China will add 60 million broadband users and 100 million 3G users in 2013 as well as improve bandwidth speed nationwide under the “Broadband China” project, the Ministry of Industry and Information Technology (MIIT) said. This year 35 million users will be added on its high-speed fiber-to-the-home (FTTH) network, up from 94 million by the end of last year. The Ministry will also increase the normal home broadband user base by 25 million to 200 million by the end of this year. The Ministry said 70% of all users nationwide will enjoy broadband services with a bandwidth of four megabytes per second (Mbps) or above. The “Broadband China” project seeks to raise the country’s average broadband bandwidth capacity in urban regions to 20 Mbps by 2015, five to 10 times faster than the current level. China, the world’s No 1 telecommunications market, will have over 332 million 3G users this year, up from 232.8 million by the end of last year. By 2015, MIIT sees 450 million 3G users in the country. In Shanghai, the average internet bandwidth hit 4.70 Mbps by the end of the first quarter.

China Mobile saw its weakest profit growth in three quarters as higher costs cut gains from more users of high-speed network services. Net income rose to CNY27.9 billion in the three months through March, compared with CNY27.8 billion a year earlier. Sales rose 5.7% to CNY134.7 billion in the quarter. Ricky Lai, Hong Kong-based Analyst with Guotai Junan International Holdings, said “the heavy handset subsidies strategy in 2013, with the total estimated at CNY27 billion, will worsen its profit margins.” China Mobile’s SMS traffic actually rose about 5.5%, while mobile internet use also rose a healthy 14%. One vulnerable area was the operator’s extensive wi-fi network, where traffic actually fell about 14% during the quarter. JP Morgan predicts that the operator’s net profit will fall 3.5% for the whole of this year. “With a much bigger capital expenditure rise in 2013, China Mobile will have to experience a few years of earnings dips,” said a JP Morgan report. “The question is whether the company’s aggressive 4G investment can translate into better long-term growth. In this regard, we are more cautious than the market.” In the first quarter, China Mobile faced difficulties from “unprecedentedly intense competition” and more substitution of traditional communication businesses by new technologies and businesses, said Chairman Xi Guohua. The firm’s net profit margin “was maintained at a relatively high level of 20.7%” in the first quarter, said Xi. However, JP Morgan, quoting China Mobile’s management, said margins would be on a declining trend, and the net profit margin will have to converge to 10% to 15% at global operators in the long run. “We expect earnings to dip due to margin pressure, high capital expenditure and a dilutive 4G profit.” China Mobile’s total customer base grew by 16.01 million to 726.31 million in the first quarter from the fourth quarter last year, and its 3G customer base rose by 26.44 million to 114.37 million.

China Unicom’s net profit surged 88.6% in the first quarter to CNY1.9 billion as its 3G business boomed. Revenue was CNY70.6 billion, an annual growth of 15.4%. The 3G business contributed 55% of China Unicom’s total mobile income of CNY19 billion by the end of the quarter, up from 43% in the same period a year ago. By the end of the first quarter, Unicom’s 87.8 million 3G subscribers still lagged behind the 114.4 million for market leader China Mobile. The company said sales expenses increased by 22.8% in the first quarter to CNY10 billion to “respond to the keen market competition”.

China Telecom’s net profit rose 10% year-on-year in the first quarter to CNY4.7 billion. It was the first increase in earnings since the country’s third-biggest mobile telephone operator in terms of users started offering Apple’s iPhone in March last year. Revenue grew 14.6% to CNY77.8 billion. The Beijing-based firm announced it would sell to its parent, China Telecommunications Corp, the 80% stake it holds in E-surfing Media. China Telecom said it expected to realize a gain of CNY670 million, which would be used as general working capital. The company said a net 7.41 million new mobile subscribers were added in the first quarter for a total of 168.03 million, of which 78.07 million were 3G subscribers. That compared with China Unicom’s 250.7 million mobile users and China Mobile’s 726.3 million.

China Mobile will increase capital expenditure by 49% to CNY190.2 billion this year, from CNY127.4 billion last year. The world’s largest wireless network operator is facing intense competition from the two other traditional telecommunications operators, as well as from internet firms that provide voice calls and short messaging services. The company built a trial fourth-generation (4G) network in 15 cities with about 20,000 base stations last year and plans to extend it by adding more than 200,000 base stations this year. China Mobile will spend CNY41.7 billion, or 52% of its network spending, on developing its TD-LTE 4G network. Its state-owned parent has been shouldering the construction costs in the past but is now shifting it to the listed company as it waits for regulators to issue 4G licenses. Chairman Xi Guohua said he expects 4G licenses to be issued around the end of this year, echoing remarks by a Ministry of Industry and Information Technology official. Independent industry commentator Xiang Ligang said China Mobile has lagged behind its rivals China Telecom and China Unicom in attracting 3G users and needs to better prepare itself for competition in the 4G era. Just 13% of its users are on 3G, compared with one-third at China Unicom and 44% at China Telecom. Xue Taohai, China Mobile’s Vice President and Chief Financial Officer (CFO), said the firm has no need to raise funds for the investment, as it has enough cash and bank deposits – CNY408 billion by the end of last year – adding that “we have a strong ability to generate cash flow”. The company plans to spend CNY27 billion this year on handset subsidies to lure high-end 3G customers compared to CNY23.8 billion last year. Xi said the growth driver this year will be data traffic, as increasing numbers of subscribers are downloading movies, games and music on their handsets. Revenue from data services increased 19.4% to CNY166.3 billion, comprising 29.7% of total revenue, compared with 26.4% in 2011. Voice calling remains the firm’s mainstay, contributing 65.7% of total revenue. China Mobile had 710.3 million subscribers at the end of last year, up 9.3% from a year earlier, but its market share declined to 63.9% from 66.5% in 2011. The carrier had 714.7 million mobile-phone subscribers at the end of January, including 95 million 3G users. The firm posted a 2.7% rise in net profit to CNY129.3 billion last year, the slowest growth in three years. Operating revenue went up 6.1% year-on-year to CNY560.4 billion, the South China Morning Post reports.

China Mobile is betting on an increase in data services to boost revenue. Revenue from short message and multimedia message services dropped about 5% to CNY44.2 billion, as more users turn to apps like WeChat and WhatsApp. Revenue from voice services was almost stagnant, increasing just 1.1% year-on-year to CNY368 billion. But there was a surge in revenue from wireless data traffic, up 53.6% to CNY68.26 billion, which in volume grew 187.6% to 1,039 billion megabytes, a clear sign that China Mobile’s data services are taking off. Revenue from wireless data traffic accounts for 12.2% of the carrier’s total revenue, up 3.8 percentage points from 2011. The proportion of short message and multimedia message services, in turn, dropped 0.9 percentage points, to 7.9%. On a single day — December 31 — the number of outbound messages on WhatsApp hit 11 billion. In January, Apple said that users on its iMessage service were sending more than 2 billion messages a day, up from 1 billion in June.

China Telecom’s net profit fell 17% year-on-year in the fourth quarter to CNY2.36 billion due to the popularity of mobile broadband which eroded income from the traditional fixed-line phone business. Its revenue in the fourth quarter rose 17% to CNY73.1 billion from a year earlier. China Telecom, whose spending will rise 40% to more than CNY75 billion this year, had 90.12 million broadband users at the end of 2012. For full year, Hong Kong-listed China Telecom’s net profit totaled CNY14.92 billion, a decline of 9.5% from 2011. The wireline business still contributed the lion’s share of CNY165.2 billion in revenue, but the growth was only 1.8%. Revenue from the mobile segment jumped 42.5% to CNY117.8 billion. Operating expenses grew 18.5% during the year to CNY261.9 billion due to increased marketing initiatives during its launch of the iPhone. Chairman Wang Xiaochu said the firm aimed at adding more than 30 million mobile subscribers this year. The company’s percentage of 3G users reached 45% in February, much higher than the industry average of 20%. The rise in the number of 3G users helped the average revenue per user (arpu) rebound to CNY53.90 last year from CNY52.40 in 2011. Arpu has been falling over the past couple of years, as new users are mostly in rural areas with weaker consumption power. Wang expected arpu to stay stable this year. He said subsidies on handsets would continue to increase in absolute terms, but the ratio to the mobile business revenue would decrease. Wang said the firm had no interest in joining China Mobile in bidding for mobile spectrum in Hong Kong and compete in the market. “There are already five telecoms operators. Enough is enough.”