China Mobile Ltd posted a slower growth in net profit in the first quarter of this year because of fierce competition, the world's biggest mobile operator said yesterday.

The telco's net income rose 1.1 percent to 25.5 billion yuan (US$3.7 billion) in the first three months, compared with a 9.2 percent growth a year ago. Its net profit was also lower than analyst estimates of 26.9 billion yuan.

Its revenue rose 7.7 percent to 109 billion yuan.

"In the first quarter of 2010, China Mobile faced adverse factors such as an increased mobile (phone) penetration rate and aggressive market competition," Wang Jianzhou, chairman and chief executive officer, said in statement.

Hong Kong-listed China Mobile's shares rose 3.3 percent to close at HK$80.30 (US$11.8), compared with a 1 percent gain in the Hang Seng Index yesterday.

Rivals China Telecom and China Unicom used aggressive strategies, such as high handset subsidies, to attract users and challenge China Mobile's leading position in the market, industry insiders said. This prompted China Mobile to study increasing handset subsidies by almost a third this year and lower call rates to keep its position in the market, Wang said.

In the first quarter, the average revenue per user (ARPU) fell to 70 yuan from 80 yuan a year earlier, China Mobile said. The APRU measures an operator's profitability.

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