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Asia

China Mobile still looking for 5G boost after flat 2020

China Mobile made gains last year in 5G and new business but these were eliminated by higher operating costs.

It achieved 1.1% higher earnings of 107.8 billion yuan (US$16.5 billion), with revenue of RMB768.1 billion ($117.3 billion), up 3.0%, the company announced Thursday.

But a rise in costs dragged EBITDA down 3.7% to RMB285.1 billion ($43.6 billion). Its 37.1% EBITDA margin was off 2.6 percentage points, while telecom service revenue EBITDA was down 2.9 points.

China Mobile said the spike in maintenance and operation costs – up 27% to RMB117.8 billion ($18 billion) – and the 15% rise in power costs were a result of the huge expansion of its 5G networks and data centers as well as increased investments in emerging areas such as smart family, cloud and industrial Internet.

R&D spending also increased 72% to RMB4.9 billion ($750 million).

Disappointed investors marked China Mobile's stock down 2.4% in afternoon trading on the Hong Kong exchange.

In contrast to counterparts in Korea and Japan, who are seeing early contributions from 5G, China Mobile is yet to see signs of a financial return from the rollout of the world's biggest 5G network.

Last year it doubled down on 5G construction as part of the government's "new infrastructure" program, adding another 340,000 5G basestations to bring the total to 390,000. Subscriber take-up was equally impressive, with 165 million 5G package customers at year end.

Yet mobile ARPU was RMB47.4, down from RMB49.1 in 2019, and has declined 10.7% in the last two years.


Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.


The giant invested RMB102.5 billion ($15.7 billion) of its total RMB180.6 billion ($27.6 billion) capex budget on 5G. This year it expects to lift 5G spend by another 7% to RMB110 billion ($16.8 billion) as it plows ahead with its rollout.

"We will build around 120,000 new 2.6GHz basestations in 2021 and we plan to jointly purchase more than 400,000 700MHz basestations with China Broadcasting Network (CBN)," chairman Yang Jie said. Those basestations will be deployed commercially in 2021 and 2022.

Instead of 5G, it's the home broadband and enterprise markets that are delivering growth, Yang said.

In the past two years sales of broadband, smart home and new business services have increased their share of total revenue from 24% to 31%.

Wireline broadband sales rose 17.4% to RMB80.8 billion ($12.3 billion) and revenue from applications and information services increased by 22.4% to RMB101 billion ($15.4 billion).

Yang said as well as driving growth the enterprise market had become "the major force for business transformation and upgrade."

He said the company had "maintained stable and healthy growth" in 2020 in the face of a "complex operating environment."

— Robert Clark, contributing editor, special to Light Reading

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