Social Media Messaging Causes China Mobile’s First Annual Profit Drop

Chinese telecom operator China Mobile announced its annual results for 2013 in Hong Kong, and those financial numbers did not impress.

During the entire year of 2013, China Mobile's operating revenue was CNY630.2 billion, a year-on-year increase of 8.3%; but its net profit was CNY121.7 billion, a year-on-year decrease of 5.9%.

This is reportedly the first time for China Mobile to see an annual net profit decline.

China Mobile stated in its chairman's report that 2013 was a key year for the company's transitional development. On one hand, the issuance of 4G license brings new opportunities; on the other hand, its operating pressure continues to increase as it faces the competition from over-the-top services and market saturation

The competition from OTT Internet services was a major reason for China Mobile's net profit decline. For example, with the launch of new communication methods such as Tencent's Wechat Weixin service, China Mobile's short message business continued to decline since January 2013.

Information from Ministry of Industry and Information Technology of China revealed that in January 2013, the short message business volume of Chinese carriers decreased by 10% year-over-year. At the same time, though the mobile call times increased by 11.3%, the growth rate decreased.