China Mobile audit unearths accountancy ‘problems’

Suggestions of graft and inflated sales

China Mobile, the world’s biggest mobile operator by subscribers, has revealed it is overhauling its accounting practices and internal management after a government audit hinted at problems. In recent years several executives and former executives of group parent China Mobile Communications – an unlisted company – have been investigated by Beijing officials amid reports of bribery, according to Chinese media reports.

In the report today by the the country’s National Audit Office, problems identified included inflated sales and unaccountable receipts.

“The board of directors and senior management of the company have attached great importance to the problems regarding the group identified in the audit, drawn up and proactively executed detailed rectification measures and plans,” China Mobile said in a statement on the Hong Kong stock exchange.

“At present, except for a particular matter that has not yet been executed pending approval by regulatory authorities, the rest of the problems identified in this audit have already been rectified and the relevant responsible persons have been dealt with in a serious manner.”

China Mobile, however, did not specify what the particular matter was.

The operator also said the problems in the audit would not have any material impact on its overall operating results and financial statements.

In March this year the company revealed it was poised to increase capital spending by half this year having beat analysts expectations with Q4 net income 6 per cent higher than a year earlier.

Revenues rose to 36 billion yuan from 33.9 billion yuan previously, with profit projected at 32.3 billion yuan.

As part of its growth strategy it has increased handset subsidies by 30 per cent in order to maintain the company’s lead in smartphone sales and persuade customers to switch to more profitable data services.

It also announced a “technical support” deal with the Symbian Foundation, giving developers a chance to use the operating system – abandoned by Nokia in favour of Windows – to build programs complying with China Mobile’s own app store standards.

About Dave Evans

Dave Evans was a long established commentator on both the IT and cellular industries. His last focus was on share price trends within the sector. He passed away in September [2014].
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