DIVIDENDS
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China Mobile

China Mobile to pay special dividend amid steady revenue, profit growth

World’s largest wireless network operator, with 867 million subscribers as of June 30, marks the 20th anniversary of its public listing in Hong Kong.

PUBLISHED : Thursday, 10 August, 2017, 3:50pm
UPDATED : Thursday, 10 August, 2017, 11:28pm

China Mobile, the world’s largest wireless network operator by subscribers, surprised the market on Thursday by announcing a special dividend after reporting stable interim earnings growth.

Chairman Shang Bing said in a regulatory filing that the China Mobile board will pay a one-off special dividend of HK$3.20 per share to mark the 20th anniversary of its public listing in Hong Kong.

China Mobile was incorporated in Hong Kong on September 3, 1997. It was listed on the New York Stock Exchange on October 22, 1997 and in Hong Kong the following day.

Its special cash dividend, the first for the company since 2008, was in addition to the regular interim dividend of HK$1.62 per share, representing a dividend payout ratio of 46 per cent.

“The announcement of a special dividend is likely a measure to support its share price ahead of a much worse second-half outlook this year, driven by a price war, government-mandated tariff cuts and upward pressure on capital expenditure,” Jefferies equity analyst Edison Lee said.

Shares of China Mobile jumped as much as 5.9 per cent to an intraday high of HK$89.60 in Hong Kong before closing at HK$87, up 2.8 per cent.

The operator’s first-half net profit rose 3.5 per cent to 62.7 billion yuan (US$9.4 billion), up from 60.6 billion yuan in the same period last year, on the back of a 6.9 per cent growth in telecommunications services revenue.

Earnings before interest, tax, depreciation and amortisation – representing net cash flows from the company’s businesses – climbed 4.7 per cent to 140.7 billion yuan during the period, from 134.3 billion yuan a year earlier.

Total revenue was up 5 per cent to 388.9 billion yuan from 370.3 billion yuan a year ago.

Jefferies’ Lee said China Mobile’s first-half financial results were in line with expectations.

“Depreciation and amortisation rose 6.6 per cent year-on-year in the first half, possibly reflecting high capital expenditure and a rise in handset subsidy amortisation,” Lee said. “After China Tower

was created, there was expectation that its depreciation and amortisation will grow at a much slower rate. But this does not seem to be the case any more.”

China Tower Corp was established by China Mobile, China Unicom and China Telecom in July 2014 to be responsible for all the construction, maintenance and operations of their telecommunications network towers and auxiliary infrastructure across the mainland.

China Mobile pointed out that it had 867 million mobile subscribers as of June 30, with 594 million on its 4G network. The operator had 837 million mobile users, including 429 million 4G subscribers in the same period last year.

“In the first half of this year, we increased the total number of 4G base stations to 1.65 million, making our 4G TD-LTE network the largest in the world,” Shang said. “The company is on track to achieve its target of a net increase of 100 million 4G customers this year.”

He also said the company will commence field tests for 5G mobile services this year.

The operator’s total fixed-line broadband subscribers reached 93.04 million at the end of June, up from 65.84 million a year ago.