Key Takeaways From China Mobile’s Q1 Results

China Mobile (NYSE:CHL), the largest Chinese wireless carrier, published its Q1 2017 results on April 20. In U.S. dollar terms, the company’s revenues and earnings declined, amid weaker equipment and other sales and also due to a depreciating Chinese Yuan. That said, the carrier continued to grow its service revenues, driven by strong wireless customer additions as well as a growing wireline broadband subscriber base. Below, we provide a brief overview of the results.

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The first quarter is typically the strongest for Chinese carriers in terms of subscriber activity, on account of the Chinese New Year holiday. China Mobile added about 7.6 million new wireless subscribers over the quarter, marking a sequential improvement of around 45%. However, its 4G net adds have been slowing down, amid a higher mix of customers on 4G plans. ARPU rose by about 2% compared to FY2016, to RMB 58.5, amid a higher mix of 4G customers and growing data usage per user. However, the near-to-medium term outlook for ARPU is likely to be slightly challenging, as the government has asked all Chinese carriers to cancel domestic long-distance and mobile roaming fees by October 1. (related: How The Roaming And Long-Distance Tariff Cuts Impact Chinese Carriers)

China Mobile has been aggressively expanding its fixed line broadband operations via a mix of acquisitions and competitive pricing. The firm added about 8 million customers during the first quarter, marking an improvement of over 138% sequentially. ARPU also saw an improvement, rising by about 10% compared to the previous quarter, to about RMB 32. That said, its ARPU still remains well below the industry average.

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