China Mobile (941 HK) announced its FY2024 full-year results on March 20, 2025, and its 1Q2025 results on April 22, 2025. Overall, the company delivered stable and improving performance, with sustained profitability and continued momentum in its digital transformation strategy. Key growth drivers include expanding DICT and cloud services, along with AI-led innovation.

Revenue and Profitability: Core Services Remain Resilient, Digital Business Accelerates

In FY2024, China Mobile recorded operating revenue of RMB 1,040.8 billion, up 3.1% YoY. telecommunications services revenue grew 3.0% YoY to RMB 889.5 billion, maintaining a stable contribution ratio of over 85%. Notably, digital transformation revenue reached RMB 278.8 billion, a YoY increase of 9.9%, accounting for 31.3% of communication service revenue—up from 29.4% in 2023—highlighting the growing importance of emerging businesses.

In 1Q2025, the company reported operating revenue of RMB 263.8 billion, virtually flat YoY (+0.02%). Telecommunications services revenue amounted to RMB 222.4 billion, rising 1.4% YoY. While overall revenue growth moderated, the core business remained resilient, supported by targeted value management and customer segmentation strategies.

Profit Expansion: Operating Efficiency and Depreciation Policy Drive Margin Gains

Full-year 2024 net profit attributable to shareholders rose 5.0% YoY to RMB 138.4 billion. Basic EPS was RMB 6.45. EBITDA reached RMB 333.7 billion, with an EBITDA margin of 37.5% on communication service revenue. A key factor behind the margin improvement was the change in depreciation policy—beginning in 2024, the depreciation period for 5G wireless and transmission equipment was extended from 7 to 10 years. This adjustment reduced annual depreciation and amortization by around RMB 19.07 billion, releasing pressure on operating margins.

In 1Q2025, EBITDA stood at RMB 80.7 billion, up 3.4% YoY, with an EBITDA margin of 30.6%, compared to 29.6% in the same period last year. Net profit attributable to shareholders was RMB 30.6 billion, up 3.45% YoY. The profit growth was mainly due to improved operating efficiency and stable contribution from non-recurring income.

A full-year dividend of HK$5.09 per share for 2024, representing a 5.4% YoY increase and a payout ratio of 73%. China Mobile reiterated its commitment to raise the cash dividend payout to over 75% of net profit within three years starting 2024, underscoring strong confidence in future earnings and cash flow.

In the “Customer” market, total mobile subscribers reached 1,004 million by end-2024, with 5G network customers rising to 552 million, representing a 55% penetration rate. Mobile ARPU remained industry-leading at RMB 48.5. The company's value-added services saw robust growth—Personal China Mobile Cloud Drive revenue reached RMB 8.9 billion (+12.6% YoY), while revenue from integrated-benefit products generated RMB 26.8 billion (+19.7% YoY). Monthly active users of 5G New Calling across all platforms reached 150 million, with 34.75 million smart application subscribers.

In the home market, broadband customers totaled 315 million, with 278 million being household users. ARPU for household customers increased 1.6% YoY to RMB 43.8. Gigabit broadband users grew 25% YoY, and FTTR users surged by 376% YoY, reflecting strong demand for premium broadband and smart home upgrades.

The "Business" Market saw strong expansion driven by “AI+DICT” integrated solutions. Revenue grew 8.8% YoY to RMB 209.1 billion. Corporate customers reached 32.6 million (+4.2 million net adds). China Mobile Cloud revenue exceeded RMB 100.4 billion (+20.4% YoY), maintaining its top-five industry position in IaaS+PaaS. The company completed over 700 large-scale 5G DICT projects and grew 5G dedicated network revenue by 61% YoY to RMB 8.7 billion.

In "New" Markets, revenue rose 8.7% YoY to RMB 53.6 billion. International business contributed RMB 22.8 billion (+10.2% YoY), digital content reached RMB 30.3 billion (+8.2% YoY), and fintech revenue soared to RMB 116.5 billion (+52%). Notably, MIGU Video monthly active users exceeded 520 million, and and-Wallet monthly actives reached 124 million.

Innovation and Infrastructure: AI+ and BASIC6 Strategy Gathers Momentum

China Mobile accelerated the rollout of its “Three Major Programs” of “Two New Elements”. The “AI+” initiative saw meaningful progress, with the debut of the company's proprietary Jiutian large language model, which was included in the 2024 list of “Top 10 National Strategic Tools” by central SOEs. The AI+DICT integrated service model signed over 500 projects and reached 190 million users for AI-based products.

On the infrastructure side, total general-purpose computing power reached 8.5 EFLOPS, with intelligent computing at 29.2 EFLOPS, with the intelligent computility center nodes commencing operation in regions including Beijing-Tianjin-Hebei. The 400G backbone and AIDC upgrades were recognized as industry benchmarks.

Investment Thesis

China Mobile's FY2024 and 1Q2025 results demonstrate stable revenue and profit growth, underpinned by resilient core businesses and accelerating contributions from digital transformation, and innovative businesses such as AI and DICT are expected to become core growth engines in the future. The depreciation policy change provided a short-term margin boost, while the company's commitment to strong and growing dividends reinforces its focus on shareholder value. Looking ahead, China Mobile is well-positioned to benefit from the “AI+” era. The company's leadership in computing infrastructure, cloud, and intelligent applications offers strong potential for value creation. We expect FY2025E-FY2026E EPS to be RMB 6.84 and RMB 7.15 respectively, with PT of HK$81.66, implies a FY2025E P/E of 11.2x (~0.5-yrs historical average plus 1 standard deviation). Our investment rating is “Neutral”.

Risk factors

1) The weak economic recovery affects user ARPU and government and enterprise demand; 2) The industry competition landscape worsens; 3) Policy or data compliance risks.

Financial

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