The world's largest wireless carrier China Mobile (Hong Kong) has identified acquisitions and third-generation (3G) services as potential new growth engines.

The company said yesterday that it also expects revenue per user to drop further.

China Mobile posted a 13 per cent rise in net profit to 17.5 billion yuan (US$2.1 billion) on 39 per cent growth in operating revenue to 76.7 billion yuan (US$9.24 billion) in the first half of this year.

Net profit growth would have been 3.5 per cent if the networks in eight provinces it acquired in July last year had been included in last year's first-half results.

Commenting on remarks that the company was now better treated as a utility firm, with its growth slowing down, chairman Wang Xiaochu said it was too early to say so given the potential growth opportunities from acquisitions and 3G mobile services.

Wang said there had been intense discussions on 3G services, although a timetable had not been set for launching services.

There are no planned acquisitions this year, he said.

Wang said the impact of the killer SARS epidemic on the company's business had eased last month.

Meanwhile, Wang expected monthly average revenue per user (ARPU) of China Mobile to decline further, with tariff cuts being the trend amid "intensifying competition".

"We need to adjust our strategy to the changing market condition," he said. "There are many ways to compete and price is an important one."

ARPU fell further to 104 yuan (US$12.53) in the first half of this year from 115 yuan (US$13.86) in the same period last year on a pro-forma basis.

The expansion of city-wide wireless systems, or "Xiaolingtong," by fixed-line operators and aggressive promotion of the CDMA-standard mobile network by rival China Unicom has presented "serious challenges", the company said.

Wang said the lower-end of the market was a new area of growth since the high-end segment in the mainland had become saturated.

China Mobile had 129.1 million subscribers in the mainland at the end of June, with a penetration rate of about 20 per cent.

Offsetting the decline in ARPU has been the strong growth in new business, including data and short messaging services, which accounted for 8.3 per cent of total revenue in the first half, compared with the 4.9 per cent in the same period last year on a pro-forma basis.

China Mobile declared an interim dividend of HK$0.16 (US$0.02) per share, after it paid its first-ever dividend of HK$0.32 (US$0.04) for the full year last year.

China Mobile said it "will endeavour to achieve a sustainable and steadily increasing dividend in the long run".

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