China Mobile, the country's biggest mobile-telephone operator, said first-quarter profit climbed 37.2 per cent, driven by its expansion into rural areas and migration of fixed-line users to its service.  Net profit for the quarter to March rose to 24.1 billion yuan from 17.5 billion yuan a year ago and was in line with market expectation of 24.6 billion yuan. Revenue rose 19.7 per cent to 93.02 billion yuan.

In contrast, first-quarter profit at fixed-line operator China Telecom Corp grew 0.5 per cent while revenue at smaller rival China Netcom Group Corp rose 0.85 per cent. Analysts expect their business growth to remain slow until they receive the long-awaited third-generation mobile licences.

China Mobile added 22.8 million subscribers in the first quarter, a 15.9 per cent increase from the previous three months, thanks to its rural push. The company added 7.78 million subscribers last month, fewer than the 7.97 million in February.

Lower spending by its rural subscribers crimped the firm's average revenue per user (arpu) - an industry profitability gauge - by 9.8 per cent to 82 yuan from 91 yuan in the previous quarter.  The fall in arpu is below my expectation, said Marvin Lo, a telecommunications analyst at Daiwa Institute of Research. The arpu for the same period last year was 85 yuan. I think the company needs to push the value-added service to uphold the arpu.  Mr Lo said the drop in first-quarter arpu also stemmed from seasonal factors.  People didn't talk much over the phone and used less value-added service during the Lunar New Year holiday, he said.

This year may be further affected by the snowstorms that started in late January, in which services in some locations were suspended.  During the first quarter, China Mobile users spent 481 minutes on average each month, up from 475 minutes in the previous quarter. But average revenue per minute was down to 17 fen from 19.1 fen.

China Mobile maintained strong growth in its cash flow as its first-quarter earnings before interest, tax, depreciation and amortisation (ebitda) rose 22.2% year on year to 49.77 billion yuan. Ebitda margin also improved to 53.5% up from 52.4 per cent. 

Separately, China Telecom's net profit rose to 6.25 billion yuan in the first quarter from 6.22 billion a year earlier. Revenue grew 1.6 per cent to 43.6 billion yuan.  The firm's xiaolingtong business, which offers limited mobile service, saw users decrease to 54.75 million from 58.04 million by the end of the previous quarter, as about 3.29 million switched to mobile operators.  Total fixed-line users including xiaolingtong subscribers were 217 million, down from 220 million, by the end of last year.