The first six months of 2013 brought positive momentum for the Group's development, underpinned by China's economic growth and a robust demand for information and communications services. We also faced a number of challenges, including slower macro-economic growth, more complex competition in the information and communications industry, greater impact from Over The Top (OTT) products on the traditional communications industry, and more intense horizontal competition due to the continued increase in mobile penetration. Against this challenging backdrop, the Group sustained positive trends in its operations and development, and maintained stable performance through embracing its strategic transformation, deepening reform and innovation, and speeding up its development transformation and structural adjustments.
In the first half of 2013, the Group's operating revenue1 maintained steady growth, reaching RMB303.1 billion, up 10.4% over the same period last year. Revenue from telecommunications services was RMB284.7 billion, up 6.8% over the same period last year. Data business sustained favorable growth momentum with revenue of RMB95.4 billion, up 25.5% over the same period last year, and as a percentage of revenue from telecommunications services increased to 33.5%, of which, revenue from wireless data traffic reached RMB47.4 billion, up 62.2% over the same period last year. The revenue structure was further optimized. The Group continued to lead the industry in terms of profitability. Profit attributable to equity shareholders increased by 1.5% over the same period last year to RMB63.1 billion, and the margin of profit attributable to equity shareholders2 was 20.8%. EBITDA increased by 0.5% over the same period last year to RMB123.7 billion, with EBITDA margin3 reaching 40.8%.
Amidst complex and intense competition, the Group took full advantage of the three major drivers of its operations in existing business, data traffic and corporate customer services, to speed up the reform of its tariff and channel systems while strengthening the building of a corresponding marketing system, and to promote the sound development of its business. In the first half of 2013, the Group achieved notable progress in existing business operations with solid customer scale. The total number of customers exceeded 740 million and the total voice usage volume reached 2,137.6 billion minutes. Data traffic achieved strong growth, of which, wireless data traffic increased by 129.0% over the same period last year, contributing 16.6% to revenue from telecommunications services and becoming a significant element and major driver of revenue growth. Terminal sales showed a significant increase over the same period last year with approximately 66 million TD-SCDMA mobile phones sold in the first six months of 2013. By playing a crucial role in existing business maintenance, data traffic operations and value enhancement, terminal sales greatly supported our market development and competitive response. The Group's corporate customer business maintained favorable growth momentum, with corporate customer dedicated-lines exceeding 1 million, while revenue derived from communication and informationalization services for corporate customers increased by over 30%.
By adhering to its mantra of "Quality is the lifeline for any telecommunications company" and "Customers are our priority, quality service is our principle", the Group has constantly enhanced quality and improved services. We have maintained a leading position in customer satisfaction in network quality — voice quality for 2G network continued to perform at a high level while 3G (TD-SCDMA) network quality improved, providing more cities with outstanding coverage and quality. Our 3G terminals also maintained good quality. The Internet traffic on-net rate rose to 85% while the WLAN authentication success rate continued to improve. In order to spur the ongoing transformation of the content and model of our services, we have improved customer service, optimized service procedures and enhanced customer retention. We strengthened the centralized management of Internet complaints and put our Internet Service Center in Luoyang into operation. We also enhanced the management of disreputable information to protect customer interests. With the continued improvement in customer perceptions, the Group remained a leader in customer satisfaction, achieving the lowest complaint rate per millions of customers for three consecutive years within the industry.
The Group firmly continued to implement its strategic transformation by deepening Four-Network Coordination, strengthening the ongoing consolidation of our infrastructure resources, and vigorously expanding our mobile Internet business.
The steady development of our Four-Network Coordination, specifically the optimization of traffic allocation, provided strong support to our data traffic operations. We strictly controlled our 2G network investment while maintaining network quality. The Group also advanced its 3G network construction and saw a significant increase in coverage and capacity with the number of 3G base stations rThe steady developmenteaching 361,000 and network utilization rate reaching 25.0%. We effectively capitalized on our advantage of low cost traffic allocation, with WLAN access points reaching 4.10 million and network utilization rate constantly improving. Meanwhile, we furthered our efforts to fully embrace the development of TD-LTE by initiating the nationwide construction of over 200,000 base stations, to provide continuous coverage for the main metropolitan areas in 100 major cities. Good progress was made in preparing for the commercialization of TD-LTE. At present, TD-LTE terminals and networks have enjoyed exciting accomplishments, with wide support among operators and manufacturers globally.
We enhanced infrastructure build-up to accelerate the formation of our second mover advantage by strengthening the construction of our backbone, metropolitan and international transmission networks, with our international transmission capacity exceeding 1,000 GB. We strengthened our efforts in public Internet construction through our continuous build-up of the CMNet backbone network. We also enhanced our Internet resource sharing mechanism with China Tietong to realize our goal of "One point of access for full resources". By adhering to our principles of new technology, high standards, product differentiation, and with a focus on investment returns, we capitalized on the synergies with our parent company to effectively develop our broadband business.
We embraced our mobile Internet development strategy of "smart pipes, open platforms, featured services and friendly interfaces". We have vigorously expanded our business in location-based services (LBS), voice recognition, mobile payment and cloud-based services through the launch of our fully commercialized 12585 LBS and intelligent voice portal "Lingxi", and the joint launch of mobile payment product "Mobile Wallet" with our partners. The construction and official rollout of "Wireless City" portals enabled us to provide a unified and versatile platform across multiple stations countrywide, and allowed customers to switch to local stations when roaming. We have established an Internet of Things (IOT) company to enhance the support capacity of our IOT specialized network, and to release high quality and reliable IOT products and services. Through producing standardized chips and modules, we have promoted a wider range of applications for IOT.
Reform and Innovation
In the first half of 2013, the Group moved forward with its transformation and innovation through centralized management, operational specialization, market-oriented mechanisms, a flat organization as well as process standardization.
We continued to promote our specialized operations in terminal sales, corporate customer business, international business, IOT, mobile Internet and other areas. In conjunction with trends in the development of smart terminals, we have guided the industry chain to improve quality and reduce cost. Terminal sales recorded an increase in response to our active expansion of social sales channels. Two models of TD-SCDMA smart phones were launched in August under our own brand. We were dedicated to building an international business network with second mover advantage, providing competitive products in international transmission and businesses. Through negotiation with international operators, we significantly lowered our international roaming charges by launching the new "RMB1/2/3 international roaming tariff scheme" that covers all 242 countries and regions with roaming services, stimulating voice usage while increasing client satisfaction.
We have deepened our centralized operations by proactively building centralized and standardized shared infrastructure and enhancing centralized procurement management. We have established a shared procurement service center and actively promoted reforms to centralize network operation maintenance. In the first six months of 2013, the successive launching of International Information Harbor Phase I and logistics centers for North, Southwest and Northwest China fully utilized our advantage in scale and fulfilled the goal of cost reduction and efficiency enhancement.
Abiding by our corporate governance principles of integrity, transparency, openness and high efficiency, the Company pursued best corporate governance practices by strictly following the requirements under the Listing Rules. We continued to improve our legal risk management system and thereby, strengthened the legal support for our innovative developments and organizational reform. Furthermore, we reinforced a strict code of conduct at both the managerial and employee levels. We also improved our internal audit and control system by focusing on key operational risks and continuing to strengthen the audit and supervision on key areas such as procurement, collaborative business and major decision-making processes. Through constructing and refining our risk control system, we enhanced our management in high risk areas and key processes to ensure orderly, safe and efficient operations.
Corporate Social Responsibility
The Group attaches great importance to corporate social responsibility. In the first half of 2013, we actively implemented a strategy of sustainable development which enabled us to integrate social responsibility in our day-to-day operations. We are committed to safeguarding our communications networks and information security by upholding our dedication to the promotion of reliable emergency communications services. In the event of disasters such as earthquakes, we activated our contingency plan in the first instance, and acted swiftly and effectively to restore communications systems and provide support services. We further deepened the "Green Action Plan" focusing on energy saving and emissions reduction through the promotion of proven technologies and the innovation in energy-saving applications. We aim to achieve a reduction in power consumption per unit of business by 15% in 2013. Through our China Mobile Charity Foundation, we continued our efforts in philanthropic activities with a focus on our "Heart Caring Campaign" and "Blue Dream Educational Aid Plan". Under the "Heart Caring Campaign", we have already treated 1,012 children in poverty with congenital heart disease. Education support projects under "Blue Dream Educational Aid Plan" continued to progress in a sustainable manner, including the training for secondary and elementary school principals in rural Central and Western China, as well as the construction of libraries and multimedia classrooms.
On 30 May 2013, as proposed by the Nomination Committee of the Company and as reviewed and approved by the Board, Mr. Paul Chow Man Yiu was appointed as an independent non-executive director as well as a member of the Audit Committee of the Company. Mr. Chow was an executive director and Chief Executive of Hong Kong Exchanges and Clearing Limited. Mr. Chow also served as the Chief Executive of the Asia Pacific Region (ex-Japan) of HSBC Asset Management (Hong Kong) Limited. The Company firmly believes that Mr. Chow's extensive experience and valuable expertise will be of great benefit to the Company. On behalf of the Company, I take this opportunity to welcome him as a member of the Board.
Awards and Recognition
Our efforts have continued to be recognized. In 2013, our ranking in Forbes Magazine's "Global 2000" List improved from 31st to 29th. The China Mobile brand was named one of the "BRANDZ™ Top 100 Most Powerful Brands" by Millward Brown and Financial Times for the eighth consecutive year, ranking 10th among all companies considered and 1st among all Chinese brands. Our brand value increased by 18% compared to last year. In the first half of 2013, Moody's and Standard & Poor's kept our corporate credit ratings equivalent to China's sovereign credit ratings, which are Aa3/Outlook Stable and AA-/Outlook Stable respectively.
In view of the Group's stable operating results in the first six months of 2013, and taking into consideration its long-term future development, based on the dividend payout guidance for the full year of 2013, the Board declared an interim dividend of HK$1.696 per share for the six months ended 30 June 2013.
The Board is of the view that the Company's good profitability and steady cash flow generating capability will continue to support the future sustainable development of the Company, while providing shareholders with a favorable return.
China's continued policy to increase internal demand and boost domestic consumption, as well as the proposed promotion of information consumption, provides us with broad prospects for future development. The government encourages proprietary technological innovation and fully supports TD-LTE as a new generation of wireless broadband technology, which will help speed up its industrialization, commercialization and internationalization. With the ICT industry entering into a phase of social integration, a new industry landscape of communications connectivity, capacity and resources, and application and information services is forming. All these factors have brought us new opportunities for development.
Meanwhile, the information and communications sector is experiencing a major transformation and a new industry landscape is quickly emerging. The growth model of telecommunication operators continues to be impacted, causing revenues from traditional business to fall. Competition among communications operators is intensifying with the rising saturation in the communications market. There is also a growing substitution effect brought on by the Internet business, causing more intense cross-sector competition. These challenges pose a threat to the Group's market position and an increasing downward pressure on its development. Currently embedded in the strategic transformation phase, the Group is experiencing growing demand in resource allocation and increasing pressure on short to medium term profitability.
The Group's development is currently in a critical period of transformation and solidification, and is presented with a distinct strategic opportunity. Facing such challenges and opportunities, we will focus on our strategic vision of "Mobile Changes Life", do our utmost to expand our market share in daily life services and information services, and continue the pursuit of strategic transformation, reform and innovation, and healthy development. We aim to enhance overall capacity and capabilities in network, marketing, management, and personnel execution. We will further promote the Four-Network Coordination and increase capacity in infrastructure resources. We will also enhance our capabilities in developing specialized mobile Internet products and services. By fully capitalizing on our three major drivers of operations in existing business, data traffic and corporate customer services, we will redeploy our resources and enhance business innovation while maintaining a cost effective operation to further promote our strategic transformation and sustainable growth.
We also continue to look for appropriate investment opportunities in an active but cautious manner, striving to grow our presence among a broader market.
We will persevere and strive to create value for investors.
15 August 2013, Hong Kong
Prior to 2013, the sales of products were incidental to the Group's telecommunications services. In 2013, the Group's sales of products have become more than incidental as a result of business development and accordingly, the Group presents the revenue from sales of products and related cost of products sold separately and the comparative figures have been presented on the same basis. Such change in presentation had no impact on reported profit or net assets for any of the periods presented.
In the first half of 2013, before the Group presents the revenue from sales of products and related cost of products sold separately, margin of profit attributable to equity shareholders was 22.2%.
In the first half of 2013, before the Group presents the revenue from sales of products and related cost of products sold separately, EBITDA margin was 43.4%.