HONG KONG: China Mobile is starting to benefit from its years of investment in non-voice services, helping the world's largest mobile carrier by subscribers to report an unexpected rise in revenue per user.

The dominant player in China's booming market beat forecasts to log its strongest quarterly profit growth in over a year, helping its shares rise more than 1 per cent in a weak market.

China Mobile, also the world's most valuable mobile carrier, has about 500 million users, more than the combined populations of Britain, Germany and the United States.

This year, the company faces a challenge to sustain the momentum as it rolls out its third-generation (3G) wireless network, which will enable a wider range of value-added services such as video streaming and music downloads.

"The key for China Mobile in 2010 is how they can grow revenue by attracting more users to its value-added and 3G services," said Frank Zhu, telecoms analyst at SinoPac Securities in Shanghai.

Many analysts say China Mobile has so far only half-heartedly promoted its 3G network, which is based on a homegrown standard known as TD-SCDMA. Smaller rivals China Unicom and China Telecom are building 3G networks based on more proven global standards.

"Compared to Unicom and Telecom, it's also got the biggest number of corporate users, which means it's more likely than rivals to grow income in the 3G field this year, even though its market share is still small now," Zhu said.

Like peers in more developed markets, Chinese telecoms operators have been pushing the non-voice mobile business to boost revenue as sales of voice calls saturate.

In India, the world's fastest growing wireless market with about 500 million subscribers, top ranked Bharti Airtel and Reliance Communications are bidding for 3G slots in a cut-rate sector which is also seeing a sharp fall in average revenue per user.

Last week, China Mobile struck a surprise deal to buy 20 per cent of Pudong Development Bank for $5.8 billion to help it dominate the country's nascent mobile e-commerce market.

Rare increase in ARPU

China Mobile's average revenue per user (ARPU) - a key performance indicator in the telecoms sector - rose to 77 yuan for the whole of 2009 versus 75 yuan for January-September, a rare increase for an industry that has seen figures fall steadily in recent years due to tougher competition.

This was largely a result of growth from value-added services, with revenue rising 16 per cent from 2008 to contribute about 29 per cent of China Mobile's total operating revenue.

China's three mobile carriers spent $21 billion building 3G mobile networks last year, following the much-delayed awarding of licenses.

China Mobile said it will roll out more than 80 TD-SCDMA handsets this year, and will focus on promoting its 3G business with initiatives in areas such as mobile reading, music downloads and mobile video.

"The government attaches great importance and gives strong support to "home-grown innovation", which motivates the group and gives it confidence in its 3G development," the company said.

China Mobile's October-December net profit rose to 31.3 billion yuan, based on Reuters calculations from company figures, from 30.2 billion yuan a year earlier. Analysts polled by Thomson Reuters I/B/E/S had predicted net profit of 30.4 billion yuan.

Shares of China Mobile and its rivals all trailed the broader market .HSI last year, with China Mobile dipping slightly in 2009 when the big board rose more than 50 per cent.