China Mobile (00941.HK), the nation’s largest mobile phone services provider, is boosting capital expenditure for development of its fourth-generation (4G) network, a business segment that will be the group’s major focus in the next five to 10 years.
Total capital expenditure for this year will top 200 billion yuan (US$32.08 billion), chairman Xi Guohua said, adding that the group aims to complete the 4G network enhancement and construction of base stations as early as possible.
The company is transforming its core business to data services from the traditional voice operation. Xi said he expects significant growth in revenue in the group’s 4G business in the second half of this year, the Hong Kong Economic Journal reported Friday.
The group will keep its dividend payout ratio at about 43 percent in a bid to reserve more capital for asset expansion which is necessary for future growth, Xi was quoted as saying after some minority shareholders raised questions about the high capital expenditure.
Meanwhile, Xi said a joint venture company that is designated to integrate the network and base station assets of China’s three telecommunications groups will be set up in the third quarter.
China Mobile will transfer the ownership of its 2G and 3G assets to the joint venture company and then rent the assets back from the new entity.
It is still uncertain how large a stake China Mobile will have in the joint venture, Xi said, adding that the venture is likely to bring in capital from the private sector.
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