China Mobile Sees Surge in Data Traffic, Need for More Network Capacity
06/19/2012| 11:43pm US/Eastern
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By Paul Mozur
SHANGHAI--The chairman of China Mobile Ltd. (CHL) said Wednesday that data traffic on its mobile network will surge more than 150% this year, and the company expects the sharp rise to continue in coming years.
While growing data traffic helps generate more revenue, it also creates a challenge as the carrier has to ramp up investment on its network to accommodate the traffic, said Chairman Xi Guohua in a speech at the Mobile Asia Expo, a mobile industry trade show.
Mr. Xi also said the company's TD-LTE experiments in Chinese cities are proceeding smoothly and attracting investment from the central government as well as local governments.
TD-LTE is a new fourth generation mobile communications standard that China Mobile is hoping to launch commercially in the coming years. The company is in the process of testing the new 4G technology in a number of Chinese cities ahead of its commercial roll out.
Mr. Xi's comments come as smartphones are becoming more widespread in China, causing data traffic to expand rapidly.
As the mobile market in China becomes increasingly saturated, China Mobile has experienced a dramatic slowdown in earnings momentum and faces increasing competition from rivals China Unicom (Hong Kong) Ltd. (0762.HK) and China Telecom Corp. (0728.HK).
The three companies are competing for new users of third-generation services that offer faster data speeds and more revenue per user than second-generation services, which are much more widely used.
China Mobile has the disadvantage of using an internationally unpopular 3G standard, which means it is unable to offer the same variety of smartphones that its rivals can. Both China Telecom and China Unicom offer Apple Inc.'s popular iPhone, which China Mobile doesn't.
In April, Mr. Xi said a jump in wireless data traffic, which grew 181.3% in the first quarter from a year earlier, helped to stabilize its average revenue per user, which has fallen as customers are increasingly using multiple SIM cards.
By Paul Mozur, Dow Jones Newswires; 86 10 8400 7702; paul.mozur@dowjones.com
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