Data Growth Drives China Mobile’s First Half Results

by Trefis Team
China Mobile
Rate   |   votes   |   Share

China Mobile (NYSE:CHL), China’s largest wireless carrier, published its first half 2017 interim results on Thursday, August 10, reporting reasonably strong service revenue growth, driven by its recent wireless and wireline broadband subscriber additions, as well as soaring data consumption. Below we provide some of the key takeaways from the carrier’s earnings. Note that we have converted the company’s financials, reported in RMB, to USD for the purpose of this article using average exchange rates. Year-over-year growth figures may diverge from the company’s reported metrics on account of the depreciation of the RMB vs. the USD.

See our complete analysis for China Mobile | China Unicom | China Telecom

Trefis has a $64 price estimate for China Mobile, which is almost 20% ahead of the current market price.

  • Service revenue growth was driven by recent wireless and wireline broadband subscriber adds and continued  migration to higher ARPU 4G services.However, this was partially offset by the depreciation of the RMB (about -5% year-over-year). Overall revenues were also impacted by lower equipment sales.
  • The carrier’s EBITDA margins remained almost flat year-over-year, as it was able to offset higher tower usage fees by cutting administrative expenses.
  • 4G net adds over H1 slowed down significantly on a year-over-year basis to just about 58 million, amid relatively high levels of 4G penetration (~70% of the carrier’s total base is now on 4G) and potentially due to the network collaboration between China Unicom and China Telecom.
  • While overall wireless ARPU saw a marginal improvement, driven by a higher mix of 4G users and higher data consumption, 4G ARPU saw a slight decline due to the government’s speed increase and tariff reduction requirements.
  • SMS and voice usage continue to trend lower, hurt by substitution by over-the-top services.
  • The carrier’s wireline broadband subscriber base jumped by 41% year-over-year to 93 million, driven by expanding coverage. The company expects household coverage to reach 70% by the end of this year, with FTTH penetration approaching 90% in the same time frame. Broadband ARPU saw some improvement, likely driven by higher speed plans.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap U.S. Mid & Small Cap European Large & Mid Cap
More Trefis Research

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!