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China Mobile buoyant despite chip shortage, volatile pricesChina Mobile buoyant despite chip shortage, volatile prices

Digital transformation services now the biggest growth drivers at the world's largest mobile operator.

Ken Wieland

March 23, 2022

3 Min Read
China Mobile buoyant despite chip shortage, volatile prices

Largely thanks to a mixture of cost-cutting and strong demand for its "home" and "business" segments, China Mobile – the largest mobile operator in the world – posted a solid 7.7% hike in full-year net income to 116.1 billion Chinese yuan (US$18.2 billion).

A statement to shareholders, attributed to China Mobile chairman Yang Jie, understandably indulged in a bit of self-congratulation. "Our net profit grew favorably and overall business performance was remarkable," purred Yang.

Full-year net income comfortably beat a RMB 107.8 billion ($16.9 billion) estimate from a Bloomberg survey of brokerages, and there were other encouraging growth figures.

Figure 1: Digital transformation is now China Mobile's largest revenue growth driver. (Source: Sipa US/Alamy Stock Photo) Digital transformation is now China Mobile's largest revenue growth driver.
(Source: Sipa US/Alamy Stock Photo)

China Mobile saw operating revenue climb 10.4% year-on-year, to RMB 848.3 billion ($133.1 billion). Of that sum, service revenue from telecoms accounted for RMB 751.4 billion ($117 billion), which was an 8% increase compared with FY20.

Growth in telecoms, pointed out China Mobile, was 4.8 percentage points higher than what was achieved during 2020.

Non-mobile growth surge

China Mobile divvies up its business into four operating segments, collectively referred to as CHBN. "C" refers to the "customer" market, including mobile; "H" is home; "B" is business; and "N" refers to new markets.

HBN, it seems, is picking up speed. It contributed 35.7% of telecoms service revenue, up 4.3 percentage points year-on-year. China Mobile said this showed a "further enhanced revenue structure," presumably since it indicates less reliance on growth from consumer mobile – a market which is becoming increasingly saturated.

The big HBN growth driver is "digital transformation." Driven by what China Mobile calls "rapid business expansion" in areas such as smart home services, DICT (data, information and communications technology), mobile cloud and digital content, digital transformation revenue increased by 26.3% year-on-year to reach RMB 159.4 billion ($25 billion).

The upshot is that digital transformation is now China Mobile's largest revenue growth driver, contributing 59.5% of the growth of telecommunications services revenue during FY21.

While operating revenue from wireless data traffic grew 2% to RMB 392.8 billion ($61.5 billion) through 2021, broadband and information services got a 27% year-on-year bounce to RMB 231.2 billion ($36.3 billion).

China Mobile is not the only beneficiary of increased demand for digital transformation and cloud-based business services in China. There were also strong FY21 growth drivers for rivals China Unicom and China Telecom. Both recently posted their FY21 results.

The 'C' word

China Mobile recorded a modest 1.4% year-on-year increase in consumer revenue to RMB 483.4 billion ($75.8 billion), reversing a "downward trajectory."

The operator's mobile customer base reached 957 million, with a net addition of 14.97 million customers. Of these, 387 million customers were for China's "5G package customers" – a net increase of 222 million.

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Through customer upgrades from 4G to 5G and integrating cloud products with its 5G service, China Mobile managed to increase its mobile average monthly ARPU by 3% year-on-year to RMB 48.8 ($7.7).

Yang's statement was not one of unalloyed optimism, however. "We face uncertainties in our transformation and development," he said. "The shortage in chip supplies, fluctuations in energy and raw material prices, and other factors will all somehow affect our operations."

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— Ken Wieland, contributing editor, special to Light Reading

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About the Author(s)

Ken Wieland

contributing editor

Ken Wieland has been a telecoms journalist and editor for more than 15 years. That includes an eight-year stint as editor of Telecommunications magazine (international edition), three years as editor of Asian Communications, and nearly two years at Informa Telecoms & Media, specialising in mobile broadband. As a freelance telecoms writer Ken has written various industry reports for The Economist Group.

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