After years pummelling its smaller rivals with aggressive pricing to drive its growth, China Mobile is pivoting away from low-priced home broadband.

A recent indicator is the 490,000 fall in net customer numbers in December, just the second monthly decline on record, a pointer to its rising prices. But more important signs are the rising revenue and ARPU and the emergence of its smart home business.

Figure 1: Speculate to accumulate: China Mobile is pivoting away from low-priced home broadband - and driving bigger profits.
Source: Grid Scheduler on Flickr
(public domain)

For the first six months of 202, China Mobile's wireline broadband sales grew 29.8% and its share of total service revenue rose from 10.1% to 12.0%, its interim results revealed.

But its home broadband segment, including its digital services as well, enjoyed a huge spike in growth. The business, which includes smart home network, home security, voice remote controls and the Mobaihe digital set top box, expanded 33.7% to 50.1 billion yuan.

In its October filing, covering the first three quarters of 2021, China Mobile reported a 7.3% rise in ARPU year-on-year to 34.8 yuan. Household blended ARPU, which includes the smart home services, was up by 10.7% to 39.8 yuan.

Pay it forward

The higher tariffs and the shift in revenue composition are the dividend China Mobile is finally reaping on its heavy investment – around 500 billion yuan ($79 billion) – on its gigabit optical network and FTTR.

Although it has shifted in strategy, the big telco has been a classic disruptor since it entered home broadband in 2014.

It had been blocked from the market because of its existing dominance of the mobile business.

Today it remains not only the biggest mobile operator by far but has parlayed its strategic and financial strength into a dominant and now profitable position in home broadband.

The big telco had pursued a two-pronged approach: building out its fiber access network while wooing its rivals' customers with low prices. Its aggressive bundled offerings sometimes included broadband thrown in for free.

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This didn't come without costs. While its own network was being built out, China Mobile's low-priced broadband was a punchline for its poor quality

But as marketing strategy it was unstoppable. It overtook China Unicom's subscriber total in 2016 and in 2018 went past China Telecom to be the biggest by customer numbers.

China Mobile now has 240 million customers, around 54% of the total. Although it may be slowing down it is still winning the biggest share of new users, accumulating 60% of net adds last year.

Now the recent numbers show the giant telco is poised to turn its huge customer base into a growing profit center.

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— Robert Clark, contributing editor, special to Light Reading