August 9, 2018 / 11:25 AM / in 3 months

UPDATE 2-China Mobile expects continued slide in revenue-per-user due to fee cuts

* H1 net profit up 5 pct, marginally beats estimates

* ARPU fell; expects ARPU to fall further in H2

* Firm has never caused any security risks -Chairman (Adds chairman comments)

By Trista Shi and Maggie Liu

HONG KONG, Aug 9 (Reuters) - China Mobile Ltd on Thursday said average revenue per user (ARPU) - a gauge of telco profitability - fell in the first half of the year and will likely continue to fall in the second, hurt by a government policy to end roaming and long-distance fees.

The world’s biggest mobile telephone network operator by subscribers also said it nevertheless expects to end the year with “stable growth” in telecommunications services revenue and net profit.

The results come as China Mobile struggles to expand in the U.S. market, with politicians attempting to block its application to offer cross-border telecommunication services from the country on national security grounds.

“I am sure that China Mobile has never committed any action that can cause risk to the security of the countries where we provide services,” Chairman Shang Bing said at an earnings briefing on Thursday.

He also said current Sino-U.S. trade tension involving tit-for-tat import tariffs has had limited direct impact on the firm.

China Mobile reported a 4.7 percent rise in January-June net profit at 65.6 billion yuan ($9.62 billion), marginally above analyst estimates, helped an increase in subscribers to its mobile data services. Operating revenue rose 2.9 percent.

However its ARPU fell 6.6 percent from the same period a year prior to 51.8 yuan, though handset data traffic jumped over 150 percent. Shang attributed the anomaly to users with handsets capable of accepting two SIM cards switching back and forth between China Mobile and rival providers, as well as competition in unlimited data plans.

“Accelerated fee-cutting means there is still relatively large downward pressure on second-half ARPU,” Shang said, referring to the end of fees for roaming and long-distance services. He did not elaborate on full-year growth expectations.

China Mobile said it added over 27 million subscribers and 190,000 base stations to its fourth-generation (4G) network. The firm intends to apply to commercialise 5G in 2020, Shang said.

In an earlier statement, Shang said China Mobile will continue to focus on increasing subscribers and data traffic market share. He said the firm will also strengthen cooperation with internet companies to market content-based data products on a massive scale, to further boost data traffic revenue.

China Mobile declared an interim dividend of HK$1.826 per share. Its Hong Kong-listed stock closed up 1.7 percent at a two-month high after the earnings announcement. ($1 = 6.8164 Chinese yuan renminbi) (Reporting by Trista Shi and Maggie Liu; Writing by Clare Jim; Editing by Subhranshu Sahu and Christopher Cushing)

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