China Mobile Q4 growth slows; dividend hike eyed

HONG KONG, CHINA: China Mobile Ltd, the world's largest mobile operator, may be pressured to raise its dividend payout ratio after it reported a 3 per cent rise in fourth-quarter net profit that met expectations and was its highest in over two years.

The company had a dividend payout ratio of 43 per cent from its full-year net profit of 119.6 billion yuan ($18.1 billion), a figure that is largely similar to its 2009 payout.

"Growth will continue, but it won't be as fast as it used to be in the past," said Victor Yip, an analyst at UOB Kay Hian in Hong Kong. "The company may consider raising its dividend payout if it returns for an A-share listing."

Had over $48 billion in available cash and assets at the end of 2010

China Mobile had over 321.8 billion yuan ($48 billion) in available cash and assets at the end of 2010, with about two-thirds of the money sitting in banks as deposits.

China Mobile reported a net profit of 32.35 billion yuan ($4.9 billion) for the quarter, based on Reuters' calculations from the company's full-year figures. That was in line with a forecast of 32.42 billion yuan from 24 analysts polled by Thomson Reuters I/B/E/S.

It was also higher than the 31.3 billion yuan profit recorded a year earlier.

"Increasing mobile penetration in China will further intensify competition in the telecommunications industry," the company said in a statement.

China Mobile offers subsidised handsets

China Mobile, the country's biggest mobile operator, has almost 600 million users and competes with China Telecom and China Unicom .

China, the world's biggest mobile-phone market, has more than 800 million mobile phone users out of a population of about 1.3 billion , a penetration rate of about 61 per cent. By comparison, Hong Kong has a mobile penetration rate of about 150 per cent.

However, most new users come from smaller towns and villages and are likely to spend less per user, and weigh on profit margins among all three mobile operators.

China Mobile, the world's largest operator by market value and subscribers, posted average revenue per user, or ARPU, of 73 yuan per month, up from 72 yuan in the first nine months of 2010 but lower than 77 yuan in 2009.

To counter the ARPU fall, Chinese mobile operators have begun chasing higher-end 3G users, offering subsidised handsets from brands such as Apple Inc and HTC Corp in return for multi-year contracts.

Apple CEO Steve Jobs had expressed interest in selling an iPhone based on China Mobile's fourth-generation TD-LTE data network, China Mobile Chairman Wang Jianzhou said earlier this month.

China Telecom and China Unicom will report results later this month.

China Mobile's margin for earnings before interest, taxes, depreciation and amortisation (EBITDA), a key indicator of profitability, clocked in at 49.3 per cent for the year, down from 50.7 per cent in the first six months of the year.

Shares of China Mobile rose 6 per cent in 2010, surpassing the Hang Seng Index's 5.3 per cent rise.