China Mobile Ltd, the world's biggest mobile phone company by users, said its first quarter net income rose 20 percent as a surge in subscribers in poorer areas masked a decline in average customer spending.

Profit rose to 11.2 billion yuan (US$1.35 billion) from 9.4 billion yuan a year earlier as sales rose 30 percent, the Beijing-based company said in a statement. Subscriber numbers rose 9.6 million this year to 214 million.

China Mobile chief executive Wang Jianzhou boosted sales by buying networks in poorer provinces from its parent and targeting rural areas. Smaller average phone bills for its customers meant China Mobile's 2004 sales were half those of Vodafone Group Plc, the world's largest mobile phone company by revenue, which had 151.8 million subscribers on December 31.

China Mobile, which has about two-thirds of the nation's cellular subscribers, competes with China Unicom Ltd in the world's largest market. China Unicom has 116.4 million cell-phone customers.

Subscriber growth slowed from 9.9 million in the fourth quarter, the company said. Prepaid customers accounted for 9.2 million, or 96 percent, of subscriber additions in the first three months.

Sales climbed to 54.9 billion yuan from 42.1 billion yuan in last year's first quarter. Revenue was little changed from the 54.6 billion yuan recorded in the fourth quarter, reflecting slowing usage growth and falling customer spending.

Average revenue per user dropped to 89 yuan a month from 91 yuan in the fourth quarter and 97 yuan a year earlier. Declining revenue per subscriber indicates prices for mobile phone calls are falling, making it more difficult for China Mobile to boost sales and profit. It also reflects a higher proportion of prepaid clients, who typically spend less.

(Shenzhen Daily April 22, 2005)