China Mobile (Hong Kong) Ltd. said Wednesday its first-half net profit rose 45% on strong subscriber growth and lower taxes.

The company said it will help its parent build a network for China's homegrown third-generation mobile technology and look for opportunities to directly invest in overseas assets as it prepares for increased competition following the restructuring of China's telecommunications industry.

The listed unit of China's largest mobile operator by subscribers reported a net profit of 54.85 billion yuan ($8.01 billion) for the six months ended June 30, up from 37.91 billion yuan a year earlier. Its result was higher than the average forecast of 51.77 billion yuan in a Dow Jones Newswires poll of nine analysts. Revenue rose 18% to 196.46 billion yuan from 166.58 billion yuan.

Analysts have been waiting for the company to comment on its involvement in developing the Time Division Synchronous Code Division Multiple Access, or TD-SCDMA, operations with its parent as they are concerned over the technology, which is relatively immature compared with foreign standards.

Its parent, China Mobile Communications Corp., is running commercial trial networks of TD-SCDMA in 10 cities, including Beijing. The technology is intended as a Chinese alternative to two international 3G standards already in wide use around the world, Wideband CDMA and CDMA2000.

The company didn't give further details on the assistance it will give its parent but said it will integrate its existing 2G network with the 3G network.

China Mobile has a more than 70% share of subscribers to the country's 2G network, but its rivals China Unicom Ltd. and China Telecom Corp. are expected to be granted licenses for the more mature 3G technology standards, which is likely to hurt the company's dominance in mobile services.

At the end of June, China Mobile's subscribers totaled 414.6 million, up from 332.4 million the year before, as it cut tariffs to target rural customers. The company also benefited from a lower overall taxation rate, paying a nearly identical amount of taxes from a year earlier, even though its first-half profit before tax was 31% higher than last year's.

China Mobile also said it will look for opportunities to invest in telecom assets overseas, a departure from the usual practice in which its parent decides on any overseas investments. In its only overseas acquisition, China Mobile Communications bought 100% of Pakistan telecommunications operator Paktel Ltd. last year for $460 million and renamed it CMPak Ltd.

Average revenue per user per month fell 5% in the first half to 84 yuan from 88 yuan a year earlier because of the strategy to increase the company's rural customer base.

China unveiled an industry restructuring plan in late May to merge six of the country's state-owned mobile phone and fixed-line operators into three nationwide carriers that offer both fixed-line and wireless services, instead of dividing coverage in terms of region or type of service. China Mobile's parent will merge with fixed-line carrier China Tietong Telecommunications Corp., according to the plan.

Source:dowjones.com