China Mobile faces most difficult financial phase

Another major reason for China Mobile's net profit drop was because of rising pressure from over-the-top products in the traditional communications industry. Meanwhile, more intense horizontal competition because of the continued increase in mobile penetration also contributed to the decline, China Mobile said.

WeChat, an instant messaging tool developed by Tencent Holdings Ltd, attracted more than 300 million users in two years. The mobile application draws people from using traditional voice and short-messaging services and, therefore, caused China Mobile's revenue to shrink.

Xiang Ligang, a Beijing-based telecoms expert, pointed out that there were multiple factors creating China Mobile's poor performance. "China Mobile wants to catch up with rivals in the 3G market and it invested a lot in handset subsidies to attract more users, but the move resulted in a financial burden on the company," Xiang said.

Analysts predicted, however, that China Unicom (Hong Kong) Ltd, a smaller telecom carrier in China, will see its third-quarter net profit will rise substantially. China Unicom is set to release its third-quarter report on Oct 25.

China Unicom, which adopted the more mature Wideband Code Division Multiple Access 3G technology, enjoyed a rapid profit growth thanks to its burgeoning 3G business.

China Mobile said the average monthly net additional customers for the first three quarters reached nearly 5 million and, as at Sept 30, the number of customers amounted to 755 million.