China Mobile reports 2018 net profit of $17.58 billion; 5G accomplishments and 2019 plans

2018 Financial Overview:

On March 20, 2019, China Mobile (the world’s largest wireless carrier by subscribers and revenue) reported a 3.1% increase in net profit for 2018 to 117.78 billion yuan ($17.58 billion).  The company focused on reducing costs and increasing operational efficiency.  Telecommunications service revenue fell a reported 0.4% but grew 3.7% in comparable terms to 670.9 billion yuan.  China Mobile’s  net profit was aided by the listing of the company’s tower division China Tower in August last year.

2018 Highlights:

  • China Mobile reported a 4.3% increase in its total customer base for the year to 925 million, of which 713 million are 4G customers – a 9.7% increase from 2017.
  • However,  mobile ARPU fell 8% to 53.1 yuan as a result of strong competition.
  • Total wireline broadband subscribers increased by 39% to 157 million, of which 147 million were household broadband customers. Household broadband blended ARPU grew 3.2% to 34.4 yuan.
  • The company’s four growth engines are: personal mobile market, home broadband market, corporate market,  emerging business
  • IoT revenue +40.2% to RMB7.53 bil
  • ICT, Cloud Computing, Big Data Revenue Revenue =RMB4.19 bil which was +75.3%
  • Boasted 2.41 mil 4G base stations with an industry-leading 4G network coverage capability
  • Realized NB-IoT continuous coverage in areas at township level and above across China
  • Achieved household broadband access capability of ≥100Mbps.
  • More efficient deployment of CDN edge nodes resulted in ongoing enhancements to customer perception
  • Maintained a backbone network with a further enhanced transmission and loading capability.
  • Performance of international submarine cables, cross-border terrestrial cables and PoPs was substantially lifted

“2018 was a challenging year for telecommunications operators. Competition amongst peers changed in characteristics as products and services have become homogenized while cross-sector challenges have intensified. The value of traditional telecommunications business rapidly diminished, coupled with multiple challenges from a complex and rapidly-changing policy environment,” China Mobile chairman Yang Jie said.

“In order to counter market competition, overcome the major obstacles in the ongoing reforms and enhance management, we continued to encourage everyone across the Company to take the ‘Big Connectivity’ strategy even further and implement the integrated development of the four growth engines.”

2018 5G Accomplishments:

  • Permitted to adopt 2.6GHz and 4.9GHz frequency bands for trials
  • Network tests and application trials in 17 cities
  • Developed 5G Ecology:
    • 5G Joint Innovation Centre
    • 5G Device Forerunner Initiative
    • 5G Joint Innovation Industry Fund

2019 Goals dor 5G: Construct end-to-end network infrastructure; Promote 5G commercialization:
• Develop NSA and SA networks concurrently with SA (stand alone- no LTE) as the primary goal
• Promote 4G/5G synergistic development and expedite 4G VoLTE
• Join hands with the industry supply chain to develop devices supporting multiple modes, bands and form factors
• Share end-to-end smart technology capabilities and serve vertical industries

Work together to build an open and win-win innovative ecosystem. Promote 5G cross-industry integration:

  • Culture and entertainment
  • Smart transportation
  • Smart city
  • Smart manufacturing
  • Remote healthcare

https://www.chinamobileltd.com/en/ir/webcasts/pre190321.pdf

China Mobile on 5G (from Press Release):

We will continue to conduct tests on the 5G network and perform trials on business applications to ensure the precommercial launch of 5G services this year. We aim to provide direction and leadership for 5G development, exploring suitable 5G products and business models with industry partners. To build a strong foundation for the ongoing transformation towards an intelligent network, we will speed up the pace of network upgrades and strengthen our core capabilities. The Company will expand into new retail business and strive for the large-scale development of our own branded intelligent hardware. We will build up our capabilities in key business areas and develop an open and shared innovative ecosystem. In order to realize a win-win situation, we will continue to enhance the collaborative opening-up efforts, reinforcing industrial cooperation,investment planning and international expansion.

http://mms.prnasia.com/00941/20190321/2018ARPressRelease_ENG.pdf

7 thoughts on “China Mobile reports 2018 net profit of $17.58 billion; 5G accomplishments and 2019 plans

  1. From Reuters Breaking Views:

    China’s carriers are starting their long ascent to the 5G spending peak. Two of the country’s three largest mobile providers have indicated how much they will pay for the initial buildout of next generation technology this year, the first real hint of how they might approach a huge project being rolled out with a push from Beijing. Costs look manageable for now, but investors are not in the clear.

    It’s only the start of what’s sure to be a long and expensive process, with carriers’ spending on faster speeds likely to peak sometime between 2020 and 2023. Jefferies reckons the total capital expenditure on the project might total around 945 billion yuan, or about $140 billion, between 2020 and 2025, though some estimates go much higher.

    Analysts at China Merchants Bank optimistically forecast that total capex might be kept at less than 25 percent of the carriers’ revenue in the coming years, compared to around 35 percent during the peak years of the 3G and 4G buildouts and around 20 percent last year.

    Certainly the smaller pair appear restrained. Company statements and other signs suggest that Unicom and Telecom might form some sort of network-sharing agreement in order to compete with the much bigger China Mobile. That would probably reduce the total bill.

    Even so, it’s early days and Beijing ultimately calls the shots. Some market observers still hope officials might push back peak deployment of the new technology, to the benefit of carriers. Others worry they will get hurt by a pre-emptive rollout designed to offset lower overseas sales by Huawei and ZTE,, following a global backlash against the equipment makers.

    Much will depend on China Mobile. It trades at an enterprise value of around 3.7 times its EBITDA – compared to an average of over 4 times over the past decade, according to Eikon data.
    https://www.nasdaq.com/article/chinas-carriers-dig-deep-for-worldbeating-5g-20190321-00245

    1. From MIT Tech Review:
      In its 13th Five-Year Plan the government describes 5G as a “strategic emerging industry” and “new area of growth,” and in its Made in China 2025 plan, which outlines its goal of becoming a global manufacturing leader, it vows to “make breakthroughs in fifth-generation mobile communication.”

      Clearly, China is serious about making this work—and on an epic scale. China sees 5G as its first chance to lead wireless technology development on a global scale.

      In a TV interview, Jianzhou Wang, the former chairman of China Mobile, China’s largest mobile operator, described the development of China’s mobile communication industry from 1G to 5G as “a process of from nothing to something, from small to big, and from weak to strong.”

      Money is another good reason. The Chinese government views 5G as crucial to the country’s tech sector and economy. After years of making copycat products, Chinese tech companies want to become the next Apple or Microsoft—innovative global giants worth nearly a trillion dollars.

      The China Academy of Information and Communications Technology (CAICT), a government-run research institute, estimates that 5G will create more than 8 million jobs domestically by 2030. The agency thinks major industries, including energy and health care, will spend billions of dollars collectively on 5G equipment and wireless service during that period.

      The government controls all three of the country’s mobile operators (China Mobile, China Telecom, and China Unicom) and has been “guiding” them to deploy large-scale 5G test networks in dozens of cities, including Beijing, Shanghai, and Shenzhen. China Mobile claims that its tests alone represent the world’s largest 5G trial network.

      Under government direction, Chinese companies began conducting research on 5G in 2013 and holding technical trials of related technologies in 2016. “Chinese operators see their job as implementing government policy, whereas most global telecom companies try to balance competitive factors and will naturally invest at a slower pace,” says Chris Lane, a research analyst for investment management firm Sanford C. Bernstein.

      Beijing has also committed to giving Chinese operators large chunks of spectrum for 5G. That’s a far cushier arrangement than operators enjoy in the US and many other countries, where they pay regulators billions of dollars for the right to use slivers of spectrum. These radio frequencies carry wireless signals and are critical to cellular service, especially 5G, which will need wide swaths of bandwidth to provide users with super-fast speeds.

      https://www.technologyreview.com/s/612617/china-is-racing-ahead-in-5g-heres-what-it-means/

  2. Shanghai Becomes World’s First District With 5G Coverage

    The 5G stations are being installed in different parts of China, including Tibet, as part of Huawei’s plans to lead the 5G trials despite the opposition. Shanghai claimed on Saturday March 30, 2019 that it has become the world’s first district using both 5G coverage and broadband gigabit network as China seeks to establish lead over the US and other countries in the race to develop next generation cellular mobile communications.

    Trial runs of the 5G network, backed by state-run telecom carrier China Mobile, officially started the service in Shanghai’s Hongkou on Saturday, where 5G base stations had been deployed over the last three months to ensure full coverage, the report said.

    During a launch ceremony, Shanghai vice-mayor Wu Qing made the network’s first 5G video call on an Huawei Mate X, the world’s first 5G foldable, AI phone, it said.

    Huawei, China’s telecom technology giant, whose revenue in 2018 crossed USD 100 billion, is battling a wave of opposition to its 5G trials from the US and different countries. Huawei has denied official links with the Chinese government.

    https://www.news18.com/news/world/shanghai-becomes-worlds-first-district-with-5g-coverage-2083285.html

  3. China to join top global ranks in 5G says a senior executive at Guangdong province-based iVision Ventures:

    “5G is the basic infrastructure that will foster a wide range of new areas of application, such as autonomous driving, internet of vehicles, augmented reality and virtual reality – and China is set to join the top ranks globally in terms of 5G commercialization,” said Cheng Hao, Xunlei co-founder and founding partner of iVision Ventures, during a Hundun University course on Friday.

    Cheng said that 5G connectivity will not only meet consumers’ demand for faster download speeds, but will also influence developments in self-driving cars and the internet of things.

    According to China Academy of Information and Communications Technology, the nation’s carriers are set to generate 1.9 trillion yuan in total revenue from 5G business from 2020-2025.

    “Superfast 5G technology will provide 10 times the data transmission rate of 4G,” said Liu Duo, China Academy of Information and Communications Technology president.

    “In the 5G era, higher reliability and lower latency can be realized, making the internet of things more effective and allowing autonomous cars to become a reality.”

    To date 5G network pilot projects have been launched in 25 provinces, autonomous regions and cities nationwide.

    http://www.chinadaily.com.cn/a/201903/30/WS5c9efee3a3104842260b3726.html

  4. China Mobile Hong Kong (CMHK) and property company Sino Group have jointly held what they are calling Hong Kong’s first in-mall 5G experience showcase at the Olympian City 2 mall. The Future is Now 5G Experience Showcase, which was held over four days ending yesterday, comprised six experience zones intended to introduce and demonstrate 5G technology.

    These zones were based around concepts including autonomous vehicles, smart glasses and a machine that purports to be unbeatable at janken (also known as rock paper scissors) by using 5G leased lines and a sensory system to detect gestures as they are thrown.

    Other zones highlight the speed improvement between 4G and 5G, the potential of 5G technology in smart city development and a start-up exhibition based on IoT technology.

    “Out of Hong Kong’s many mobile carriers, CMHK is the first network provider to receive the 5G trial permit, and has succeeded in engineering Hong Kong’s first end-to-end 5G network testing as well as the first Commercial Equipment Field-Testing of 28GHz 5G base stations,” CMHK chairman Dr Li Feng said.

    “In the future, CMHK will continue to adhere to the concept of ‘4G changes lives, 5G changes society’ by presenting “5G+ Project” in three agendas: firstly, to complement the existing 4G network with 5G infrastructure; to promote 5G with new networking technology; and develop more comprehensive 5G ecosystems to maximize the value of 5G.’

    https://www.telecomasia.net/content/china-mobile-hong-kong-holds-5g-experience-showcase

  5. FCC may ban China Mobile from US market

    Federal Communications Commission (FCC) chairman Ajit Pai has released a statement urging his fellow FCC executives to vote for an order that would deny China Mobile’s application during the scheduled vote at its May 2019 Open Meeting.

    “Safeguarding our communications networks is critical to our national security. After reviewing the evidence in this proceeding, including the input provided by other federal agencies, it is clear that China Mobile’s application to provide telecommunications services in our country raises substantial and serious national security and law enforcement risks,” Pai’s statement reads.

    “Therefore, I do not believe that approving it would be in the public interest. I hope that my colleagues will join me in voting to reject China Mobile’s application. ”

    The draft order proposed by Pai would stipulate that China Mobile has not demonstrated that its application is in the public interest, but more importantly it would assert that “China Mobile is vulnerable to exploitation, influence, and control by the Chinese government.”

    China Mobile first applied back in September 2011 for a license to provide facilities based and resale telecommunications services between the US and overseas destinations.

    After a long review of the application, agencies within the US government’s Executive Branch recommended in July 2018 that China Mobile deny that application, citing “substantial national security and law enforcement risks that cannot be resolved through a voluntary mitigation agreement.”

    The proposed objection comes the month after Chinese vendor Huawei revealed it was taking the US government to court over an order banning federal agencies from buying its products due to national security fears.

    https://docs.fcc.gov/public/attachments/DOC-357062A1.pdf

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