll.

Sales at China's largest mobile phone service provider reached 412.3 billion yuan (US$60.4 billion) in 2008, up 15.5 percent compared to a year earlier. The annual growth rate hasn't been that low in at least six years, the oldest data carried on the company's Web site.

Net profit increased 29.6 percent to 112.8 billion yuan.

The number of mobile phone subscribers at China Mobile rose to 457.25 million as of the end of last year, up 23.8 percent from a year earlier.

Nearly half of the operator's new subscribers last year came from rural areas of China after the company made a major push to expand its network coverage to every corner of the nation. Subscriber growth in big cities continued, but the company noted "signs of maturity."

Despite the increase in subscribers, China Mobile faced a number of challenges last year, including new competition and the massive Sichuan earthquake, which killed thousands and knocked out mobile networks.

Competition intensified in China's telecommunications industry after the government ordered a major restructuring, the company said. The government move resulted in an new rival for China Mobile, as the number of mobile network operators rose to three from two.

The restructuring also turned China Mobile into both a fixed line and mobile operator, when it used to be just a mobile operator. The company was also tapped to champion China's home grown TD-SCDMA (Time Division-Synchronous Code Division Multiple Access) technology for 3G networks.

One of the company's rivals, China Unicom, is using the more widely accepted WCDMA (Wideband CDMA) standard.

China Mobile predicted tougher times going forward.

"The influence of financial crisis that swept across the globe in 2008 will likely widen and deepen, and its impact on China's economy will continue," the China Mobile statement said. "The telecommunications industry will be affected."

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