China Mobile's surprising 3Q12 revenues not enough to offset profit-less 3G growth

China Mobile reported 6% growthyoy, about 3% pts above consensus.

CIMB notes that China Mobile’s 9M12 operating data showed 3Q12 earnings that were better than consensus expectations due to stronger revenue
growth which offset a fall in EBITDA margins. Net adds were also up strongly in September.

The slightly stronger numbers however, it said,  are not enough to change CIMB's forecast as weaker EBITDA margins are in line with their view of “profit-less” 3G growth.

Here's more from CIMB:

China Mobile reported 3Q revenue growth of 6% yoy, about 3% pts above our expectations, due to stronger subscriber growth in 3Q.

ARPU was Rmb67 for 3Q, down 4% yoy and 3% qoq. MOU of 512 was down 2% yoy and qoq. Data MOU rose to 37.6 MB, up 23% from 1H12 levels, which was stronger than expected.

EBITDA margin fell 2.0% pts yoy to 45.2%, in line with our expectations. Aided by higher revenue, net profit rose 1% yoy, better than our expectations of a 3% decline in 2H12.

China Mobile also released Sep subscriber data, showing net adds of 5.43m, down 8% yoy, up 6% mom but below the previous 12 months’ average of 5.46m.
TD-SCDMA net adds accounted for 63.6% of total, up from 61.7% in the previous month.

Despite being higher than expected, stronger subscriber growth is in line with our thesis of continuing high levels of net adds driven by 3G competition as well as ARPU and EBITDA margin erosion. Data MOU, however, was a surprise, rising more strongly than anticipated. But we cannot discern the trajectory as this is the first quarterly data MOU released. 

Higher data MOU growth with stable tariffs would be positive.