Business: China Mobile profit expected to grow strongly but future clouded by market, regulatory changes

China Mobile, the world’s biggest phone company by subscribers, will be reporting their earning for the first half of the year this Wednesday.

Speculations that the company’s earning would rise by up to 42 percent due to strong customer demand. But their growth might be hampered by the government’s plan to restructure China’s telecoms market.

Citigroup's Michael Meng and Anand Ramachandran are forecasting a 42 percent rise in net profit, while Jimmy Cheong of JP Morgan & Co. expects 36 percent.

Government plans for mobile network

But uncertainty about the governments plan to restructure and introduce a homegrown third-generation or 3G mobile phone standard might hurt China Mobile’s future prospects, analysts said.

Because of this, China Mobile shares in Hongkong have tumbled 42 percent from their Oct.29 peak.

A merge on state-owned carriers into three groups namely: China Mobile, China Telecom Ltd, and China Netcom Ltd, is what regulators are pushing. They want to boost competition as fixed-line carriers are struggling to attract customers and China Mobile is booming. The new groups would have both mobile and fixed-line services.

"We believe that the forthcoming set of results will again highlight the fundamental strength of China Mobile," Cheong said in a research report. "However, the sector faces a challenging next 12 months due to 3G licensing, new industry landscape and potential regulatory changes."

For five straight years, Chinese economy has expanded by more than10percent. China Mobile’s customers and profits also soared. It has more than 400million out of the 590 million mobile accounts.