China Mobile, the world’s largest mobile phone operator by subscribers, reported first quarter profits this morning of 24.1 billion yuan (US$3.4 billion) – a 37% rise over the year-earlier period – as it continued to sign-up new customers in rural areas and those churning away from local fixed-line operators. Net income jumped from 17.6 billion yuan the previous year to beat average analyst estimates of around 23.6 billion yuan, while sales rose 20% to 93.02 billion yuan.

Chief Executive Wang Jianzhou said the company won subscribers from both China Telecom and China Netcom, the two fixed-line players, as more and more customers switched to mobile. The operator also managed to extend its reach into rural areas by lowering fees, though this meant that ARPU fell to 82 yuan in the quarter, from 85 yuan a year earlier. Its total number of subscribers rose by a record 22.8 million in the first quarter to reach 392.1 million, which means the operator is adding more than 7 million new customers a month.