--- title: "China Mobile: Higher Taxes + Lower Fees — Propped Up by Big Dividends?" type: "News" locale: "en" url: "https://longbridge.com/en/news/295923550.md" datetime: "2026-08-14T10:59:31.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/295923550.md) - [en](https://longbridge.com/en/news/295923550.md) - [zh-HK](https://longbridge.com/zh-HK/news/295923550.md) --- # China Mobile: Higher Taxes + Lower Fees — Propped Up by Big Dividends? China Mobile (600941.SH/00941.HK) released its Q2 2026 results (through Jun 2026) after the HK market close on Aug 13, 2026. Key takeaways are below. **1) Ops metrics:**$ CHINA MOBILE.HK **Q2 2026 revenue was RMB 271.6bn, down 3% YoY,** driven by weaker telecom services. **The service decline reflected a higher VAT burden (6%→9%) and lower ARPU in telecom services.** **China Mobile’s Q2 2026 operating profit was RMB 49.3bn, down 15% YoY,** as both revenue and GPM declined. This dual pressure weighed on profitability. **2) Core biz: users still growing, tariffs still falling** User additions continued. Tariffs/ARPU kept trending lower. **a) Mobile:** Mobile subs rebounded to 1.011bn this quarter, **up approx. 2.12mn QoQ.** However, 1H ARPU fell to RMB 45.1, down 9% YoY. ARPU pressure persisted despite user growth. **From Jan 1, 2026, telecom services have been subject to ~2% higher VAT. Ex-VAT effects, mobile ARPU still fell by about 6% in 1H, directly pressuring revenue and GPM.** The VAT uplift and ARPU erosion jointly dragged topline and margins. **Since early 2026 the company stopped disclosing quarterly ARPU, and Dolphin Research estimates VAT’s impact on ARPU at roughly 3%.** Even after stripping out this effect, the downtrend in mobile ARPU appears to be accelerating. This underpins a weaker revenue mix. **b) Broadband:** Relatively steady with continued growth. Subs reached 337mn this quarter, up 3.9mn QoQ. Since last quarter, the company adjusted disclosure, **replacing the prior ‘fixed-line broadband subs’ with ‘broadband networked subs’, now including household broadband, enterprise broadband, internet leased lines, and data leased lines.** The broader scope better reflects total connections. **3) Capex:** Q2 2026 capex was approx. RMB 35.9bn, down RMB 3.3bn YoY. **No new full-year guidance was provided; prior guidance called for 2026 capex of RMB 136.6bn, down RMB 15–20bn YoY,** with reduced spend on telecom networks and higher investment in computing power networks. Mix is shifting toward compute infrastructure. **4) ROE and dividends:** TTM ROE was 9.9% this quarter, up 10bps YoY. 1H dividends were RMB 48.0bn; based on the interim plan, another ~RMB 54.4bn is expected. This implies a current dividend payout ratio (dividends/after-tax cash profit, TTM) of ~73%, which looks stable. Both ROE and dividends are calculated on after-tax cash operating profit, about RMB 49.3bn this quarter. The metric is defined as: after-tax cash operating profit = (operating profit + D&A − capex) × (1 − tax rate). This aligns payout analysis to cash generation. **Dolphin Research view: higher taxes and lower tariffs leave dividends holding the line** Revenue and GPM both declined YoY this quarter, mainly due to higher VAT and falling mobile ARPU. Importantly, VAT alone does not explain the decline. **VAT lifted the telecom tax burden by about 2%, yet telecom services fell nearly 5%, implying the remaining ~3% was driven by lower mobile ARPU.** ARPU pressure is the bigger swing factor. **\[New VAT policy**: From Jan 1, 2026, data, SMS and MMS were reclassified from ‘value-added telecom services’ to ‘basic telecom services’, with VAT raised from 6% to 9%. **\]** This reclassification increased the effective tax rate on telecom services. **With operations softening, the market is focused on dividends.** The statements show Q2 dividends paid of RMB 28.3bn, with another RMB 54.4bn announced; the implied dividend payout ratio (dividends/after-tax cash profit) is about 73%. Cash returns remain the key support. At the current HK market cap of HKD 1.78tn, the stock trades at roughly 12x 2026E net profit (assuming flat revenue, 56.5% GPM, and a 22% tax rate). **Historically, the stock has traded mostly in a 7–13x PE range, placing the current multiple slightly above mid-range.** With telecom services and GPM trending lower, full-year profit likely declines, mechanically lifting the PE multiple. Valuation support thus hinges on cash returns. Overall, China Mobile faces a twin drag from VAT and ARPU declines, resulting in continued earnings pressure. Full-year profit is likely to fall, already pushing PE above 10x. This sets a higher bar for multiple expansion. **From a PE lens, the stock is not cheap, and the market focus has shifted to dividends.** Incorporating VAT and lower tariffs, Dolphin Research estimates 2026 EBITDA at RMB 319.2bn (−6% YoY). Assuming FY capex of RMB 145.0bn (cash flow statement), after-tax cash profit is estimated at RMB 136.0bn. This frames sustainable distributions. **With a 70–80% payout ratio, full-year dividends could reach RMB 95.0–108.0bn.** At the current HK market cap (HKD 1.53tn), that implies a dividend yield of roughly 6.2–7%. Yield remains competitive in the HK market. **For growth investors, China Mobile offers limited appeal.** The bull case rests on high-dividend allocation and risk-off demand. During prior pullbacks in tech-growth, the stock drew some safe-haven flows. That dynamic could recur if volatility rises. **Even with earnings under pressure, the HK line should still deliver a 6%+ dividend yield.** If earnings weaken further, the company could lift its payout ratio to maintain a higher nominal dividend, a tactical lever to support the stock’s appeal. This would be a reactive move. Below are Dolphin Research’s detailed data cuts on China Mobile’s results: Dolphin Research archive on China Mobile: Apr 20, 2026 earnings review. 'China Mobile: Tax reform skims the cream? More generous payouts needed'. https://longportapp.cn/zh-CN/topics/40046950 Mar 26, 2026 earnings review. 'China Mobile: Facing tax reform head-on, is the dividend story intact?'. https://longportapp.cn/zh-CN/topics/39546859 Oct 20, 2025 earnings review. 'China Mobile: Rock-solid ballast, cash cow stays on track!'. https://longportapp.cn/zh-CN/topics/35402458 Aug 7, 2025 call transcript. 'China Mobile (Trans): Guidance unchanged for steady revenue growth and solid profit growth'. https://longportapp.cn/zh-CN/topics/32749983 Aug 7, 2025 earnings review. 'China Mobile: Earnings power intact, cash-cow profile unchanged'. https://longportapp.cn/zh-CN/topics/32749613 Apr 22, 2025 earnings review. 'Essential services champion! Is China Mobile the true king stock?'. https://longportapp.cn/zh-CN/topics/29067474 Risk disclosure and statement: https://support.longbridge.global/topics/misc/dolphin-disclaimer ### Related Stocks - [00941.HK](https://longbridge.com/en/quote/00941.HK.md) - [80941.HK](https://longbridge.com/en/quote/80941.HK.md) - [HCMD.SG](https://longbridge.com/en/quote/HCMD.SG.md) - [600941.CN](https://longbridge.com/en/quote/600941.CN.md) ## Related News & Research - [China Mobile Sets 2026 Interim Dividend and Details Tax Treatment for Hong Kong Shareholders](https://longbridge.com/en/news/295859044.md) - [DBS Sticks to Its Buy Rating for China Mobile (0941)](https://longbridge.com/en/news/295915283.md) - [NIO Stock Falls as Blackrock Slashes Stake in EV Maker](https://longbridge.com/en/news/295665687.md) - [GARO: Electrification drives modest growth, but E-mobility underperformance weighs on profitability](https://longbridge.com/en/news/295896164.md) - [AVAX One Q2 revenue rises on staking rewards, bitcoin mining](https://longbridge.com/en/news/295841406.md)