(Bloomberg) — China Mobile Ltd. said it plans to increase its cash payout ratio for investors after posting higher-than-expected profit as rising demand for business and home-network services offset sluggish mobile user additions.
Net income at the world’s largest mobile operator for 2021 rose 7.7% to 116.15 billion yuan ($18.2 billion), the company said on Wednesday, beating the 107.84 billion yuan estimate from a Bloomberg survey of brokerages. Operating revenue rose 10% to 848.26 billion yuan for the year, it said.
For the quarter ended Dec. 31, it reported profit of 28.9 billion yuan compared with 26.2 billion yuan a year earlier, a jump of 10%. The wireless service provider, which boosted the full-year dividend to HK$4.06 per share ($0.52) for 2021, said in a statement that it will gradually raise its cash payout ratio to at least 70% of its profit over three years to create more value for investors despite some incoming headwinds.
“We face uncertainties,” Chairman Yang Jie said in the statement while commenting on the future outlook which will be beset with intense competition and rising risk of cyberattacks. “The shortage in chip supplies, fluctuations in energy and raw material prices, and other factors will all somehow affect our operations.”
Key Insights
- The state-run operator was boosted by the Covid-19 pandemic that forced people to study, work and shop from home last year.
- Businesses servicing companies and homes have contributed to more than half of the group’s telecommunications services revenue growth, Yang said.
- China Mobile is also facing challenges in further expanding its mobile-user base as domestic market reaches saturation. It added about 15 million new users last year, compared with a loss of 8 million in 2020, but the net addition was still down 41% from the pre-pandemic level of 2019.
- Subscriptions for the latest-generation, super-fast 5G network continue to grow steadily, now accounting for 44% of the firm’s user base. That’s helped compensate for slowing mobile income, which plagued China’s telecommunications industry in the pre-pandemic years amid state-mandated price cuts and intense competition.
- The company has found new growth areas in broadband, data centers and virtual data storage, as Covid triggered broadly a more digital lifestyle. It is also introducing more virtual-reality entertainment applications to boost its 5G networks further.
Market Reaction
- China Mobile’s shares rose 0.5% on Wednesday, pushing this year’s surge to 16%. The benchmark Hang Seng Index has slipped 5%.
- It announced its earnings after market closed in Hong Kong for the day.
Get More
- Total mobile subscribers: 960.8 million, including 425 million 5G users, as of end-February
- Operating revenue from wireless data traffic grew 2% to 392.8 billion yuan last year, while broadband and information services grew 27% to 231.2 billion yuan
- Monthly average mobile revenue per user rose 3% year on year to 48.8 yuan
(Updates with details throughtout.)
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