Negative Growth of Communication Industry China Mobile’s Revenue and Profit Decline in the First Half of the Year


With the saturation of the traditional telecommunications market, the rapid decline of traffic dividend and the negative growth of the telecommunications industry, China Mobile’s revenue and profits are declining year on year.
At noon on August 8, China Mobile released its first half of 2019 earnings. The report shows that in the first half of this year, China Mobile’s operating income reached 389.4 billion yuan, down 0.6% from the same period last year, of which 351.4 billion yuan was the main telecommunications service income, down 1.3% from the same period last year; shareholders should account for 56.1 billion yuan of profit, down 14.6% from the same period last year. After the first quarter of this year, China Mobile’s revenue and net profit continued to decline.
China Mobile said that from the current point of view of the telecommunications industry, simply relying on traditional factors to promote performance growth is unsustainable, the industry as a whole shows negative growth, and the company’s income and earnings also bear greater pressure.
According to the economic operation of the telecommunications industry in the first half of 2019 announced by the Ministry of Industry and Information Technology, the revenue of telecommunications business reached 672.1 billion yuan, down 0.03% from the same period last year. This is the first time in many years that the Ministry of Industry and Information Technology has announced negative growth in telecommunications revenue. Specifically, in June, the actual revenue of telecommunications business was 113.1 billion yuan, and that month’s revenue of telecommunications business fell by more than 1.1% year-on-year.
Although mobile traffic is still increasing rapidly, the growth rate has slowed down dramatically. In the first half of the year, the cumulative traffic of mobile Internet reached 55.4 billion GB, and the annual growth rate dropped from 129.1% in the first quarter to 107.3%. Fu Liang, a telecom analyst, pointed out that although the average monthly user traffic is still growing rapidly after years of continuous speed-up and fee-reduction, it can no longer offset the impact of the average traffic fee. As a result, the traffic has increased greatly, but the traffic revenue is still negative.
Telecom operators are also actively transforming. Yang Jie, chairman of China Mobile, said that the external business environment is becoming more and more complex and severe. There are downward pressures on macro-economy. Homogeneous competition and cross-border competition are becoming more intense, and they are gradually evolving towards ecological competition. With the rapid decline of the flow dividend, the industry value is facing greater challenges. It is urgent for the company to change its old and new momentum. It is necessary to explore new development models and new revenue growth points.
The results show that China Mobile’s household market and government-owned enterprises are growing rapidly. In terms of user size, China Mobile’s mobile customers grew by 9.98 million in the first half of the year, reaching 935 million, including a net increase of 21.13 million in 4G customers, reaching 734 million, and a net increase of 18.2 million in wired broadband customers, reaching 175 million. Intelligent Internet of Things (IOT) connections increased by 142 million, reaching 693 million. The active users of Migu series products grew rapidly every month. Home and Internet of Things users continue to grow rapidly.
In order to meet the challenges, China Mobile has optimized its organizational structure, completed the reform plan of organizational operation system in the fields of government-enterprise, cloud service, family business and international business. It has set up government-enterprise department based on government-enterprise branch, cloud capability center based on Suzhou R&D center and wisdom based on Hangzhou R&D center. Family Operations Center, set up Headquarters International Business Department, accelerate the building of cloud services, family business core competencies, and comprehensively enhance the overall planning and expansion capabilities in the field of government-enterprise market and international market.
In order to solve the dilemma of weak growth of traditional business, 5G is highly expected. China Mobile said it would promote 5G and 4G technology sharing, resource sharing, coverage collaboration and business collaboration, make full use of 4G site and transmission resources, and build 5G network with low cost and high efficiency.
According to the plan, China Mobile will build more than 50,000 5G base stations nationwide this year to realize 5G commercial services in more than 50 cities. China Mobile said that it would continue to play a greater role in the formulation of the next version of the 5G International Standard (R16), cooperating with industry parties to strengthen 5G-related basic technology research to ensure advanced technology.