China Mobile's next growth strategy: Acquisitions
That's the word from China Mobile Chairman Xi Gouhua, who says that the company is looking in several areas to grow its business.
Despite strong profits, the world's largest mobile carrier, China Mobile, is eyeing ways to grow its business in new ways, Chairman Xi Gouhua,confirmed in an earnings call on Thursday.
Speaking to investors in an earnings call earlier reported on by The Wall Street Journal, Xi said that China Mobile is seeking "investment opportunities," adding that his company wants to either acquire or invest in companies that "help grow our core telecom business." The chairman specifically pointed to "content and Internet companies" as possible targets.
China Mobile posted strong revenue gains for the first half of 2014, posting 324.68 billion yuan ($52.7 billion) in revenue, compared to 303.1 billion yuan during the same period last year. The company's profits slipped, however, falling from 63.1 billion yuan in 2013 to 57.7 billion yuan this time around.
While those figures might seem troubling at first blush, part of the profit decline was due to China Mobile's increasing investment in its network infrastructure. The company had been slow to invest in 4G technology, but has since dedicated over $12 billion to improving its infrastructure. That figure stood at $6 billion in 2013.
China Mobile's chairman kept ideas for acquisitions close to the vest during the earnings call, according to the Journal, but did indicate that he'd look both in emerging countries and major, developed markets around the world. Content and Internet companies present a unique opportunity for China Mobile.
Many carriers around the world, including Verizon and AT&T, among others, have invested heavily in video content to build out their offerings. That has largely been a response to popular messaging applications that have taken from the carriers an important revenue stream from SMS. Rather that route messages over SMS, popular applications like Facebook's WhatsApp carries messages over servers. The result is less revenue for carriers and massive user bases for messaging providers.
Whatever China Mobile has up its sleeve, one issue is not users. The company ended the first half of 2014 with 790 million users across China, making it not only that market's biggest carrier, but the world's largest.
CNET has contacted China Mobile for comment on the chairman's statement. We will update this story when we have more information.