China Mobile's revenue in the third quarter increased by 2.5% year-on-year, with AI direct income achieving rapid growth | Earnings Report Highlights
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China Mobile delivered a "mediocre" report card for the third quarter. Operating revenue for the first three quarters was 794.7 billion yuan, up just 0.4% year-on-year, and the sluggish growth highlights the weakness in traditional business growth. However, looking at the single quarter, Q3 revenue was 250.9 billion yuan, a year-on-year increase of 2.5%, showing some improvement compared to the previous two quarters and indicating a marginally improving operating environment.
On Monday, China Mobile released its third-quarter financial report. Specifically:
Financial Performance: Revenue for the first three quarters was 794.7 billion yuan, a slight increase of 0.4% year-on-year; net profit attributable to the parent company was 115.4 billion yuan, up 4.0% year-on-year; Q3 single-quarter revenue was 250.9 billion yuan, up 2.5% year-on-year, with a sequential improvement in growth.Profitability: Net profit margin attributable to the parent company rose to 14.5%, up 0.5 percentage points year-on-year; EBITDA was 265.4 billion yuan, up 0.9% year-on-year, EBITDA margin remained at 33.4%; Q3 single-quarter EBITDA margin dropped 1.3 percentage points to 31.7%Cash Flow Under Pressure: Net operating cash flow for the first three quarters was 161.0 billion yuan, a sharp decrease of 28.1% year-on-year, plummeting over 60 billion yuan from 224.1 billion yuan, showing capital expenditure pressures.User Growth: 5G network customers reached 622 million, with a net increase of 23 million; total mobile subscribers were 1.009 billion; broadband subscribers were 329 million, with a net increase of 14.2 million.
Business Highlights: DICT business maintained good growth, AI direct revenue achieved high-speed growth, and international business maintained rapid growth.
Sequential Improvement in Q3 Revenue
China Mobile's operating revenue for the first three quarters was 794.7 billion yuan, with a year-on-year growth rate of only 0.4%, virtually stagnant. Notably, Q3 single-quarter operating revenue was 250.9 billion yuan, a year-on-year increase of 2.5% and a sequential improvement.
Main business revenue increased by 0.8% to 683.1 billion yuan, also sluggish. Traditional mobile business is under pressure: Q3 mobile ARPU fell to 48.0 yuan per user per month, down 1.5 yuan from Q2's 49.5 yuan, a decrease of 3%. Although mobile internet DOU increased to 17.0GB, up 8.1% year-on-year, the ongoing dilution of data value has clearly dragged on revenue performance. The total number of mobile customers reached 1.009 billion, with 622 million 5G users. The slight increase in user scale was unable to offset the impact of declining ARPU.
Under the backdrop of weak revenue growth, net profit attributable to the parent reached 115.4 billion yuan, up 4.0% year-on-year, with net profit margin rising to 14.5%. Specifically, non-recurring gains contributed 8.25 billion yuan, among which gains from changes in fair value and disposal of financial assets reached 8.08 billion yuan, accounting for the majority.
Excluding non-recurring gains and losses, net profit was 107.1 billion yuan, a year-on-year increase of 6.6%, which is even more robust, indicating a real improvement in the company's core business profitability. Cost control was a key factor: operating costs were 547.6 billion yuan, basically flat year-on-year, while selling and administrative expenses both declined, demonstrating significant expense control results.
However, Q3 single-quarter EBITDA margin was 31.7%, a year-on-year decrease of 1.3 percentage points, indicating pressure on operating profit margin. Although the annual EBITDA margin remained at 33.4%, the quarterly fluctuations are noteworthy and might be related to capex schedules and depreciation & amortization pressures.
Sharp Decline in Cash Flow
The most noteworthy issue is the deterioration of cash flow. Net operating cash flow for the first three quarters was 161.0 billion yuan, plunging 28.1% year-on-year, down by 63.1 billion yuan from 224.1 billion yuan in the same period last year. This stands in stark contrast to the growth in net profit, reflecting pressures in working capital management such as accounts receivable and inventory.
The report shows that accounts receivable soared from 75.7 billion yuan at the beginning of the year to 111.5 billion yuan, an increase of 47%, possibly related to the expansion of government and enterprise business and longer payment terms. Meanwhile, cash outflows for goods and services reached 492.6 billion yuan, up 7.8% year-on-year, far greater than revenue growth, further squeezing cash flow.
In terms of investment activities, cash payments for the purchase and construction of fixed and other long-term assets were 117.1 billion yuan, basically unchanged from last year, but investment-related cash outflows reached 75.5 billion yuan, up 21% year-on-year, indicating continued spending in 5G networks and computing infrastructure. Cash and equivalents decreased from 242.3 billion yuan at the beginning of the year to 161.1 billion yuan, a decrease of 81.2 billion yuan (33.5%), narrowing financial flexibility.
DICT and AI as Growth Engines
With traditional business under pressure, the company is actively cultivating new growth drivers. DICT business revenue maintained good growth; AI direct revenue achieved rapid growth—although the financial report did not disclose specific figures, strategic statements indicate that the government and enterprise market is becoming a new value growth pole.
International business also performed well, with income maintaining rapid growth in the first three quarters. The company leveraged opportunities from high-level opening-up and the synergy between domestic and international markets. In content services, operations focusing on "content + technology + integrated innovation" led to steady growth in core product customer bases.
Expectations Gap and Future Focus
China Mobile's first three quarters' results display typical transformation characteristics: sluggish growth in traditional business, ongoing user value dilution, increased pressure on cash flow, but also emerging dynamism in new businesses, effective cost controls, and a steady improvement in profit margins.
Going forward, attention needs to be focused on several aspects: First, whether ARPU can stop declining and stabilize—this determines whether revenue can achieve sustainable growth; second, the balance between capital expenditure scale and cash flow, and whether ongoing high-intensity investment can translate into revenue growth; third, the profitability of new businesses such as DICT and AI, and whether they can become new profit growth points; fourth, the commercialization paths after the increase in 5G penetration, and how to translate network advantages into revenue advantages.
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