China Mobile <0941.HK> missed forecasts with its slowest quarterly profit growth since 2005 and warned a deepening financial crisis will pressure subscriber growth as local competition gets tougher.

The world's largest mobile carrier by users faces challenges as rivals China Unicom <0762.HK> and China Telecom <0728.HK> eat into its market share, and the high-end mobile segment becomes saturated, analysts said.

We are cautious as the global slowdown may turn worse while local competition intensifies. Telecom and Unicom may be able to expand their subscriber base at the expense of China Mobile, but China Mobile will still remain dominant, said Elinor Leung, analyst at CLSA Asia-Pacific.

China Mobile, chosen by Beijing to roll out a new third-generation (3G) network based on an untested, home-grown Chinese standard, said it would reach new users by providing services such as mobile Internet.

But it said it will continue to promote its 2G system, reflecting the challenges it will face establishing the new technology.

The company, which is pushing out from the cities into less lucrative rural areas, also warned of a tougher year ahead for the economy and the telecom sector.

The influence of the financial crisis that swept across the globe in 2008 will likely widen and deepen, and its impact on China's economy will continue. The telecommunications industry will be affected, Chairman Wang Jianzhou said in a statement.

China Mobile shares extended losses in the afternoon after the results were announced, closing down 2.1 percent.

The stock has lost 14 percent this year, underperforming a 9 percent drop on the blue chip Hang Seng Index <.HSI> and a 2 percent loss on the main index for major Chinese companies listed in Hong Kong <.HSCE>.

GROWTH SLOWDOWN DISAPPOINTS

China Mobile earned 30.2 billion yuan ($4.42 billion) in October-December net profit, up from 27.2 billion yuan a year earlier. The 11 percent gain lagged the latest consensus forecast for a rise of 16.5 percent as subscriber growth and usage eased.

It earmarked 375.4 billion yuan for capital spending in 2009-11 as it switches to the more advanced 3G network, which offers the kind of data-rich, multimedia services available in many other countries. Total capex was 136.3 billion in 2008.

China Mobile's subscriber base exceeded 457 million people -- equivalent to the combined populations of Britain, Germany and the United States -- up 23.8 percent from a year earlier.

The high growth phase of China Mobile has passed as intensified competition will put pressure on its tariffs, said Tiffany Feng, analyst at Guotai Junan Securities. Since the company has already had a huge number of users, it will be difficult to see substantial growth in subscribers.

The company proposed a final dividend of HK$1.404 per share, bringing the total 2008 dividend to HK$2.743 per share versus HK$2.098 in 2007. It said it will maintain the 43 percent dividend payout ratio for full-year 2009.

This may be slightly disappointing as market bulls had been hoping for a dramatic upside surprise in dividend payout ratio, Goldman Sachs said in a quick reaction note.

($1=HK$7.8=6.83 yuan)

(Additional reporting by Donny Kwok and Joanne Chiu; Editing by Doug Young and Lincoln Feast)

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