China Mobile, a major player in the telecommunications market, faces mounting pressure from intensified competition and declining demand in China’s telecom landscape. Despite seeing a modest rise in revenue, the company’s profit fell by 4.2% year-on-year. Weaker demand and higher taxes are squeezing margins, highlighting the complex challenges the telecom giant faces.
According to Guang Yang, senior principal analyst at Omdia, “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.” The telecom regulator, MIIT, reported a 1.7% decline in telecom service revenue earlier this year.
With operating revenue for the first quarter pegged at CNY266.5 billion, there is slight year-on-year growth. However, the revenue from core businesses dropped by 1.1%, underscoring the necessity for strategic diversification. China Mobile has set its sights on computing and AI services but faces intense competition in these domains.
Noteworthy is China’s government’s recent decision to raise the value-added tax rate on mobile data and broadband services from 6% to 9%, which further strains the company’s profitability. This tax increase is part of the challenging macroeconomic environment that has limited local governments’ spending abilities.
China Mobile’s pivot to computing services has brought some positive returns, marked by a 12.7% leap in other business revenues. However, fierce competition from internet hyperscalers like Alibaba, Tencent, and ByteDance looms large. These companies maintain significant growth, especially in computing infrastructure, where China Mobile appears to struggle due to higher capital expenditure and talent acquisition hurdles.
“As for the computing service market, internet companies have more customers from the private sector,” Yang pointed out. The revenue generated by internet companies has had healthy growth, with Alibaba Cloud boasting nearly 30% growth in 2025. Thus, telecom operators might find it challenging to close the growth gap in computing services.
Central to China Mobile’s strategy, there is a keen focus on expanding 5G services. Nevertheless, the impact remains minimal due to the complexity of market demands. The company is advancing towards experience-based and scenario-based business models using next-generation 5G SA core networks. Yet pinpointing niche customer segments remains challenging.
Looking forward, China Mobile plans to bolster its communications, computing, and AI services. This plan will emphasize efficiency, drive innovation, and ultimately support long-term growth. Despite the pressures, a strategic realignment toward more lucrative service areas could pave the way for future success.
