China Mobile says profit up 1.1 percent

China Mobile Ltd., the world’s biggest phone carrier by subscribers, said Tuesday its first quarter profit rose 1.1 percent from a year earlier amid intensifying competition.

Profit for the three months ending March 31 was 25.5 billion yuan ($3.7 billion), the Beijing-based carrier said. Revenue rose 7.7 percent to 109 billion yuan ($15.9 billion).

China Mobile was long China’s dominant carrier but has seen profit growth slow since regulators restructured the industry in 2008 to revive competition by rearranging state-owned phone companies into three groups, each with mobile operations.

“In the first quarter of 2010, the group faced adverse factors such as the increased mobile penetration rate and the intensifying market competition,” chairman and chief executive officer Wang Jianzhou said in statement.

The company said it added an average of 5.5 million accounts per month for a total of 538.9 million. But it said average revenue per user is declining as the market becomes saturated and many new customers use their phones less.

China Mobile and its rivals, China Telecom Ltd. and China Unicom Ltd., are promoting music downloads and other value-added services to drive revenue growth.

The companies are rolling out third-generation, or 3G, service that is expected to ignite new revenue growth as customers gain access to video and other offerings.

Associated Press