China Mobile up 6% on smart home, new business

Rising smart home services and new business growth have powered China Mobile to a 6% lift in interim profit – its best first-half result since 2011.

The Chinese giant handed down a net profit of 59.1 billion yuan (US$9.1 billion) Thursday on the back of 13.8% higher operating revenue of 443.6 billion yuan ($68.4 billion).

Chairman Yang Jie attributed stronger results to the performance of home broadband and smart home services, which grew 29%, and new apps and services, up 45%.

Figure 1: Going up: Operating costs might have risen – but China Mobile still managed to smash expectations with the best results in a decade.
(Source: China Mobile)

He said the operator had "achieved encouraging growth in all businesses and continued to increase our customer satisfaction."

The company reported 10% higher telecom services revenue at 393.2 billion yuan ($60.68 billion) and a 4% year-on-year improvement on mobile ARPU to 52.2 yuan – the first increase since 2018. Broadband ARPU climbed 16% to 41.1 yuan.

EBITDA was up 11% to 162.0 billion yuan ($25.0 billion) and free cash flow increased 28% to 75.6 billion yuan (11.66 billion).

Operating costs overtook the rise in revenue, increasing 15.2%. However, the biggest part of this was the huge jump in wholesale handset acquisition cost coming off the low of 2020.

Big business

In enterprise services the company signed an additional 900 contracts for major provincial-level projects in key verticals such as the industrial Internet, transportation and healthcare.

China Mobile invested 50 billion yuan ($7.71 billion) in 5G in the period but is still yet to see a pay-off.

It has clocked up 127 million 5G customers, accounting for 13% of all subs, and has just launched its 5G private network program, but mobile data sales remained flat.

Instead, the biggest growth sources in wireless were SMS and MMS, which grew 13%.

The company said its 5G consumer services included Ultra HD livestreaming, 4K and VR technology, Ultra HD video connecting tones and cloud-based games.

Future planning

Looking ahead, China Mobile said it would build "digital-intelligent" products, network and ecosystems to enable its "second curve of growth."

After being cut from the New York exchange earlier this year, the company has won approval to list on the Shanghai exchange later in 2021 or early 2022.

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It says it will allocate the funds raised to new cloud infrastructure, gigabit broadband, smart home and R&D for next-gen technologies.

Rival China Telecom, which is set to debut on the Shanghai bourse later this month, has reported a 17% rise in underlying profit for the first half.

Revenue was up 13.1% to 219.2 billion yuan ($33.82 billion), led by a 7% improvement in mobile and 17% expansion in industrial Internet services.

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— Robert Clark, contributing editor, special to Light Reading