China Mobile's forecast-beating results suggest its years of investment in data services is paying off, helping the world's largest mobile carrier report an unexpected rise in revenue per user.

The dominant player in China's booming market logged its strongest quarterly profit growth in more than a year, which pushed its shares more than 1 percent in a weak market.

China Mobile, also the world's most valuable mobile carrier, has about 500 million users, more than the combined populations of Britain, Germany and the United States.

This year, the company faces a challenge to sustain the momentum as it rolls out its third-generation (3G) wireless network to promote a wider range of value-added services such as video streaming and music downloads.

The key for China Mobile in 2010 is how they can grow revenue by attracting more users to its value-added and 3G services, Frank Zhu, telecoms analyst at SinoPac Securities in Shanghai, said on Thursday.

Many analysts say China Mobile has so far only half-heartedly promoted its 3G network, which is based on a homegrown standard known as TD-SCDMA. Smaller rivals China Unicom and China Telecom are building 3G networks based on more proven global standards.

China Mobile Chairman Wang Jianzhou told reporters the company will further boost investments in the TD-SCDMA field.

We're still working with various handset makers to continue to push out smartphones that are compatible with the TD-SCDMA standard, and this is all evidence of our commitment, he said.

Like peers in more developed markets, Chinese telecoms operators have been pushing the non-voice mobile business to boost revenue as sales of voice calls saturate.

In India, the world's fastest growing wireless market with about 500 million subscribers, top ranked Bharti Airtel and Reliance Communications are bidding for 3G slots in a cut-rate sector which is also seeing a sharp fall in average revenue per user.

China Telecom and China Unicom report results next week.

RARE INCREASE IN ARPU

China Mobile's average revenue per user (ARPU) -- a key performance indicator in the telecoms sector -- rose to 77 yuan for the whole of 2009 versus 75 yuan for January-September, a rare increase for an industry that has seen figures fall steadily in recent years due to tougher competition.

In 2008, China Mobile's ARPU was 83 yuan.

The company is the publicly listed arm of its state-run parent, China Mobile Communications Corp.

The rise in ARPU was mainly due to growth from value-added services, with revenue jumping 16 percent from 2008 to contribute about 29 percent of China Mobile's total operating revenue.

Last week, the firm struck a surprise deal to buy 20 percent of Pudong Development Bank <600000.SS> for $5.8 billion to help it dominate the country's nascent mobile e-commerce market.

China Mobile's October-December net profit rose to 31.3 billion yuan, based on Reuters calculations from company figures, from 30.2 billion yuan a year earlier. Analysts polled by Thomson Reuters I/B/E/S had predicted net profit of 30.4 billion yuan.

Shares of China Mobile and its rivals all trailed the broader market <.HSI> last year, with China Mobile dipping slightly in 2009 when the big board rose more than 50 percent.

China Mobile officials said ARPU was likely to return to the downward track this year, with a slight decline expected, accompanied by weakening EBITDA margins.

China's three mobile carriers spent $21 billion building 3G mobile networks last year, following the much-delayed awarding of licenses.

China Mobile said Research in Motion will develop a TD-SCDMA version of its popular BlackBerry mobile e-mail smartphone, and that it will ramp up handset subsidies by nearly 30 percent to 15.5 billion yuan.

China Mobile said this year it will spend 45 billion yuan to extend its 3G coverage and roll out more than 80 types of TD-SCDMA handset to address market concerns about its lukewarm 3G push.

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