China Mobile Limited Stock Code: 941 Visionary 擇高處立．向寬處行 Inclusive Annual Report 2016 20 years of excellence 1997 1999 2002 2006 2012 2014 3 SEPTEMBER 12 NOVEMBER 1 JULY 28 MARCH 23 AUGUST 9 JUNE China Telecom (Hong Kong) Limited The Company completed the acquisition The Company completed the acquisition The Company completed the acquisition The Company’s wholly-owned subsidiary, The Company agreed to, through its was incorporated in Hong Kong and of Fujian Mobile, Henan Mobile and of 8 provincial mobile companies and privatization of former China CMC, entered into a share subscription wholly-owned subsidiary, subscribe later changed its name to China Mobile Hainan Mobile. including Anhui and Jiangxi. Resources Peoples Telephone Company agreement with IFLYTEK Co., Ltd. for shares in True Corporation Public (Hong Kong) Limited and its name was Limited and became a wholly-owned (“IFLYTEK”) to acquire 70,273,935 Company Limited (“True Corporation”) subsequently changed to China Mobile subsidiary which later changed its name ordinary shares of IFLYTEK, representing in Thailand through a private placement Limited (the “Company”). to China Mobile Hong Kong Company 15% of its enlarged issued share capital, for a total consideration of approximately Limited. in an effort to speed up our mobile RMB5.5 billion. Upon completion of the 22 & 23 OCTOBER Internet deployment. transaction, the Company indirectly holds The Company raised US$4.2 billion 29 MAY 18% equity interest in True Corporation. in its initial public offering, with its The Company changed its name to China shares listed on the NYSE and HKEX, Mobile Limited. respectively. 1997 2000 2004 2010 2012 2014 1998 2000 2004 2010 2013 11 JULY The Company together with China 4 JUNE 28 JUNE 1 JULY 10 MARCH 4 DECEMBER Telecom and China Unicom jointly The Company completed the acquisition The Company changed its name to China The Company completed the acquisition The Company’s wholly-owned subsidiary, China Mobile Communications established China Communications of Jiangsu Mobile. Mobile (Hong Kong) Limited. of 10 provincial mobile companies Guangdong Mobile and Shanghai Pudong Corporation (“CMCC”) (the Company’s Facilities Services Corporation Limited including Neimenggu and Jilin, China Development Bank Co., Ltd. (“SPD parent company) was granted a 4G (subsequently renamed as China Tower 13 NOVEMBER Mobile Communication Co., Ltd (“CMC”) Bank”), entered into a share subscription (TD-LTE) license. The Company has Corporation Limited) (“China Tower”). The Company completed the acquisition and Beijing P&T Consulting & Design agreement to acquire 20% interest in thus taken the lead in launching its 4G of 7 provincial mobile companies Institute Company Limited. The Company SPD Bank at a consideration of RMB39.5 services. including Beijing and Shanghai. became the first overseas-listed PRC billion. Completion of the subscription telecommunications company operating took place in October. 18 DECEMBER in all 31 provinces, autonomous regions The Company launched the new and directly-administered municipalities On 25 November, China Mobile Limited commercial brand “and!”. in Mainland China. and SPD Bank entered into a strategic cooperation agreement, thereby officially commenced their cooperation in areas of mobile finance and mobile e-Commerce businesses. Theme: Striving to achieve a higher position in our journey towards Internet of Everything, we bolster our competitive advantages and consolidate around our core strengths in this wave of information technology progress. We address stakeholder needs and strike a balance between short- term interests and long-term development, cultivating a healthy ecosystem with the ultimate goal of achieving sustainable growth. 2015 2016 OCTOBER The Company’s growth rate of revenue The Company completed its transfer from telecommunications services of existing telecommunications towers achieved a five-year high and ranked the and related assets to China Tower. After first in the industry. China Tower’s issue of new shares to the Company pursuant to the transaction Wireless data traffic revenue became the agreement, the Company, through its biggest revenue source for the first time subsidiary, holds a 38.0% shareholding in the Company’s history, surpassing the interest in China Tower. combined revenue of voice, SMS (Short Message Service) and MMS (Multimedia Messaging Service). 2015 2017 27 NOVEMBER The Company, through its wholly- 2017 owned subsidiary, China Mobile TieTong Company Limited, entered Reaching its 20th anniversary of listing, into an acquisition agreement with the Company has become a world-class China TieTong Telecommunications Corporation (“TieTong”) (a wholly- telecommunications operator with the owned subsidiary of CMCC) to acquire world’s largest network and customer TieTong’s assets and businesses at a base, industry-leading profitability and final consideration of RMB31.967 billion. This acquisition enables the Company to market capitalization. obtain a wireline broadband license and resources. Contents 02 Company Profile 61 Notice of the Annual General Meeting 04 Corporate Recognitions 64 Corporate Information 06 Financial Highlights 65 Independent Auditor’s Report 07 Biographies of Directors and Senior 71 Consolidated Statement of Management Comprehensive Income 14 Chairman’s Statement 73 Consolidated Balance Sheet 22 Business Review 75 Consolidated Statement of Changes in Equity 30 Financial Review 76 Consolidated Statement of Cash Flows 36 Corporate Governance Report 78 Notes to the Consolidated Financial Statements 53 Human Resources Development 138 Financial Summary 54 Report of Directors 02 CHINA MOBILE LIMITED Company Profile China Mobile Limited (the “Company”, and together The Company’s ultimate controlling shareholder is with its subsidiaries, the “Group”) was incorporated in CMCC, which, as of 31 December 2016, indirectly held Hong Kong on 3 September 1997. The Company was approximately 72.72% of the total number of issued listed on the New York Stock Exchange (“NYSE”) and shares of the Company. The remaining approximately The Stock Exchange of Hong Kong Limited (“HKEX” 27.28% was held by public investors. or the “Stock Exchange”) on 22 October 1997 and 23 October 1997, respectively. The Company was admitted In 2016, the Company was once again selected as one as a constituent stock of the Hang Seng Index in Hong of “The World’s 2,000 Biggest Public Companies” by Kong on 27 January 1998. Forbes magazine, and recognized again on the Dow Jones Sustainability Emerging Markets Index. Currently, As the leading telecommunications services provider in the Company’s corporate credit ratings are equivalent to Mainland China, the Group provides full communications China’s sovereign credit ratings, namely, AA–/Outlook services in all 31 provinces, autonomous regions Negative from Standard & Poor’s and Aa3/Outlook and directly-administered municipalities throughout Negative from Moody’s. Mainland China and in Hong Kong Special Administrative Region, and boasts the world’s largest mobile network and the world’s largest mobile customer base. Its businesses primarily consist of mobile voice and data business, wireline broadband and other information and communications services. As of 31 December 2016, the Group had a total of 460,647 employees, 849 million mobile customers and 77.62 million wireline broadband customers with its annual revenue exceeding RMB700 billion. ANNUAL REPORT 2016 03 C OMPANY PROFILE China Mobile Organizational Structure and Majority Shareholding * As of 31 December 2016 * Except those indicated, the rest are wholly-owned. China Mobile Communications Corporation China Mobile (Hong Kong) Group Limited China Mobile Hong Kong (BVI) Limited 72.72% Public shareholders 27.28% China Mobile Limited 66.41% China Mobile China Mobile Aspire Holdings Ltd. (Shenzhen) Co., Ltd. Communication Co., Ltd China Mobile China Mobile Hong Kong Co., Ltd. International Ltd 31 Provincial China Mobile Group Design operating subsidiaries Institute Company Limited China Mobile Investment China Mobile IoT Co., Ltd. Holdings Co., Ltd. China Mobile Online China Mobile (Suzhou) Services Co., Ltd. Software Technology Co., Ltd. China Mobile (Hangzhou) MIGU Co., Ltd. Info Technology Co., Ltd. China Mobile Internet Co., Ltd. China Mobile Tietong Co., Ltd. 0.03% China Mobile Group 52.44% China Mobile Group 8.00% Device Co., Ltd. 99.97% Finance Co., Ltd. China Mobile Group Beijing Co., Ltd holds 39.56% Corporate Recognitions “Asiamoney” “The Asset” Best Managed Large Cap in China The Asset Platinum Award “Corporate Governance Asia” “Corporate Governance Asia” Asia’s Outstanding Company on Asian Corporate Director Recognition Corporate Governance Award 06 CHINA MOBILE LIMITED Financial Highlights 2015 2016 Operating revenue (RMB million) 668,335 708,421 Of which: Revenue from telecommunications services (RMB million) 584,089 623,422 EBITDA1 (RMB million) 240,028 256,677 EBITDA margin2 35.9% 36.2% EBITDA as % of revenue from telecommunications services 41.1% 41.2% Profit attributable to equity shareholders (RMB million) 108,539 108,741 Margin of profit attributable to equity shareholders3 16.2% 15.3% Basic earnings per share (RMB) 5.30 5.31 Dividend per share – Interim (HK$) 1.525 1.489 – Final (HK$) 1.196 1.243 – Full year (HK$) 2.721 2.732 Operating Revenue from Revenue Telecommunications (RMB million) Services (RMB million) 668,335 708,421 584,089 623,422 2015 2016 2015 2016 EBITDA Profit Attributable to (RMB million) Equity Shareholders (RMB million)