Performance Trend of China Mobile in the Past Half Years
China Mobile executives admitted at the performance communication meeting that the decline was affected by faster fee cuts and the cancellation of traffic roaming fees. But in fact, the growth of individual mobile market in China Mobile's "four-wheel drive" is gradually peaking, and the household market and the government-enterprise market are new opportunities to be seized urgently.
This year is the first year of 5G commerce in China, and 5G commerce is also expected to further stimulate the growth of the government and enterprise market. Will 5G be a good medicine for China Mobile to get out of its performance predicament?
Double-dip revenue and profit delivers the worst performance
According to the financial report, in the first half of 2019, China Mobile's operating income was 389.4 billion yuan, down 0.6% year-on-year, of which the revenue from telecommunications services was 351.4 billion yuan, down 1.3% year-on-year. More seriously, China Mobile's shareholders should account for 56.1 billion yuan in profits, down 14.6% year-on-year.
In fact, China Mobile has also experienced a profit decline in the first half of 2014 and in the first half of 2015 since 2010, but the decline has been almost 15%rare. At the same time, this is the first time that China Mobile has experienced a year-on-year decline in revenue in the first half of China Mobile since 2010.
Personal mobile market, family market, government-enterprise market and new business market constitute the "four-wheel drive" of China's mobile communication service income. Among the four businesses, household market income increased 21.3%, government-enterprise market income increased 15.7% and new business market income increased 4.1% year on year. However, personal mobile market income declined 6.2% year on year, which is also the main reason for the decline of China Mobile's operating income and telecommunications service income in the first half of the year.
China Mobile's Income Composition of Communications Services in the First Half of the Year
According to the personal mobile market data released by China Mobile, in the first half of this year, its mobile customers increased by 9.98 million, reaching 935 million, and its 4G customers increased by 21.13 million, reaching 734 million. But with the growth of both mobile customers and 4G customers, China Mobile has experienced the situation that customer growth does not increase revenue.Mobile phoneInternet traffic revenue declined 1.5% year-on-year, while voice and MMS revenue declined 20.6% year-on-year.
Under the impact of many instant messaging Apps, the decline of voice and short-term MMS revenue is normal, but in the context of strong demand for 4G and the imminent commercial use of 5G, the decline of mobile Internet traffic revenue is very rare.
Data show that in the first half of this year, the DOU of mobile Internet in China increased to 6.2GB from 2.6GB in the same period last year, an increase of 140.9%, and even reached 8.0GB in June. However, the mobile Internet fee dropped 61%, and the mobile ARPU value was 58.1 yuan from the same period last year.
It dropped to 52.2 yuan, a decline of 10.1%.
Dong Xin, vice president and chief accountant of China Mobile, said at the performance communication meeting that, on the one hand, due to the impact of the acceleration and reduction of fees and the abolition of traffic roaming fees last year, the revenue in the first half of the year was reduced by 4.7 billion yuan, and the profit was reduced by nearly 6%. On the other hand, the increase of rigid cost, depreciation increased the cost of 4.2 billion yuan, marketing expenditure also increased, sales expenses increased by 4.5%, R&D investment in 5G vertical industry increased, and these factors all led to the decline of China Mobile's profits.
Whether 5G can be an antidote to the market of government and enterprises
Yang Jie had previously said at the World Mobile Conference in 2019 that simply relying on the demographic dividend has reached the bottleneck in the development of the telecommunications industry. Only by conforming to the trend of a new round of industrial change can operators achieve successful transformation.
In the first half of this year, China Mobile first carried out cost reduction and efficiency enhancement. In terms of network cost, the average maintenance fee per base station decreased by 11.8%, and the average power cost per carrier network decreased by 7.1%. China Mobile also cleaned up inefficient and ineffective business halls and shops to promote channel transformation. Over 500 self-operating halls and 1200 co-operating halls were closed, which reduced the average sales cost per customer by 2.7%.
But what's more important is business reform.
Firstly, the reform of the operation system of government and enterprise, which is based on the branch company of government and enterprise, establishes a vertical integration of R&D, operation, support, sales and service system in the field of government and enterprise. China Mobile calls for the government and enterprise market to become the main force of income growth, transformation and upgrading.
Secondly, it is an all-round transformation of cloud computing. Based on the Suzhou R&D Center, it establishes a cloud capability center, which is positioned at the builder of cloud facilities.Cloud servicesProviders, cloud ecosystem aggregators, and even put forward the goal of striving to enter the first camp of domestic cloud service providers within three years.
Thirdly, the smart family reform, based on Hangzhou R&D center, establishes the smart family operation center, positioning itself as the integrator of core competence, the builder of family ecology, and the supporter of centralized operation, so as to improve the value contribution of smart family business.
Finally, we should speed up international expansion, set up headquarters international business department, strengthen the overall management of international business expansion, establish a fast and smooth international business operation mechanism, and promote the rapid upgrading of international business scale.
Among these four reform measures, the Ministry of Government, Enterprises and Institutions will undoubtedly become the focus. In the first half of this year, the market revenue of government and enterprises has accounted for 12.5%, becoming the second largest source of mobile communication service revenue in China. China Mobile has set an annual target of breaking through 10 million government and enterprise customers.
More importantly, 5G commerce will further stimulate the growth of government and enterprise business.
In the personal business of 5G, it is still the traditional mode of voice and traffic income. Under the background of the Ministry of Industry and Information Technology continuing to push forward the speed-up and fee-reduction, operators have stated that the unit flow price of 5G must be lower than 4G. Although DOU of mobile Internet will increase further in 5G era, the decline of traffic fee will still make China Mobile possible. Can face the embarrassment of increasing revenue.
China Mobile's 5G Planning
The application of 5G in government, industry and other fields has become a new opportunity. Industry insiders say that 5G will increase the productivity of smart medicine, smart industry and other industries by 10 times, which contains a huge market.
China Mobile said in the financial results that it will actively layout 5G development and create a new "5G" advantage. It is reported that China Mobile will build more than 50,000 5G base stations and achieve 5G commercial services in more than 50 cities this year.
However, NSA networking can only meet the high-speed mobile broadband needs of individual users, and industry digitization needs 5GSA networking. This is also the reason why China Mobile proposed SA as the target architecture, synchronously promote the development and maturity of NSA and SA, and Yang Jie expressed at the World Mobile Congress in 2019 that it will not allow individual NSA mobile phones to enter the network from January next year. Where.
The 5G battle is undoubtedly a key factor in China Mobile's transformation and revenue promotion. However, the huge capital investment in the early 5G period will also become one of the challenges, which is a balanced problem for China Mobile, whose revenue and profit declined in the first half of the year.
Sina Technologies Zhang Jun