CHINA MOBILE delivered an "ice and fire" financial report for the first quarter of 2026. On one hand, core telecommunications service revenue declined 1.1% year-over-year, and net profit narrowed by 4.2% year-over-year to 29.3 billion yuan, highlighting sustained profitability pressures; on the other hand, net cash flow from operating activities surged 128.1% year-over-year to 71.4 billion yuan, marking a standout performance in recent years and demonstrating the company's proactive control over capital management and payment scheduling.

In terms of total volume, first-quarter revenue reached 266.5 billion yuan, up 1.0% year-over-year, showing moderate growth momentum. The incremental contribution supporting overall revenue primarily came from "other business income," which surged 12.7% year-over-year to 46.6 billion yuan, indicating that emerging businesses such as computing power and intelligent services are becoming important revenue supplements. However, core Main Business Income of 219.9 billion yuan declined 1.1% year-over-year, suggesting that the characteristics of the maturity phase for traditional communication services are becoming increasingly apparent.

On the profit front, EBITDA decreased 5.0% year-over-year to 76.7 billion yuan, with the EBITDA margin falling from 30.6% in the same period last year to 28.8%, a contraction of 1.8 percentage points; the net profit margin also declined from 11.6% to 11.0%. On the cost side, operating costs increased 3.2% year-over-year, significantly outpacing revenue growth, while R&D expenses surged 22.3% year-over-year, representing the core reason for profit pressure and reflecting the company's strategic orientation toward continuous investment in technological innovation.

The user base continued to show steady performance. The total number of mobile customers exceeded 1.009 billion, with a net increase of 3.76 million in the first quarter; 5G network customers reached 668 million, a net increase of 26 million compared to the beginning of the year; IoT card connections surpassed 1.5 billion, with a quarterly net increase of over 22 million. These figures confirm that CHINA MOBILE maintains its moat advantage on the foundation of communication infrastructure.

Main Business Income Leaves Behind Growth, Other Businesses Take Over

Breaking down the revenue structure reveals the core contradiction: the growth ceiling for traditional main businesses has been reached. Main Business Income of 219.9 billion yuan declined 1.1% year-over-year, indicating that saturation continues for traditional communication services such as voice and data traffic.

However, the outstanding performance of "other business income" provides structural hedging: at 46.6 billion yuan, the year-over-year growth rate reached 12.7%, accounting for nearly 17.5% of the total revenue pie. This segment primarily corresponds to emerging sectors such as cloud computing, compute leasing, digital government affairs, and intelligent services, directly reflecting the implementation of CHINA MOBILE's "communication services + computing services + intelligent services" three-pillar strategy.

From an annual perspective, if other business income maintains double-digit growth, it is expected to offset the structural pressure on Main Business Income within the next 1-2 years, becoming a new engine for resuming revenue acceleration.

Costs Rise Across the Board, R&D Investment Expands Counter-Cyclically

First-quarter profit pressure was primarily driven by rising costs. Operating costs reached 198.9 billion yuan, up 3.2% year-over-year, with an absolute increase of approximately 6.2 billion yuan, while revenue only increased by about 2.7 billion yuan, creating a clear scissors-effect.

More notably, R&D expenses surged 22.3% year-over-year to 3.9 billion yuan, indicating that the company is increasing investment in cutting-edge technologies such as large AI models, computing infrastructure, and 5G-A. In an increasingly competitive computing arena, this forward-looking R&D investment is a necessary cost, though it exerts direct erosion on profits in the short term.

Administrative and selling expenses remained relatively stable, increasing slightly by 0.9% and 1.3% year-over-year respectively, demonstrating that the company maintained a certain level of cost discipline in daily operational expenses. Credit impairment losses decreased from 6.66 billion yuan in the same period last year to 6.11 billion yuan, alleviating bad debt pressure and providing a small positive contribution to profits.

Investment income performed impressively, reaching 6.84 billion yuan in the first quarter, a significant year-over-year increase of 2.57 billion yuan. Among this, investment income from associates and joint ventures amounted to 4.01 billion yuan, buffering the downward pressure on operating profits to some extent.

Cash Flow Surges Dramatically, CapEx Contracts Significantly

The most unexpected highlight of this quarter was undoubtedly the net cash flow from operating activities, which grew 128.1% year-over-year to 71.4 billion yuan (approximately 71.4 billion yuan in absolute value).

Breaking down the driving factors: operating cash inflows were roughly flat compared to the same period last year (274.8 billion yuan vs. 274.5 billion yuan). The key change occurred on the cash outflow side—cash paid for purchasing goods and accepting services dropped sharply from 201.4 billion yuan in the same period last year to 157.9 billion yuan, a reduction of approximately 43.5 billion yuan, a decline exceeding 21%. This change may be related to the company adjusting supplier payment schedules and compressing procurement expenditures, reflecting a marked improvement in operational cash management efficiency.

Capital expenditure also contracted. Cash paid for acquiring fixed assets, intangible assets, and other long-term assets was 30.4 billion yuan, down approximately 6 billion yuan from 36.4 billion yuan in the same period last year, a decrease of 16.5%, signaling that after the peak phase of heavy infrastructure investment, the company is gradually entering a stage of optimizing returns.

Cash and cash equivalents balance at the end of the period reached 155.3 billion yuan, up over 24% from 125.1 billion yuan in the same period last year. With ample fund reserves, the company has provided solid support for subsequent shareholder returns and strategic investments.

User Scale Expands Steadily, 5G and IoT Become New Growth Poles

In terms of user operations, CHINA MOBILE's overall trend remains steady and positive. In the previous quarter (Q4 2025), mobile customers experienced a net outflow of 3.71 million households, whereas in the first quarter of this year, the figure turned to a net increase of 3.76 million households, returning to a growth trajectory and demonstrating the company's solid attractiveness in market competition.

The 5G migration process continues. By the end of the first quarter, 5G network customers reached 668 million, with a single-quarter net increase of approximately 26 million. The penetration rate of 5G customers among total mobile customers has exceeded 66%, and the dividend of 5G scaling continues to be released.

The IoT sector shows even stronger momentum. IoT card connections reached 1.504 billion, with a net increase of 22.33 million in the first quarter. Both the total connection volume and the incremental growth are leading the industry. Combined with the company's strategic layout in computing services, the data traffic and processing demands generated by massive IoT connections will become an important source of future growth for computing businesses.

Total broadband customers reached 333 million, with a net increase of 3.9 million households. Continuous penetration into the home market also leaves room for bundled sales and ARPU (Average Revenue Per User) improvement.

Balance Sheet Remains Robust, Equity Continues to Accumulate

Regarding the balance sheet, as of the end of March 2026, CHINA MOBILE's total assets stood at 2.1535 trillion yuan, up 2.9% from the beginning of the year; equity attributable to shareholders of the parent company was 1.4228 trillion yuan, up 2.1% from the beginning of the year, indicating steady accumulation of shareholder value.

On the liability side, total current liabilities amounted to 645.3 billion yuan, with accounts payable at 350 billion yuan being the largest single item, primarily consisting of normal operating liabilities, resulting in a healthy overall financial structure. Long-term borrowings were only 9.5 billion yuan; the company carries very low interest-bearing debt, making financial risk highly controllable.

Notably, construction in progress increased from 61.8 billion yuan at the beginning of the year to 83.5 billion yuan, an increase of approximately 21.7 billion yuan, a surge of 35%, indicating that the company continues to advance the construction of network infrastructure and computing infrastructure. Once these projects are completed and put into production, they will further solidify competitive barriers. The weighted average return on equity (ROE) was 2.1%; considering the massive equity base, the absolute return level remains robust.