In the first half of 2026, China Mobile (600941.SH) experienced a decline in both revenue and profit, with its net profit attributable to the parent company dropping for three consecutive quarters.

Securities Star observed that, influenced by factors such as adjustments to value-added tax (VAT) policies for telecom services, the shift from traditional to new growth drivers, and prevailing market conditions, the company's traditional telecom services have seen a contraction. Additionally, both the Average Revenue Per User (ARPU) and customer base size in the individual and government-enterprise markets have declined to varying extents. Facing growth bottlenecks in its traditional businesses, China Mobile is stepping up its efforts in the AI and computing power sectors to identify new growth avenues. However, growth in these two key areas remains limited, making it challenging to counterbalance the downward pressure from traditional business declines. Furthermore, the user penetration rate of the company's AI products still requires significant enhancement.

01. Decline in Traditional Businesses: Core Markets Under Pressure

The 2026 semi-annual report reveals that China Mobile's operating revenue for the first half of the year stood at RMB 538.035 billion, a 1.05% decrease year-on-year. Net profit attributable to the parent company was RMB 78.934 billion, down 6.3% year-on-year, indicating a decline in both revenue and net profit. As of the end of the reporting period, the company's total mobile customer base reached 1.011 billion, while broadband internet customers numbered 337 million.

The revenue decline in the first half of the year was primarily driven by a downturn in the second quarter. Revenue for that quarter was RMB 271.557 billion, a 3.02% decrease year-on-year. Net profit attributable to the parent company was RMB 49.592 billion, down 7.48% year-on-year, with profitability under pressure for three consecutive quarters.

It's important to note that in February 2026, the three major domestic telecom operators announced adjustments to the VAT categories applicable to telecom services, with the VAT rate for mobile data, SMS/MMS, and broadband access services rising from 6% to 9%. They indicated that this adjustment would impact the company's revenue and profit.

Simultaneously, affected by the transition from traditional to new growth drivers and market conditions, China Mobile's telecom services are facing pressure. In the first half of 2026, telecom service revenue was RMB 350.4 billion, a 5.7% decrease year-on-year.

Securities Star noted that behind the decline in telecom services, the company's three main businesses—voice, SMS/MMS, and wireless internet—continued to shrink. In the first half of 2026, revenues from these businesses were RMB 30.9 billion, RMB 14.1 billion, and RMB 174.3 billion, respectively, down 9.5%, 12.3%, and 10.8% year-on-year.

Although the company's wired broadband business and application and information service revenues grew, their increases were insufficient to fully offset the impact of the decline in traditional wireless internet and other businesses. Notably, the growth rate of the wired broadband business slowed further, with revenue of RMB 72.1 billion and the growth rate dropping from 8.9% in the same period last year to 5.1%.

From a market perspective, China Mobile's two core markets—individual and government-enterprise—are both under strain. In the individual market, the company's mobile internet customers reached 895 million in the first half of the year, but mobile ARPU continued to decline, dropping 8.9% year-on-year to RMB 45.1. In the government-enterprise market, the customer base size decreased from 34.84 million in the same period last year to 33.82 million this year, a 2.9% decrease year-on-year.

It's worth mentioning that in recent years, due to factors such as the widespread adoption of post-paid models in government-enterprise businesses and prolonged payment collection cycles, China Mobile's accounts receivable have continued to rise, increasing from RMB 54.881 billion at the end of 2023 to RMB 99.762 billion at the end of 2025, a cumulative increase of 82%. As of the end of June 2026, the company's accounts receivable further increased to RMB 122.239 billion, up 15.51% year-on-year, deviating from the trend of revenue changes.

In terms of international business, China Mobile accelerated its global capability expansion, with the company's roaming business volume increasing by 59.9% in the first half of the year, and the cumulative number of Chinese companies served overseas increasing by 19.6% from the end of last year. However, in terms of revenue volume, the company's international market revenue in the first half of the year was RMB 18.2 billion, accounting for only 3.38% of the total revenue for the period, a relatively small share.

02. Insufficient Growth Momentum in Intelligent Services: Token Business Revenue Realization Still Awaits

Securities Star observed that amid competitive pressure in traditional voice and basic data services, China Mobile stated that it would continue to increase investment in intelligent computing infrastructure and AI computing power. Leveraging Mobile Cloud, AIDC (Artificial Intelligence Data Center), and industry digitalization solutions, the company aims to expand its incremental space.

According to media reports, focusing on the development of intelligent services, China Mobile made significant adjustments in its organizational structure and resource allocation in the first half of the year. It established a Computing Power Office and a Token Office, optimized the responsibilities of Mobile Cloud Company and China Mobile Jiutian Artificial Intelligence Technology (Beijing) Co., Ltd., and transferred a substantial number of talented personnel from within the company to the AI business line. Meanwhile, the company's new capital expenditures are primarily directed towards the AI infrastructure sector and AI technological innovation.

From a revenue structure perspective, in the first half of 2026, the company's AIDC, intelligent computing services, and cloud computing application revenues all achieved varying degrees of growth, driving a 14% year-on-year increase in computing power service revenue to RMB 52.9 billion. However, the revenue scale of this segment remains limited, accounting for less than 10% of the total revenue for the period, with insufficient increments to offset the pressure from the decline in traditional businesses.

In comparison, China Mobile's intelligent services segment remained relatively flat. In the first half of 2026, despite promoting the AI-ification of product services and introducing new applications such as intelligent agents and MobileClaw, the segment achieved revenue of RMB 49.3 billion, up slightly by 0.9% year-on-year.

Securities Star noted that the issue of the low user penetration rate for the company's AI intelligent assistant, Lingxi Intelligent Agent, has not seen significant improvement. Against the backdrop of over 1 billion total mobile customers, the company's AI intelligent assistant had over 130 million monthly active customers in the first half of the year, accounting for less than 13%, meaning that over 80% of mobile users did not use this intelligent service. This also reflects that while the product matrix continues to enrich, there is still significant room for improvement in user reach, scenario integration, and user engagement construction.

It's worth mentioning that amid the Token economy boom, China Mobile is also actively seizing this development opportunity and investing significant resources in products, platforms, and ecosystems. At a recent interim results briefing, company executives revealed that unified national Token package pricing would be introduced for both the public market and the government-enterprise market. According to reports, the company completed the design of multi-tier Token pricing in the first half of the year and conducted pilots in multiple provinces. The next step will be to focus on expanding the user base for Token products.

Combining industry perspectives, Token, as a new unit of measurement, still requires time for its business model and ecosystem construction to be validated. Currently, the industry as a whole is still in the pilot planning stage, with pricing and scheduling mechanisms still being explored. How to convert Token usage into sustainable revenue and profit is a challenge that telecom operators need to overcome. For China Mobile, its Token business still requires time to contribute to scaled revenue. Whether it can gain pricing dominance in the competition for the 'new pipeline' in the future hinges on the ecological attractiveness of the MoMA platform and the implementation of pricing plans, with its effectiveness yet to be further validated by subsequent financial data. (This article was first published on Securities Star, Author | Li Ruohan)

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