China Mobile reported revenues down 0.5 percent in 2018 to CNY 736.8 billion, hurt by the new accounting rules and competition in the mobile market. Excluding the accounting effect, the company said revenues rose 1.8 percent, and service revenue was up 3.7 percent to CNY 670.9 billion. Mobile revenue declined 1.9 percent to CNY 492.4 billion or 73 percent of the total revenue.
EBITDA improved 1.9 percent over the year to CNY 275.5 billion, and net profit rose 3.1 percent to CNY 117.8 billion. China Mobile increased its dividend by 0.4 percent to HKD 3.217 per share.
The company remains China's biggest mobile operator with 925 million customers at year-end, up 4.3 percent from 2017. 4G customers increased by 9.7 percent over the year to 713 million, of which just over half could use VoLTE. Total handset data traffic increased by 182.1 percent over the year, and in December 2018, 4G customers used an average 6.6 GB per month. Mobile ARPU was still down 8 percent to CNY 53.1 amid pressure from the government to moderate prices for mobile services.
China Mobile showed stronger growth in the fixed market, where the number of residential broadband customers increased 34.2 percent in 2018 to 147 million, and 96.8 million customers used its digital set-top box Mobaihe. Household broadband ARPU increased 3.2 percent to CNY 34.4. The company also grew strongly in the IoT market, reaching 551 million connections, more than double the 229 million at the end of 2017.
Outlook: lower capex, higher service revenues
China Mobile said it plans a continued focus on cost control in 2019 as well as customer satisfaction, in the face of growing competition in the market. It will also continue with 5G network and application tests amid plans to launch a pre-commercial 5G service this year.
Despite the preparations for 5G, capital expenditure is expected to fall again this year, after a 5.9 percent decrease in 2018. China Mobile forecast a budget of CNY 149.9 billion, down from CNY 167.1 billion or 24.9 percent of revenue last year. Additional spending may still be added for the launch of 5G services in selected cities this year.
The company aims to grow to a total of 2 billion connections this year, while maintaining its market-leading mobile ARPU and adding another 45 million 4G users and 300 million IoT connections. Services revenues are expected to show "favourable growth" this year, while profit will be stable to higher, excluding the one-time gain on the China Tower transaction and leasing effects.
