China Mobile service revenue growth hits five-year high

23 Mar 2017

China Mobile, the world’s largest wireless provider by subscribers, booked operating revenue of CNY708.421 billion (USD102.872 billion) for the year to 31 December 2016, equating to a 6.0% increase year-on-year, whilst annual service revenue growth reached a five-year high at 6.7%. The increase in turnover, combined with continuing cost control measures, led to a 6.9% increase in EBITDA to CNY256.677 billion, with an EBITDA margin of 36.2% (35.9% in 2015). Net profit for the year edged up by 0.2% to CNY108.741 billion, though the operator notes that, excluding a one-off gain of CNY10.096 billion in 2015 from the transfer of its tower assets, net profit growth for 2016 is 10.5%.

Mobile voice and SMS/MMS revenue continued to decline, falling 19.8% and 8.6% to CNY209.949 billion and CNY28.555 billion, respectively, but the operator’s ‘Big Connectivity’ strategy – which concentrates on building its digital services capabilities – has helped boost 4G expansion. Mobile added 400,000 new 4G base stations over the course of the year, lifting the total to 1.51 million, boosting population coverage to 1.3 billion and giving it what it claims is the world’s largest 4G network. At the end of the December 2016, Mobile counted a total of 535.04 million 4G subscribers, up from 312.28 million twelve months earlier and equating to 63% of its total mobile user base of 848.90 million. Unsurprisingly, the massive increase in subscriptions led to strong growth in terms of handset data revenue, which grew by 44.9% y-o-y to CNY283.229 billion, and handset data traffic (+127.7% y-o-y to 5,681 PB).

China Mobile’s fixed broadband services also saw growth, meanwhile, with the operator claiming 77.62 million subscribers at the end of the year compared to 55.03 million at end-2015. Service revenue from fixed broadband services grew by 39.7% to CNY25.618 billion.

Looking ahead, China Mobile noted that regulatory measures set to be implemented this year are expected to have a negative effect on FY 2017 operating revenue and profit, with the elimination of charges for domestic long-distance and roaming charges estimated to have an impact of around CNY4.0 billion, whilst tariff reductions for dedicated internet access for SMEs and international long-distance services are estimated to be worth approximately CNY3.0 billion.

China, China Mobile