March 16 (Bloomberg) -- China Mobile Ltd., the world’s biggest wireless carrier by users, unexpectedly said it will boost capital spending this year to meet rising demand for data services from users downloading video and music on their phones.
China Mobile aims to spend as much as 132.4 billion yuan ($20.1 billion) in 2011, compared with 124.3 billion yuan last year, according to a company presentation today. Analysts including Michael Meng of BOCI Research Ltd. had expected the Beijing-based company to reduce capital spending this year.
The company is increasing spending after posting a better- than-expected net income in the fourth quarter. Chairman Wang Jianzhou is expanding the range of data services China Mobile offers over its mobile network beyond traditional short message service texting as he seeks to maintain the lead over rivals China Unicom (Hong Kong) Ltd. and China Telecom Corp.
The capital spending guidance “was a negative coming out of the result,” Lisa Soh, a Hong Kong-based analyst at Macquarie Group Ltd. which rates the stock “outperform,” said in an e-mail. Soh said she was surprised by the company’s projection, which was 35 percent more than she estimated.
China Mobile fell 1.7 percent to HK$71.05 at the 4 p.m. close of trading in Hong Kong, after earlier climbing as much as 1.5 percent. The stock has dropped 8 percent this year.
BOCI’s Meng had forecast capital spending at China Mobile may drop to 118 billion yuan this year in a March 9 report. Paul Wuh, a Hong Kong-based analyst at Samsung Securities Co., said he’d expected the 2011 expenditure at 98 billion yuan.
Net Profit
Net income increased 3.7 percent to 32.4 billion yuan in the quarter ended Dec. 31, according to figures derived from full-year earnings reported by the company today. Profit was expected to be 31.8 billion yuan, according to the average of five analyst estimates compiled by Bloomberg News.
Fourth-quarter sales rose 6 percent to 132.6 billion yuan.
China Mobile had a total of 584 million mobile-phone subscribers at the end of last year, including 20.7 million customers for the high-speed, third-generation service that smartphones use to surf the Web, the company said in February.
That compares with China Unicom’s 311.3 million total subscribers and 14.1 million users of its 3G service. China Telecom was in third place with 90.5 million subscribers.
Value-added data such as the mobile music service “was an essential driver of total revenue growth” last year, accounting for 31 percent of operating revenue in 2010, Wang said.
Registered Customers
China Mobile has 35 million registered customers for its mobile applications offerings, who can select from 50,000 applications to download, the carrier said. By the end of last year, the site had recorded 110 million application downloads, according to the statement.
Wang aims to keep China Mobile’s lead with heavy data users by rolling out the country’s first fourth-generation network. The company in December received approval from the Ministry of Industry and Information Technology to begin a trial of its 4G TD-LTE network, and it said this month it added Beijing to the original six cities in the program: Shanghai, Hangzhou, Nanjing, Guangzhou, Shenzhen and Xiamen.
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