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China’s Top 3 Telecoms Suffer Sales Dip, Forced To Cut Fees

The listed units of China’s three leading state-owned wireless carriers each reported a sales decline for the first nine months of the year, following a government mandate to cut service fees for customers.

China Mobile’s sales totaled 566.7 billion yuan ($80.2 billion) between January and September, down 0.2% from a year earlier. Earnings were impacted by the state order that took effect last year for all three telecommunications providers to eliminate domestic roaming fees, the company said.

Wireless contracts rose slightly to about 942 million for China Mobile, the world’s largest carrier. But revenue per user dipped to 50 yuan monthly from 52 yuan in the year-earlier period. Net profit tumbled 13.9% to 81.8 billion yuan.

Sales at China Unicom shrank 0.7%, due primarily to a 6% drop in revenue from mobile communication services. But the company cut costs while boosting sales of industrial internet services, leading net profit to grow by 11.9%.

China Telecom’s sales retreated 0.8% as the bottom line shrank by 3.4%. Despite an increase in cell phone contracts, the company’s average revenue per user went south.

Amid the tighter revenues, Beijing tasked the three telecoms with developing the infrastructure for fifth-generation wireless communications. China Unicom and China Telecom agreed last month to collaborate on this front, looking to slash construction and operating costs and roll out high-quality 5G service quickly.

China Mobile is expected to partner with China Broadcasting Network on building 5G infrastructure. CBN, which is also a broadband provider, falls under the purview of China’s National Radio and Television Administration. CBN was recently awarded a license to run commercial 5G services.―Nikkei Asian Review

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