Guang Yang, senior principal analyst at Omdia, told RCR Wireless News that China Mobile is facing growing competition from rival telcos
In sum – what to know:
Profit under pressure – Profit fell 4.2% year-on-year as weaker demand, competition and higher taxes weighed on margins despite modest revenue growth.
Shift beyond connectivity – Growth in computing and other services highlights China Mobile’s push toward new revenue streams as traditional services decline.
Competitive gap in cloud – Telcos face increasing pressure from hyperscalers, with stronger growth and advantages in computing infrastructure and enterprise demand.
China Mobile is facing increasing pressure on profitability as competition intensifies and demand weakens across China’s telecom market, even as the operator continues to expand into computing and AI services.
“China Mobile indeed faces competition pressure. Its competitors, China Telecom and China Unicom, are trying to grab its high-end postpaid customers with more competitive prices. Meanwhile, Chinese telecom operators, including China Mobile, also face weakened demand. According to China’s telecom regulator MIIT, telecom service revenue in China declined by 1.7% in January and February,” Guang Yang, senior principal analyst at Omdia, told RCR Wireless News.
“In a struggling macro environment, it’s often challenging to maintain profitability. Another factor impacting Chinese telcos’ profitability is the tax increase. China government recently increased the value-added tax rate on mobile data and broadband services from 6% to 9%,” the analyst said.
In the first quarter of 2026, China Mobile reported operating revenue of CNY266.5 billion ($39 billion), up 1% year-on-year. Revenue from its core businesses declined by 1.1% to CNY219.9 billion, while other businesses grew 12.7% to CNY46.6 billion. Profit attributable to shareholders fell 4.2% to CNY29.3 billion, with EBITDA declining 5% year-on-year.
Mobile customers amounted to 1 billion as of the end of Q1, with a net addition of 3.76 million during the period. Integrated broadband network customers totaled 333 million, with a net addition of 3.90 million in Q1. China Mobile said it had a total of 668 million 5G network customers at the end of the first quarter.
The company said it continues to reposition its business around communications, computing, and AI services, as it seeks new growth areas beyond traditional connectivity. However, competition is also intensifying in these segments.
“China Mobile reported a 11.1% increase in its computing service revenue in 2025, while its communication service revenue declined by 1%. However, telcos face severe competition from internet hyperscalers, such as Alibaba, Tencent, and ByteDance. Telcos have no advantages in either technical capabilities, capital expenditure on computing infrastructure, or talent acquisition. In past years, China Mobile’s computing service gained many customers of local governments and large state-owned enterprises to support their digital transformation. But since 2025, high debt levels have significantly limited local governments’ willingness to spend,” Yang said.
“In contrast, internet companies have more customers from the private sector, so they maintain healthy growth. For example, Alibaba Cloud reported an almost 30% growth in 2025. The gap between telcos and Internet companies in the computing services market may widen further,” Yang added.
Operators are also exploring differentiated 5G services to support revenue growth, though their impact remains limited.
“Currently, Chinese telcos are looking at the differentiation capability provided by 5G SA core and 5G-Advanced air interface. They are exploring experience-based and scenario-based business models. The strategy works well in some cases, but can only address long-tail requirements from very niche customer segments. To have a positive impact on their overall business performance, Chinese telcos may need to conduct more precise market segmentation to identify more long-tail requirements, which is not easy,” the analyst added.
In its earnings statement, China Mobile said it will continue to strengthen its communications, computing and AI services while focusing on improving efficiency and advancing innovation, as it looks to stabilize performance and support long-term growth.
