China Mobile: Tax Revamp Hit, Div. Still Intact?

China Mobile (00941.HK/600941.SH) released its FY25 annual results and Q4 2025 earnings (to Dec 2025) after the Hong Kong close on Mar 26, 2026 (Beijing time). Key takeaways below:

1) Ops: revenue edged up; operating profit trended higher. $CHINA MOBILE(00941.HK) reported Q4 revenue of RMB 255.5bn (+2.5% YoY). Communications service revenue was slightly higher YoY, while product sales and related lines rose about 14% for a second straight quarter. Q4 operating profit came in at RMB 25.6bn (+8% YoY), mainly on a lower opex ratio.

2) Core biz: lower data tariffs to drive usage; broadband steady.

a) Data traffic: still the largest revenue contributor at 40% of total. H2 data revenue was RMB 173.6bn, down 4% YoY. Data usage rose 10% YoY, but average data tariffs fell 13%, as the company continued to cut prices to attract users.

b) Broadband: steady growth. H2 broadband revenue reached RMB 73.0bn, up 8.6% YoY, supported by both user growth and higher ARPU.

c) Other lines: voice and SMS continued to decline, while information services kept growing.

3) Capex: dialing back network spend, adding to computing power. $China Mobile(600941.SH) Q4 2025 capex was approx. RMB 39.8bn, broadly flat YoY.

On the outlook, 2026 capex is guided at RMB 136.6bn, down RMB 15–20bn YoY. Cuts will focus on communications network capex, while investment in computing-power networks will continue to rise (around RMB 37.8bn).

4) ROE and dividends: TTM ROE at 10%, flat YoY. Total dividends and buybacks in Q2–Q3 reached RMB 104.2bn, with the dividend payout ratio still above 72%.

Dolphin take: despite 'higher taxes', dividends remain rich; 'compute power' is the growth hope

Results were broadly in line with expectations, with revenue growth primarily from product sales and related businesses, while core communications saw modest gains. The sharp drop in bottom-line profit was mainly due to other gains/losses, whereas operating profit rose 8% YoY.

By line: ① the data business kept executing a 'cut tariffs to drive traffic' playbook, with H2 data ARPU down 13% and mobile user numbers still inching up; ② broadband sustained roughly 8% growth in H2, with both users and ARPU up; ③ information services and product sales grew, led mainly by computing-related services.

Versus the steady ops, the market is more focused on:

a) Capex: Q4 capex was RMB 39.8bn, roughly flat YoY. Management guides 2026 capex at RMB 136.6bn (-9.5% YoY), with cuts in network capex and continued additions to computing-power capex (around RMB 37.8bn).

With 5G peak investment behind it, China Mobile’s capex has clearly rolled over. As capex declines while D&A remains elevated, cash operating profit exceeds reported operating profit, implying stronger cash earnings. Dolphin estimates Q4 after-tax cash operating profit at RMB 25.5bn, up 6% YoY.

b) Dividends: since distributions typically fall in Q2/Q3, full-year 2025 dividends totaled about RMB 104.2bn, keeping payout north of 72%.

Overall, operating trends remained stable this quarter, while the decline in net profit was mainly driven by other gains/losses. From Jan 1, 2026, under the new VAT policy, data, SMS and MMS will be reclassified from 'value-added telecom services' to 'basic telecom services', with VAT lifted from 6% to 9%.

Based on the revenue mix of data, SMS and MMS, the VAT hike is expected to trim total revenue by roughly 1–2%. Given the ongoing 'price cuts to drive volume' strategy, pass-through to end-users is limited, implying a profit impact of about 5–7%.

At the current market cap of RMB 1.5tn, 2026E net income implies around 11x PE (assumptions: +1% revenue growth, GPM 58.6%, tax rate 22.3%). Historically, the stock traded in a 7–13x PE range, and the current multiple sits near the midpoint.

In this print, capex keeps trending down, ROE is improving, and payout remains high. The company still offers both 'earnings stability' and 'high dividends'. The VAT change is an industry-wide factor for the three national operators, bringing a one-off hit to 2026 growth and slightly reducing dividends (by about 5%).

As a data traffic provider, usage keeps climbing through the year, making it a steady business. The VAT increase is a sector headwind that will dampen results but should be manageable. With data centers and AI yet to ramp, even after a haircut to dividends, China Mobile still offers a 6%+ yield and remains a dividend play.

Below is Dolphin’s detailed read of China Mobile’s results:

I. Operating metrics: steady growth

1.1 Top line

Q4 2025 revenue was RMB 255.5bn (+2.5% YoY). By segment, communications services contributed RMB 212.4bn (+0.5% YoY), while product sales and others delivered RMB 43.1bn (+14% YoY).

Communications service revenue rose slightly YoY, with personal mobile services down 4% in the quarter. Home and government/enterprise continued to grow around 9% YoY.

For the personal mobile segment, which accounts for over half of total revenue: ① mobile subs stayed above 1bn, slipping QoQ; ② mobile ARPU was RMB 43.2 in Q4, down 4.5% YoY. ARPU has been trending lower over the past year.

2.2 Gross margin

Q4 2025 GPM was 51.4%, down 380bps YoY. Dolphin treats 'network operation & support' and 'cost of products sold' as COGS to derive gross profit and margin.

Communications services carry higher margins than product sales. A higher mix of product-related revenue in Q4 diluted the consolidated GPM.

2.3 Operating expenses

Q4 2025 opex was RMB 105.9bn, down 4.9% YoY. Dolphin aggregates 'selling expenses', 'employee benefit expenses', 'D&A', and 'other operating expenses' into opex.

1) Selling expenses: RMB 15.2bn (+21.5% YoY), reflecting higher spend on retention and customer service. 2) Employee benefits: RMB 36.9bn (+2.2% YoY), with more tilt to core and frontline staff. 3) D&A: RMB 48.0bn (-2.7% YoY) as capex trends down post the 5G investment peak.

2.4 Net profit

Q4 2025 net income was RMB 21.8bn, down 21% YoY, mainly due to other gains/losses. With VAT rising from 2026, the company adjusted 'bundle revenue tax allocation' this quarter.

Given D&A exceeds capex, after-tax cash operating profit was RMB 25.5bn in Q4 (ex non-operating items), up 6% YoY.

II. By business: 'cut tariffs to draw traffic' remains the core approach

China Mobile’s revenue mainly comes from communications services and product sales, with the former long accounting for 80%+. Hence, trends in communications services drive overall revenue and business changes.

Within communications services, wireless data remains the largest contributor at 40.5%, but its share is falling under the 'cut tariffs to drive usage' strategy. Other lines include broadband, voice, SMS, and application & information services.

2.1 Wireless data

H2 2025 data revenue was RMB 173.6bn (-4% YoY). Short-video and other use cases kept boosting data consumption, but a lower unit tariff continued to weigh on revenue.

Breakdown: H2 wireless data usage reached 96.1bn GB (+10.3% YoY), while the avg. tariff was RMB 1.8/GB (-13% YoY). Despite robust demand, the company continued to reduce data tariffs.

2.2 Broadband

H2 2025 broadband revenue was RMB 73.0bn (+8.6% YoY). Growth persisted, driven by share gains in the broadband market.

As of Dec 2025, broadband subs rose to 324mn (+3% YoY), implying monthly ARPU of RMB 37.6 (+4.6% YoY).

2.3 Other lines

1) Voice: H2 2025 revenue was RMB 32.44bn (-4% YoY). The line is in secular decline as OTT video/voice substitutes legacy calling.

2) SMS/MMS: H2 2025 revenue was RMB 13.5bn (-7.6% YoY). This is no longer a mainstream channel, with demand concentrated among B-end clients such as banks.

3) Apps & information services: H2 2025 revenue was RMB 122.1bn (+6% YoY). The bucket spans consumer digital content & apps (entertainment & lifestyle), smart-home (digital home hub), and enterprise digitalization (gov./enterprise IT services).

As a legacy carrier, the company aims to upgrade via app and information services, shifting from connectivity to value-based services. The biggest pivot is toward cloud, 5G and AI as strategic anchors to move the mix up the tech stack.

Current growth is only ~6%; watch data center and cloud-related businesses for more 'potential' upside.

Dolphin Research’s China Mobile archive:

Oct 20, 2025 earnings take: 'China Mobile: as steady as a ballast, the cash cow stays on track!'

Aug 7, 2025 call transcript: 'China Mobile (Trans): guidance unchanged for 'steady revenue growth, solid profit growth''

Aug 7, 2025 earnings take: 'China Mobile: earnings power intact, cash-cow status unchanged'

Apr 22, 2025 earnings take: 'The non-discretionary champ! Is China Mobile the real king of stocks?'

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