China Mobile, the largest mobile operator in the world, added more than 220 million 4G subs in 2016 and saw brisk wireless data revenue growth despite a sharp drop in tariffs, allowing it to deliver strong overall results for the year.

Net profit was flat, inching up 0.2 per cent to CNY108.7 billion ($15.75 billion). However, excluding a one-off gain of CNY15.5 billion in 2015 from the transfer of its tower assets, its profit would have increased 10.5 per cent. EBITDA rose 6.9 per cent to CNY256.7 billion in 2016.

Total operating revenue for the year was up 6 per cent to CNY708 billion, with service revenue rising 6.7 per cent to CNY623 billion. Mobile revenue increased 4.7 per cent to CNY578 billion.

With the government’s continued push to boost internet speeds and reduce prices, data tariffs fell 36 per cent in 2016, said China Mobile chairman Shang Bing.

He said the new round of “speed upgrade and tariff reduction” policies will require operators to further enhance their infrastructure and increase internet bandwidth, while cancelling domestic long-distance and roaming tariffs from October.

“We expect the new policies will have a certain impact on our 2017 operating results. However, we believe these initiatives will, in the long run, accelerate our transformation towards predominantly data traffic and digital services,” Shang said. “We have taken an orderly and balanced approach to mitigate the risks by proactively removing standalone non-flat rate domestic long-distance and roaming packages and focusing our promotional efforts on the sales of flat-rate packages.”

Continued data growth
Despite the tariff cuts, wireless data revenue increased 43.5 per cent in 2016, accounting for 46.2 per cent of service turnover. Wireless data became the largest revenue source for the first time in 2016, surpassing the combined revenue of voice, SMS and MMS.

Mobile voice revenue fell 20 per cent to CNY210 billion, accounting for 33.7 per cent of service revenue (down from 44.8 per cent in 2015). SMS/MMS revenue declined 8.6 per cent to CNY28.6 billion.

The market leader signed up a staggering 223 million 4G subscribers in 2016, taking its 4G total to 535 million, or 63 per cent of its total user base of 849 million. The operator added 22.7 million new subscribers last year, with 3G connections dropping by 66 million to 103 million as customers switched to 4G plans.

Overall ARPU rose 2 per cent to CNY57.50, while 4G ARPU was stable at CNY74.40

The operator rolled out an additional 400,000 4G base stations during the year, taking the total to 1.5 million sites covering a population of more than 1.3 billion. It also launched commercial VoLTE services in 313 cities. It said the average download speed on urban roads reached 40Mb/s.

Its 2017 capex budget was cut 6 per cent to CNY176 billion.

New CFO
The company announced the appointment of a new CFO, Dong Xin, who will also serve as an executive director. He replaces Xue Taohai who retired. Stephen Yiu Kin Wah also was named as an independent non-executive director and a member of the audit committee.

China Mobile was the last of the ‘Big Three’ to report 2016 results. China Telecom’s net profit fell 10.2 per cent to CNY18 billion ($2.6 billion), while its operating revenue increased 6.4 per cent to CNY352 billion. China Unicom reported a 94 per cent drop in its net profit to CNY625 million ($90.6 million), on total revenue of CNY274 billion, which was down 1 per cent year-on-year in 2016.