China Mobile posted earnings growth exceeding 50% on Wednesday, but the mobile operator cautioned that there would no time for "roaming" in the coming year amid tougher competition in the country’s revamped telecoms market.

China Mobile earned 30.8 billion yuan ($4.5 billion) in net profit for the second quarter, which ended in June, up 51% from the previous year, beating an average forecast of 27.7billion yuan ($4.0 billion) from five analysts polled by Reuters. Total sales in the quarter were 103.4 billion yuan ($15.1 billion), up 16% from 88.9 billion yuan ($13.0 billion) a year ago.

On a half-yearly basis, China Mobile’s net profit rose 44.7%, to 54.8 billion yuan ($8.0 billion), while sales were up 17.9%, to 196.5 billion yuan ($28.7 billion).

The Hong Kong- and New York-listed company has recommended the payment of an interim dividend of 1.3 Hong Kong dollars (17 cents) per share to all shareholders.

China Mobile said its stronger than expected result was generated by rapid growth in its subscriber base, usage volume for voice services and high-value-added businesses. The net increase of new subscribers per month topped 7.5 million, taking the total subscriber number to 415 million. For the six months ended June 30, voice usage volume reached 1,160.47 billion minutes and average minutes per user was 496. Average revenue per user per month was 84 yuan ($12.28).

Although the growth in Chinese consumer purchasing power, the steady development of China’s rural economy and the acceleration of information infrastructure throughout the country has created a huge market for China Mobile, the company remains cautious about its outlook because Beijing’s recent measures to restructure the country’s telecoms sector have changed the competitive landscape. China announced in May that China Unicom  will buy China Netcom, the smaller of China's two fixed-line carriers, and will sell its smaller code division multiple access network to the country's fixed-line leader, China Telecom, in the process creating a stronger mobile competitor to China Mobile.

To confront the challenge, China Mobile said it would focus on innovations, including assisting its parent company in the construction of a TD-SCDMA network and integrating the existing 2G network into 3G in preparation for the full introduction of 3G operations.

In a research note released after China Mobile’s result announcement, Goldman Sachs stressed that China’s Mobile’s management guidance with regard to its ongoing strategy, particularly on its plans for implementing TD-SCDMA and its targets in the wake of the restructuring, was more important than the second-quarter figures themselves. “We continue to believe that the market underestimates China Mobile’s TD-SCDMA responsibility and potential asymmetrical regulation risks. We put out target price under review,” the report stated.

Source:forbes.com