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2016 was a robust year marked by accelerated strategic transformation for the Company. The Company continued to promote entrepreneurship and innovative development amid a complicated competitive environment, making most earnest endeavours to bolster its core competences and innovative calibre. Coupled with its redoubled efforts to further the integrated development of the "four growth engines", the Company managed to maintain relatively rapid and sound growth momentum and achieve encouraging overall results.

 

In 2016, operating revenue reached RMB708.4 billion, up by 6.0% compared to the previous year. Of which, revenue from telecommunications services was RMB623.4 billion, representing a year-on-year growth rate of 6.7% that was a five-year high. As a result of revenue growth and cost management, the Company's profitability in 2016 continued to be industry-leading. Profit from operations was RMB118.1 billion, up by 14.7% compared to the previous year. EBITDA was RMB256.7 billion and EBITDA margin was 36.2%, up by 0.3 percentage points compared to the previous year. Profit attributable to equity shareholders was RMB108.7 billion and its margin was 15.3%. Excluding the one-off gain on the transfer of Tower Assets in 2015, net profit increased by 10.5%.

The Company ended 2016 with continuing market leadership. The total number of mobile customers reached 849 million, with a net addition of 22.66 million in 2016. Mobile ARPU reached RMB57.5, representing an increase of 2.2% from the previous year. The Company demonstrated comprehensive leadership in the 4G market, with its 4G customer base recording a net addition of 223 million from 2015 to reach 535 million. Riding on the burgeoning growth of data traffic business, wireless data traffic became the biggest revenue source in 2016 for the first time in the Company's history, surpassing the combined revenue of voice, SMS (Short Message Service) and MMS (Multimedia Messaging Service) with its 46.2% contribution.

 

Building on its exceptional strategic visioning competence, the Company made a tactical move by proactively taking the initiative to cancel domestic long distance and roaming tariffs in 2016. By completely ceasing the sales of non-flat rate packages, the Company managed to migrate customers to flat rate packages in a balanced and orderly manner, leading to mitigation of operating risks. In 2016, the number of flat rate packages took up 63.6% of the total.

To firmly and timely grasp the divergent growth opportunities arising from the current market, the Company has devoted great efforts to ramp up its 4G business in 2016, leading to a continuing enhancement to network quality and an expansion of customer base. Harnessing these positive results, the Company has comprehensively established its 4G competitive edges.

 

The Company added 0.4 million 4G base stations in 2016, bringing the total number to 1.51 million. As an operator boasting the world's largest 4G network, the Company provides coverage for a population of over 1.3 billion. Meanwhile, the average download speed on urban roads has improved to 40Mbps, resulting in enhanced customer experience.

 

Thanks to the Company's considerable efforts to promote the migration of 2G/3G customers to the 4G network, the 4G penetration rate of its mobile customers has reached 63% and its market share for net additional 4G customers has exceeded 64% as at the end of 2016, enabling it to be the largest operator in the world in terms of 4G customer base. The rapid development of the 4G business also led to a marked uplift in the Group's overall customer value, with 4G customer DOU maintaining its upward trajectory to reach an annual average of 1,027MB, which was 7.5 times as high as 2G/3G customer DOU. These results have together provided a strong testament to the value of the Company's 4G network.

 

In addition to network upgrade, the Company also proactively developed signature 4G products. The Company has built the world's largest VoLTE (Voice over LTE) network, providing high quality VoLTE for commercial use in 313 cities and progressively enabling implicit, automatic connection within the entire network.

The Company's overarching strategy for its wireline broadband business is to expedite a boost to business quality and market competitiveness by consistently adopting a high-end marketing approach which aims at delivering products and services with enhanced network speed and quality and targeting at specific customer groups. The total number of wireline broadband customers grew to exceed 77.62 million in 2016, of which, net additional customers amounted to 22.59 million and accounted for over 63% of the total net additions in the market. Buoyed by the Company's focused efforts to promote mid to high-bandwidth products, the proportion of customers subscribing to products with bandwidth of 20Mbps or above has reached 76.9%. An emphasis has been placed on raising returns on investment, and APRU has risen to RMB32.1. In the meantime, the Company has devised plans to proactively tap into the household market and endeavored to establish its presence in homes with an expanding range of home broadband products. It has recorded an encouraging result for its home digital product "Mobaihe", a set-top box that provides high-definition video-on-demand service, with the number of customers surpassing 22.80 million. The wireline broadband ARPU that included home digital services reached RMB33.8.

Capital expenditure amounted to RMB187.3 billion in 2016, slightly higher than the RMB186.2 billion budgeted at the beginning of the year. The variance was mainly attributable to respective investments of RMB83.0 billion and RMB25.5 billion in the 4G and wireline broadband networks, as the Company stepped up efforts to strengthen these capacities particularly in response to the rapid growth of data traffic business in certain hotspot areas.

 

The Company will, at a reasonable pace, continue to prioritize investment choices with a refined direction to ensure investment efficiency in 2017. Capital expenditure is expected to record a reduction of RMB11.3 billion from the previous year to RMB176.0 billion in 2017, with resources mainly invested in areas that, amongst others, align with the Company's endeavours to strengthen its competitive edge in the 4G network, establish a high-quality full-fibre broadband network, construct network infrastructure for the advance planning of future development and enhance IT integration capabilities, which are all central to the Company's plan to underpin its market leading position in network capabilities and customer perception.

Exceeding investors' expectations is the Company's overriding priority. The Company hopes to create better returns for its shareholders and share with them the fruits of its success, while also securing the Company's development and maintaining shareholder value in the longer term.

 

To this end, the Board recommends the dividend payout ratio of 46% for the full financial year of 2016. The Board recommends payment of a final dividend of HK$1.243 per share, together with the interim dividend of HK$1.489 per share paid earlier, this amounts to an aggregate dividend payment of HK$2.732 per share for the full 2016 financial year. Taking into account the Company's financial position, its ability to generate cash flow and its capital demands for future development, the Company will maintain a stable dividend payout ratio for the full financial year of 2017, striving to attain a stable-to-rising dividend payout ratio to create higher shareholder value.

2017 is the year of China deepening supply-side structural reform, and is also a milestone year for the implementation of the Company's "Big Connectivity" strategy. To ensure effective implementation of the strategy, the Company will take a more macro and comprehensive view of the entire market and build a strong foundation that will enable the growth of its comprehensive network and leverage the opportunities arisen from network evolution. In the meantime, it will further strengthen its capability and promote mechanism breakthroughs that generate greater synergies. The Company will spare no effort, maintain the high standards investors expect of it and deliver more favourable results and returns to its shareholders. In the event that the policy environment matches the Company's expectations, in 2017 China Mobile will strive to maintain revenue growth from telecommunications services above the industry average, while also delivering industry-leading profitability.

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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