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China Mobile maintained stable growth in the first half of 2017, recording operating revenue of RMB388.9 billion, representing an increase of 5.0% compared to the same period last year. The 6.9% growth in telecommunications services revenue was above industry average. Business transformation has also yielded positive results, with revenue from wireless data traffic reaching RMB187.7 billion, accounting for more than 50% of the telecommunications services revenue and continuing to play a significant role as the biggest driver of growth. EBITDA increased by 4.7% compared to the first half of 2016, reaching RMB140.7 billion. Profit attributable to equity shareholders grew by 3.5% year-on-year to RMB62.7 billion while overall profitability continued to be ahead of our industry peers.

We have been striving to strengthen our network infrastructure and capability. In the first half of 2017, we increased the total number of 4G base stations to 1.65 million, making our 4G TD-LTE (Time Division Long Term Evolution) network the largest in the world, leading in technology, coverage and quality.

 

We are aware of the importance of enabling more users to enjoy our services, and to this end we have lowered the basic 4G tariff. With a net addition of 58.62 million 4G customers, the total number of 4G customers has reached 594 million and the 4G penetration rate of our mobile customers has achieved 69% in the first half of 2017. We are proud to say that, in every three 4G users in the world, there is one China Mobile customer. The Company is on track to achieve its target of a net increase of 100 million 4G customers this year.

 

We also actively promoted featured 4G services, including the launch of VoLTE (Voice over LTE) high definition voice services in 313 cities, with the total number of customers reaching 98.73 million.

 

The development and penetration of 4G has accelerated the application of mobile Internet, thus driving customer spending on data traffic. In the first half of 2017, the average handset data traffic per user per month, or DOU, of 4G customers reached 1.4GB, and the total handset data traffic increased by 107.5%. With the fast growing popularity and development of video and other applications, we expect the DOU of mobile customers will continue to realize relatively high upside potential.

We continued our activities to implement the "Broadband China" national strategy, upgrading network speed and quality with a special focus on customer identification and targeting. With our concerted efforts, we have achieved the concurrent development of broadband and 4G, and our wireline broadband business has experienced favourable growth momentum with significant increments in both customer and revenue market shares in the first half of 2017. The customer base rapidly expanded with a net addition of 15.42 million, bringing the total number of wireline broadband customers to 93.04 million. We are hopeful to grow our wireline broadband customer base to more than 100 million by the end of the year. Meanwhile, we also witnessed an increasing proportion of customers subscribing to services of higher bandwidth. Specifically, customers opting for products with bandwidth of 20Mbps or above accounted for 87.5% of our total wireline broadband customers, representing an increase of 10.6 percentage points from the end of last year. Revenue from the wireline broadband business has increased by 49.8% year-on-year to reach RMB17.9 billion and has become a key component of our revenue growth.

 

The effective upgrade of broadband network strength has facilitated the rapid development of home digital services. We have been proactively developing smart home applications and service solutions, including the Smart Home Gateway, Mobaihe (digital set-top box), "and-Mu" (family surveillance) and IMS (IP Multimedia Subsystem) phonelines to further enhance customer loyalty and service quality. In the first half of 2017, the number of Mobaihe customers reached 38.59 million, representing a net increase of 15.79 million from the end of 2016 and a penetration rate of more than 40%.

 

The broadband ARPU recorded a heartening growth of 4.6% to RMB34.9 in the first half of 2017, following the rapid expansion of the customer base and widening application adoption. The APRU that included home digital services grew by 9.8% to reach RMB38.0.

We again expanded our business with corporate customers in the first half of 2017. The concerted effort has yielded positive results in terms of both customer base and revenue. We served more than 5.90 million corporate customers and achieved a 25.3% year-on-year rise in corporate telecommunications and informatization services revenue, accounting for more than one third of the total market. The Company has established a business structure that further optimizes revenue generation, with the data dedicated line and IDC (Internet Data Centre) businesses leading the growth, recording increases of 38.4% and 97.1% respectively year-on-year.

 

We continued to develop vertical industry solutions by focusing on seven key sectors, namely industry, agriculture, education, public administration, finance, transportation and healthcare. We worked with relevant organizations to develop industry specific solutions, which have already begun to generate scalable revenue. Worthy of highlighting is the fact that, 8 products have each generated annualized revenue of more than RMB100 million. Among which, our "and-Education" solution has generated an annualized revenue of more than RMB4 billion. Our cloud services have seen breakthroughs in market development, winning 7 projects with provincial governments and serving 32,000 enterprises and institutions.

We have seen a gradual pick-up in digital services. In the first half of 2017, application and information services generated a 12.1% increase in revenue, with broad prospects for further growth. We have sped up the development of competitive digital products while strengthening our content and application businesses, in order to continuously enhance customer experience. In the first half of 2017, average monthly active app-users for our digital media MIGU exceeded 100 million. We have stepped up efforts to introduce rich content and enhance our CDN (Content Distribution Network). Front-page loading latency for the top 100 most-visited websites has become significantly shorter and video streaming notably smoother. This resulted in a further boost to both customer loyalty and the value of applications.

 

Our IoT service developed solidly in the first half of 2017, with the total number of smart connections exceeding 150 million. The increasing scale of smart connections provided a take-off point for broadening IoT applications. The IoT platform, together with Internet of Vehicles, industrial manufacturing, smart wearables, education and healthcare, municipal administration and other IoT applications will all be areas with long-term growth potential.

CAPEX is mainly used for establishing premium networks to promote business transformation and upgrade, thus laying the solid foundation for sustainable development. Our actual CAPEX stood at RMB85.3 billion in the first half of 2017. Capital expenditure is expected to record a reduction of RMB11.3 billion from the previous year to RMB176.0 billion for full-year 2017. Apart from implementing the measures relating to “speed upgrade and tariff reduction” and investing in mobile IoT, to meet our business needs, we expect to appropriately increase investments in wireline broadband through making adjustments to the CAPEX structure.

Taking into consideration the operating results in the first half of 2017 and the anticipated need for future development, the Board declared payment of an interim dividend of HK$1.623 per share, or a dividend payout ratio of 46%, in accordance with the 2017 full-year dividend payout ratio guidance.

 

This year marks the 20th anniversary of China Mobile's public listing. To express our heartfelt gratitude to our shareholders for their continued endorsement and support, the Board declared payment of a one-off special dividend of HK$3.200 per share in celebration of the 20th anniversary.

 

The Board believes that our industry-leading profitability and ability to generate healthy cash flow will provide sufficient support for the Company's future development and generate good returns for our shareholders.

A new wave of the information technology revolution and industry reform has been rolling across the world. We will respond quickly to the trend, allowing the Company to capture the opportunities and meet new challenges. We will deepen our "Big Connectivity" strategy and speed up the horizontal expansion of our scale, vertical development of our services and continue to seek breakthroughs in connection applications. Firstly, we will solidify our information and telecommunications infrastructure. Secondly, we will seek further integration of the "four growth engines". Thirdly, we will aim to offer the service support that is needed for the development of a robust digital economy. Lastly, we will build out the industry ecosystem for collaboration and inclusive growth. Looking forward, we will commit ourselves to maintaining our leading position in the market and building on our competitive strengths. For the full year of 2017, China Mobile will strive to achieve a telecommunications services revenue growth rate that surpasses industry average while maintaining our healthy level of profitability. The Company will also endeavor to achieve a full-year net profit higher than that of 2016.

General Questions

The Company was listed on the New York Stock Exchange in the form of ADS on 22 October 1997 and on the Stock Exchange of Hong Kong in the form of ordinary shares on 23 October 1997.

Our fiscal year is from 1 January to 31 December of each calendar year.

Our shares are traded on the Stock Exchange of Hong Kong with the stock symbol of 941 and our ADS are traded on the New York Stock Exchange with the stock symbol of CHL respectively.

As at 31 December 2016, the number of issued shares of the Company was 20,475,482,897.

An ADS is a negotiable U.S. certificate representing ownership of shares in a non-U.S. corporate. ADRs are quoted and traded in U.S. dollars in the U.S. market. Also, the dividends are paid to investors in U.S. dollars. ADRs are designed to facilitate the purchase, holding and sale of non-U.S. securities for investors, and to provide a corporate finance vehicle for non-U.S. corporate.

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