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So recently I was looking to see what dividend stocks to add to my portfolio and came across China Mobile Limited.

For those unaware, China Mobile Limited is listed on the Hong Kong Stock Exchange (Ticker symbol: 941).

At its current market price (as of 7th July 2024), China Mobile has a trailing dividend yield of 6.28%.

China Mobile market price as of 5th July 2024
Source: Google

At this rather attractive yield, is China Mobile a worthy investment?

To answer that question, I decided to analyse China Mobile’s performance over the past 5 years and consider its growth prospects and current valuation.

An Overview of China Mobile

Before going into the financial numbers, we need to know what China Mobile is roughly about and its revenue segments.

China Mobile operates in the telecommunications and information technology sectors. It is also one of the three main telecommunication service providers in China, the other two being China Telecom and China Unicom.

As of FY2023, a breakdown of China Mobile’s revenue segments would be as such:

  • Voice services contributed 7.2%
  • SMS & MMS services contributed 3.1%
  • Wireless data traffic services contributed 39.1%
  • Wireline broadband services contributed 11.8%
  • Applications & information services contributed 22%
  • Other miscellaneous services contributed 2.5%
  • Sales of telecommunication products and others contributed the remaining 14.4% 
China Mobile FY2023 revenue segments

In terms of shareholder structure, around 69.8% of China Mobile shares are held by China Mobile Communications Group Co Ltd, which is a state-owned enterprise. The remaining 30.2% of shares are held by public investors.

China Mobile shareholder structure as of FY2023
Source: China Mobile Annual Report 2023

Now that we have a rough idea of what China Mobile is about, let’s consider its 5-year financial performance next.

China Mobile 5-Year Financial Performance

Steady growth in its top and bottom line

Looking at its top and bottom lines first, China Mobile’s total revenue, EBITDA and net profit have all increased at a compounded annual growth rate (CAGR) of 8.2%, 9.4% and 10.5% respectively over the past 5 years.

China Mobile top and bottom lines from 2018 to 2023

While there was overall growth in China Mobile’s top and bottom lines, there are noticeable differences in the revenue growth of its individual segments.

Revenue growth of individual segments

The revenue growth rate of China Mobile’s telephony services segments has been rather tepid over the past 5 years.

China Mobile telephony services segments revenue growth from 2018 to 2023

Revenue from the voice services segment shrank at a 5-year compounded rate of -9.6%, while SMS & MMS services and wireless data services only grew at a 5-year CAGR of 1.9% and 0.7% respectively.

These growth rates are in stark contrast to that of China Mobile’s wired broadband services and information services segments.

China Mobile revenue growth rate of wireline broadband services and applications & information services segments from 2018 to 2023

Over the past 5 years, revenue from both the wireline broadband services and applications & information services segments have grown at a CAGR of 21.6% and 30.8% respectively.

If we were to zoom out and consider the overall revenue growth of China Mobile’s telecommunication and information technology services, it has grown at a steady 5-year CAGR of 6.5%.

China Mobile telecommunications and IT services revenue from 2018 to 2023

Lastly, revenue from the sale of telecommunication products segment has grown at a 5-year CAGR of 22%.

China Mobile revenue from the sale of products & others segment from 2018 to 2023

While this segment’s growth rate is quite impressive, it should be noted that it does not generate China Mobile much gross profit. As of FY2023, the segment’s gross profit margin stood at a meagre 2%.

Sale of products and others segment margins from 2018 to 2023

Nonetheless, I would say that from an overall growth perspective, China Mobile has performed quite steadily over the past 5 years.

Declining margins due to increased operating expenses

However, while overall growth has been rather healthy, underlying margins have declined over the past 5 years.

China Mobile EBITDA and net profit margins from 2018 to 2023

Both EBITDA and net profit margin declined from 37.4% and 16% respectively in 2018, to 33.8% and 13.1% in 2023.

This decline in margins is mainly due to a rise in operating expenses, excluding depreciation and amortization.

Over the past 5 years, China Mobile’s overall operating expenses, excluding depreciation and amortization, have risen at a compounded rate of 9.7%.

China Mobile operating expenses, excluding depreciation and amortization, from 2018 to 2023

Both network operation & support expenses and employee-related expenses made up the bulk of this increase.

China Mobile network operation & support expenses and employee benefit  & related expenses from 2018 to 2023

Individually, network operation & support expenses and employee-related expenses have risen at a compounded rate of 7.7% and 11.3% respectively over the past 5 years.

As of FY2023, both these expenses made up 40.3% and 21.6% of total expenses, excluding depreciation and amortization.

The rise in these two expense segments is expected given the need for China Mobile to maintain and build out network capabilities and coverage for a host of China’s networking needs, ranging from 5G wireless networks to wired broadband connections and cloud computing.

Thus, with continued demand for network and interconnectivity in China, I expect operating expenses to continue increasing over the next few years. This would likely continue to negatively impact China Mobile’s underlying margins, though whether it would cause a considerable decline remains to be seen.

China Mobile Financial Health

When it comes to financial health, China Mobile is in a rather healthy state despite some slight blemishes.

As of FY2023, total assets against liabilities and current ratio were at 3.08 and 0.89 times respectively. China Mobile also has no interest-bearing debt on its balance sheet.

China Mobile total assets/Liabilities and current ratio for 2023

While some investors might be spooked by China’s Mobile rather low current ratio, I think there is not much to worry about if you look into the individual components of the current liabilities.

China Mobile current assets and current liabilities for 2023
Data source: China Mobile Annual Report 2023

Removing both contract liabilities and receipts in advance would reduce China Mobile’s current liabilities to RMB 413.3 billion. At this amount, it would be easily covered by the value of current assets after the deduction of inventories.

The reason for excluding contract liabilities and receipts in advance is mainly because they would either be recognized as operating revenue or are refundable funds received from customers in advance of services rendered. This means that such funds would not need to be covered by existing cash or current assets on China Mobile’s balance sheet.

China Mobile contract liabilities and receipts in advance for 2023
Data source: China Mobile Annual Report 2023

Moving on to return on equity (ROE) next, China Mobile’s ROE was 9.8% for FY2023. It has declined as compared to 5 years ago.

China Mobile Return on Equity from 2018 to 2023

Thankfully, China Mobile has grown its book value from 52 RMB in 2018 to 63 RMB in 2023, a 5-year CAGR of 5.1%.

China Mobile book value from 2018 to 2023

In terms of China Mobile’s free cash flow, it was positive over the past 6 years and has grown at a CAGR of 47.1%, from RMB 10.6 billion in 2018 to RMB 121.4 billion in 2023. Free cash flow per share has also increased over the past 5 years.

China Mobile free cash flow from 2018 to 2023

Lastly, when it comes to China Mobile’s dividends paid out, it has grown at a 5-year CAGR of 14.1%, from 4.217 HKD in 2018 to 4.83 HKD in 2023. Dividend payout was also sustained by free cash flow in 4 of the last 6 years.

China Mobile's dividends and dividend payout percentage from 2018 to 2023

With China Mobile’s Capex costs for 2024 expected to be slightly lower than 2023, there is room for dividends to be sustainably increased in 2024.

China Mobile Growth Prospects

Having looked at China Mobile’s financial performance and health over the past 5 years, it’s time to consider its growth prospects.

For this, I think it is useful to consider based on China Mobile’s three main business segments; namely the telephony services segment, the wired internet connection segment and finally the information technology services segment.

Telephony services segment

For the telephony services segment, growth would mainly stem from the adoption of 5G mobile packages in China.

As of FY2023, while China Mobile’s 5G package customer base has grown substantially since 2020, net additional 5G customers have actually slowed down.

China Mobile 5G package customer base and net additional 5G package customers from 2020 to 2023

If you were to look at the overall mobile customer base of China Mobile it has increased at a rather slow pace of just 1.7% over the past 5 years.

China Mobile's total mobile customer base from 2018 to 2023

When it comes to average revenue per user per month (ARPU), it has decreased from RMB 53.10 in 2018 to RMB 49.30 in 2023.

China Mobile's average revenue per user per month for mobile customers from 2018 to 2023

All the above figures suggest a possible saturation of the mobile market space in China.

This could perhaps be due to competition from other major telecom companies such as China Telecom and China Unicom, as well as other Chinese mobile virtual network operators (MVNOs) when it comes to the pricing of 5G mobile plans.

Another point to consider is whether the common individual who is already on a mobile 4G plan, would see the need to upgrade and pay more for a 5G plan.

Nevertheless, based on China’s latest statistical report on internet development, 5G mobile phone subscribers made up 46.6% of all mobile phone subscribers in 2023 and recorded a positive growth of 13.3% as compared to the previous year.

So perhaps there is still room for 5G to make an impact on China Mobile’s revenue from its mobile services segment. Nonetheless, I do not expect this impact to be huge given the slow revenue growth of its wireless data traffic services segment.

Wireline broadband services segment

When it comes to China Mobile’s wireline broadband services segment, its growth trajectory differs greatly from the mobile services segment.

Over the past 5 years, China Mobile’s broadband customer base has increased from 157 million in 2018 to 298 million in 2023, a CAGR of 17.4%.

China Mobile's broadband customer base from 2018 to 2023

Out of the 298 million broadband customers, 264 million were households. With China Mobile’s current gigabit coverage of 390 million households, there is a significant potential customer base for China Mobile to tap into and sell its broadband plans to.

This could perhaps explain why China Mobile’s household customer blended ARPU has increased at a higher rate than its overall wireline broadband ARPU.

China Mobile wireline broadband ARPU from 2018 to 2023

Also with China’s internet penetration of urban and rural areas at 83.3% and 66.5% respectively as of 2023, there remains much room for growth in China Mobile’s wireline broadband segment for the next few years, especially in terms of providing broadband connectivity to rural areas.

Information technology services segment

China Mobile’s IT services segment is the segment that I am most bullish on in terms of growth prospects.

As most would know, AI is currently a huge growing global industry. Like many countries, China is also poised or is already spending huge on AI investments in the next few years. This is even more prevalent if you consider the export restrictions of advanced AI GPUs and chips imposed by the United States.

All this spending on AI advancement in China would be a boon to China Mobile due to the huge demands for cloud computing and high-speed networking solutions and infrastructure.

While China Mobile’s cloud platform, China Mobile Cloud, might not beat incumbent players like Alibaba Cloud, Tencent Cloud or Huawei Cloud in terms of market share, it can utilise its networking expertise as an edge over other market players. For FY2023, revenue from China Mobile Cloud came in at RMB 83.3 billion, a 65.6% increase from the previous year.

China Mobile’s corporate customer base also increased from 7.18 million in 2018 to 28.37 million in 2023, a CAGR of 41%.

China Mobile corporate customer base from 2018 to 2023

Besides tailwinds from AI and cloud computing, China Mobile is also in a great position to benefit from advancing industries such as autonomous driving and the general IoT or Smart industry as a whole, due to its expertise and continued development of 5G capabilities.

We can see this in the growth of China Mobile’s IoT card customer base, from 551 million in 2018 to 1.316 billion in 2023, a CAGR of 24.3%.

Long story short, as China continues to develop and move into a high-tech digital future, the demand and need for high-speed networking and computing solutions should fuel China Mobile’s growth for the next few years.


While China Mobile’s growth prospects are exciting, we should not forget that much of it still depends on China’s domestic demand and growth.

Also with China Mobile’s significant links to the Chinese government, overseas expansion to Western markets would be highly unlikely. Over the years, we have seen how the United States continues to implement restrictions on the operations of Chinese companies.

China Mobile was also not spared as together with other Chinese telecom companies, it was delisted from the New York Stock Exchange in 2021. It was also recently ordered to cease any broadband offerings in the United States.

While expansion to Western markets might prove difficult, China Mobile has found some success in forging partnerships in the Middle East, Africa and Southeast Asia regions. However, it would likely take years or a decade for such overseas partnerships to have a considerable financial impact on China Mobile’s earnings.


Having looked at China Mobile’s financials and growth prospects, let’s now consider its current valuation.

Based on its current market price, China Mobile’s price-to-earnings and price-to-book ratios are both higher than its 5-year average values.

In terms of dividend yield, the trailing 12-month dividend yield (as of 7th July 2024) was at 6.28%, which was lower than its 5-year average yield.

When it comes to its price chart, China Mobile recently retreated slightly from its new 52-week high price.

Source: Tradingview

All these suggest that China Mobile might be currently trading at a rather high valuation.

While some might argue that basing valuation on the past five years might not be valid given the poor performance of the Chinese markets in recent years, I feel that it is valid as we should always account for market forces and sentiments before buying into a stock.

In addition, I also think it would be prudent to factor in a ‘Chinese discount’ when investing in Chinese companies. Doing so enables investors to have an appropriate margin of safety when investing in Chinese counters.


From a fundamental perspective, I feel that China Mobile is a good company to invest in. It is poised to greatly benefit from China’s current and future demand for high-speed telecommunications and networking solutions, be it for AI, cloud computing or 5G networks.

Its latest 1Q 2024 results also showed growth in its top and bottom lines and underlying customer bases. Margins however continue to be a slight blemish.

Furthermore, with a sustainable dividend payout percentage and lower expected Capex costs for 2024, dividends paid out for 2024 could likely increase.

However, at its current market price, I feel there is more downside risk than upside potential for China Mobile. Thus, I would wait for the price to retrace to around the 65 HKD region before thinking of adding China Mobile to my portfolio.

At this price, the 12-month trailing dividend yield would be 7.4%. If you think China Mobile’s dividends for 2024 would likely increase to at least 5 HKD as I do, then the corresponding dividend yield would be at least 7.7%. With this yield, I think it provides a good risk-to-reward ratio for the investor.

Final Verdict

  • Financials – 4/5 rating
  • Growth – 4/5 rating
  • Valuation – 2/5 rating
  • Total rating – 3.3/5 rating

Verdict: Good dividend stock to invest in, but wait for the price to retrace to acceptable levels

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