2007 Interim Results

China Mobile Limited

16 August 2007

Management

Mr. WANG Jianzhou

Chairman & CEO

Mr. LI Yue
Executive Director & Vice President

Mr. XUE Taohai

Executive Director, Vice President & CFO

Madam XIN Fanfei

Executive Director & Vice President
3

Agenda

Overall Performance
for 1H2007

Financial Results
for 1H2007

Overall Performance
for 1H2007

Highlights

Excellent operating
results
Revenue 21.6%

Continuing rapid
subscriber growth
Average monthly net
adds of 5.19 million

Net profit 25.7%

Planned full year dividend

payout ratio of 43%
Strong growth in rural
market
Rapid growth in valueadded business

Half of subscriber
growth from rural areas

Interim dividend of
HK$0.837 per share
Special interim dividend of
HK$0.085 per share

Proportion to total
revenue rising to 25.2%

Overall Operating Performance

1H2006

1H2007

Change

Subscribers (Million)

273.786

332.378

21.4%

Operating Revenue (RMB Billion)

136.979

166.580

21.6%

EBITDA (RMB Billion)

78.343

89.814

14.6%

EBITDA Margin (%)

57.2%

53.9%

- 3.3 ppt

Net Profit (RMB Billion)

30.168

37.907

25.7%

Net Profit Margin (%)

22.0%

22.8%

0.8 ppt

1.52

1.90

25.0%

Basic Earnings per Share (RMB)

Continuous Rapid Growth of

Subscribers

Total Subscribers

Net Additional Subscribers

(Million)

(Million)
21.4%

20.8%

22.3%
32.3%

332.378

31.146

273.786
25.775

223.781
19.489

65%

67%

2005.6

2006.6

Market share

68%

2007.6

69%

77%

77%

1H2005

1H2006

1H2007

Net adds market share

Voice Business Growth

Driven by Favourable Price Elasticity
Total Voice Usage

45.6%

(Billion Minutes)
828.82

36.2%

Price Elasticity
569.20

1H2007 vs 1H2006

418.06

MOU
1H2005

1H2006

1H2007

Average voice
revenue per
minute*

20.0%

Proportion of Intra-network Usage

-19.3%

56.0%

1H2005

59.0%

63.6%

*After deducting value-added business revenue

1H2006

1H2007
9

Strong Growth in Value-added

Business
Color Ring Revenue
Value-added Business Revenue
(RMB Billion)

90.3% 5.027

(RMB Billion)

25.2%

2.642
22.6%

35.5%

41.915
1H2006

1H2007

8.784

WAP Revenue

30.926

45.8%

(RMB Billion)
6.570

4.435

13.872

3.042
9.247

15.109

19.259

1H2006

MMS Revenue
76.0% 0.713

(RMB Billion)
1H2006

1H2007

1H2007
0.405

SMS
Voice value-added
service

Non-SMS data business

Value-added business /
Total revenue
1H2006

1H2007

10

Continuous Growth of Revenue-Driving

Products and Vibrancy of Growth-Driving
Products
SMS Usage

Color Ring Subscription

(Billion Messages)

(Billion Times)
37.3%

41.0%
235.4
167.0

0.300
0.219

Mobile Music
A new fashionable entertainment mode, leading the
mainstream distribution, consumption and way of
experiencing music
Wireless music club members: 48 million
31 million additions in six months
Senior members: 22 million

Mobile Paper
1H2006

1H2007

1H2006

1H2007

WAP Traffic

MMS Usage

(Billion MB)

(Billion Messages)

167.1%

Fetion

77.5%
4.5
2.15

2.5
0.81

1H2006

1H2007

1H2006

Providing timely and convenient access of information.

Strengthened cooperation with mainstream media to
achieve win-win situation
Paid subscribers: 15 million
Nearly 10 million additions in six months
Morning/Evening News paid subscribers: 12 million

1H2007

An important tool that integrates various

communication modes, to cope with a new trend of
communication and information access
Fetion subscribers: approx. 38 million
Nearly 32 million additions in six months
Active subscribers: 10 million
11

Active Promotion of Mobile Life

Turning mobile phone into an
indispensable companion to our life

Multi-uses

Mobile Paper, Mobile Music, Mobile TV,

Mobile Search

Mobile Media

Promoting mobile phone as a

personalized media
information platform

Entertainment
Mobile
Mobile
Gaming,
Gaming,
Mobile
Mobile
Animated
Animated
Comic,
Comic,
Fetion
Fetion

Commerce

Daily life

Mobile
Mobile Wallet,
Wallet,
e-Cert,
e-Cert, Mobile
Mobile
Securities
Securities
Trading,
Trading,
Mobile
Mobile
Mailbox
Mailbox

Mobile
Mobile Info.
Info.
Service,
Service, Mobile
Mobile
Navigation,
Navigation,
Weather
Weather
Forecast,
Forecast, Flight
Flight
Info.
Direct
Info. Direct

Capitalizing on industry trends

and nurturing driving forces
for our rapid and sustainable
development
Strengthen
Strengthenhandset
handset
customization
customization
Design
user-friendly
Design user-friendly
interface
interfaceand
andfacilitate
facilitate
business
promotion
business promotion

A reserve of valueA reserve of valueadded business

added business
products at different
products at different
life stages
life stages

Advance
Advanceplanning
planningtoto
control
controlstrategic
strategic
resources
resources

Innovative
Innovativeoperation
operation
model
to
develop
model to develop
industry
industryvalue-chain
value-chain
12

Developing Rural Market and

Promoting Rural Informationalization
Relatively low penetration rate in rural areas
Per capita income of rural residents continued to
grow
Strong support from new rural policy
Users entry barrier further lowered
Appropriate marketing strategy

Agricultural Information Access

Subscribers
(Million)

23.5%
12.8%

17.82

24.82

Rural market
contributed
significantly to
our overall
performance

"Agricultural Information Access" provides

rural customers with practical and updated
information, via SMS, voice and the Internet
Well received by the market, driving subscriber
growth
Effectively enhanced customer loyalty and lowered
churn rate

20.10

Propelled revenue, further boosting the proportion

of data business to total revenue
Promoted rural informationalization

2006.12

2007.3

2007.6

13

Continued Growth in Operating

Revenue
Operating Revenue

MOU
440

(Minutes)
328

367

(RMB Billion)

21.6%
166.580

19.6%
136.979
114.547

1H2005

1H2006

1H2007

ARPU

1H2005

1H2006

1H2007

(RMB)
90

88

88
Subscriber and voice usage
growth
Favorable impetus of valueadded business

1H2005

1H2006

1H2007

Rapid development of rural

market

Continued
growth in
operating
revenue

14

Sustained Profit Growth

Operating Expense

Net Profit

(RMB Billion)

(RMB Billion)

18.9%
17.1%

25.7%
113.075

25.5%

37.907

95.125
81.210

30.168
24.043

70.9%

1H2005

69.4%

1H2006

67.9%

1H2007

21.0%

22.0%

22.8%

1H2005

1H2006

1H2007

Operating expense / Operating revenue

Net profit margin

Favorable revenue growth

Effective cost management
Better economies of scale

Sustained
profit growth
15

CAPEX
Net Additional Subscribers
CAPEX

20.8% 31.146

(Million)
25.775

(RMB Billion)

<10%
99.8
1H2007

1H2006

51.1

Total Voice Usage

(Billion Minutes)

45.6%
828.82

569.20

2007
Budget

1H2007
Actual

CAPEX adjustment

1H2007

1H2006

Operating Revenue
(RMB Billion)
To satisfy robust market demand

21.6%
166.580

136.979

To promote continuous development

of value-added business
To secure leading network advantage
1H2006

1H2007

16

Favorable and Continued Dividend

Growth
Planned dividend payout ratio for the full year of 2007 is 43%
Interim dividend for 2007 was HK$0.837 per share
Plan to distribute special dividend for 2007, special interim dividend was HK$0.085
per share
Endeavor to achieve a long-term sustainable, steadily increasing dividend, with a
view to generating the best possible return for shareholders

Dividend and Payout Ratio

43%

42%
39%

(HK$)
33%

1.383
21%

0.763
1.02
0.66

0.36
0.20
0.16

0.46

2003

2004

Payout Ratio

0.57
0.837
0.62
0.45

0.20

Interim Dividend

2005

Final Dividend

0.159
0.069
0.09
0.09

2006

Special Interim Dividend

0.085
0.085

2007

Special Final Dividend

17

Earnest Effort to Prepare for

Beijing 2008 Olympic Games

The most advanced

technology
China
Mobiles
Olympic
Commitment

The most abundant

business
The most
considerate service

Capitalizing on Beijing Olympics to

enhance brand value
Exhibiting corporate charisma and
fulfilling social responsibility
Driving further growth in revenue
Realizing benefit from partnership
rights
18

Corporate Responsibility

SMS competition for charity

Eliminate digital divide in

rural areas

Educational assistance to the

poverty-stricken districts

Realize harmony and

growth among
corporation, value
chain, society and
environment

To build a world-class corporate

responsibility management
system

Recycle program of cell phones,

batteries, and accessories

The Green Olympics

environmental education
textbook for secondary
school students

Assure communications
service for emergency and
disaster relief
19

Mobile Information Expert

A World-class Enterprise and

A Mobile Information Expert

20

Financial Results
for 1H2007

21

Strong Growth Momentum

Subscribers
21.4%

(Million)

332.378

273.786

Operating Revenue
(RMB Million)

2006.6

166,580

2007.6

Total Voice Usage

21.6%

136,979

(Billion Minutes)

45.6% 828.82
569.20

1H2006

1H2007

Value-added Business Revenue

(RMB Million)

35.5% 41,915

30,926

1H2006

1H2006

1H2007

1H2007

22

Delivering Strong Financial

Performance
EBITDA

14.6%

(RMB Million)

89,814
78,343

Basic EPS
(RMB)
25.0%

53.9%

57.2%

1.90
1.52
1H2006

1H2007
EBITDA margin

Net Profit
(RMB Million)

25.7%
37,907

30,168
22.0%

22.8%
1H2006

1H2006

1H2007

1H2007
Net profit margin

23

Remain Strongly Cash Generative

Net Cash Generated from
Operating Activities
(RMB Million)

79,107

86,516

Continuing favorable business

growth and economies of scale

1H2006

1H2007

Free Cash Flow

(RMB Million)

47,182
35,388

1H2006

1H2007

Provide a solid foundation for the

sustainable healthy development
of the Company

24

Revenue Composition

1H2007

2006

64.6%

64.2%
4.1%

5.0%

23.5%
25.2%

6.1%

7.3%

Usage fees

Monthly fees

Value-added business

Others
25

Sources of Revenue Growth

(RMB Million)

8,775
18,612

166,580

2,214

21.6%

Voice value-added Data business

services

136,979
Voice business

1H2006

1H2007
26

Cost Composition

Operating expense

69.7%

68.9%

67.9%

Leased lines
Interconnection

1.4%

0.8%

0.7%

6.3%

6.4%

6.3%

Depreciation

23.2%

21.9%

21.0%

Personnel

5.8%

5.7%

5.2%

SG&A

33.0%

34.1%

34.7%

2005

2006

1H2007

Note: The above data are expressed as a percentage of operating revenue

27

Revision of Assets Estimated

Useful Lives
Along with the maturity of new technology and
under our prudent financial principle, the Company
has revised the estimated useful lives of existing
switching center equipment (excluding soft
switching center equipment that conforms with the
new generation technology) from 7 years to 5
years.

Having considered the effect on net profit

resulted from the revision of estimated useful
lives, the Company plans to distribute a special
dividend for the full year of 2007. The special
interim dividend was HK$0.085 per share.

Dividend and Payout Ratio

Depreciation

(HK$)

(RMB Million)

39%

27,730

34,542
6,529

34,938
5,737

43%

42%

1.383
1.02

0.763

0.57
0.45

1H2005

1H2006

1H2007

Effect of assets estimated useful lives

revision

2005

0.837
0.62

0.069
0.09
0.09

2006

0.159

0.085
0.085

2007

Interim Dividend
Final Dividend
Special Interim Dividend
Special Final Dividend
Payout Ratio
28

Effective Cost Resource Allocation

Enhancing future competitiveness

Significant economies of scale
Strong business development
Revenue up 21.6%
Subscribers up 21.4%
Voice usage volume up 45.6%

Sales
Sales
channel
channel
Rational
Rational
investment
investment

Customer
Customer
care
care
Effective
Effective cost
cost
allocation
allocation

Cost to revenue down 1.5 ppt.

Average operating expense per minute down
18.4%
Average monthly operating expense per
subscriber down 1.2%

Network
Network
optimization
optimization

System
System
support
support
Refined
Refined
management
management

R&D
R&D
Proactive
Proactive
planning
planning

Operating expense up 18.9%

29

Solid Capital Structure and Strong

Credit Profile
31.12.2006

30.06.2007

Short Term Debt

5,276

4,330

Long Term Debt

33,574

33,578

Total Debt

38,850

37,908

Shareholders Equity

319,002

341,707

Total Book Capitalization

357,852

379,615

10.9%

10.0%

Cash & Bank Deposits

153,461

185,271

Net Cash

114,611

147,363

63X

64X

(RMB Million)

Total Debt / Total Book Capitalization

Interest Coverage

Credit Rating
S&Ps
Moodys

A / Stable

A / Positive

A2 / Positive

A1 / Stable

Note: Net cash represents Cash & Bank Deposits minus Total Debt

30

Sarbanes-Oxley: Sustaining
Compliance & Creating Business Value
Sustaining SOX 404 compliance

F
Re ina
po nc
rti ial
ng
Co
m
pl
ia
nc
e

O
pe
ra
tio
n

Risk Assessment
Control Environment

P
ris roce
k m ss
an -ba
ag se
em d
en
t

Internal control
management
information system

isk
t
el r
lev men
All age
n
ma

Control Activity

Establish internal control system

according to COSO framework

Information &
Communication

Activity 2
Activity 1
Business Unit B
Business Unit A

Monitoring

Company
internal
control and
management

d
an
ng on
ori nt
l
nit me tro
Mo ess l con nt
s
as erna eme
int anag
m

Compliance with
SOX 404 requirements

S
co us
wi mp tain
th
l
SO ianc
X e
40
4

Cultivate risk
awareness

The external auditors

expressed an unqualified
opinion on managements
assessment of, and the
effective operation of, the
Companys internal
control over financial
reporting under SOX 404
as of 31 Dec. 2006.

31

Extracts from unaudited consolidated income statement for the

6 months ended 30 June 2007 Appendix I

(RMB Million)

1H2006

1H2007

Operating revenue

1H2006

1H2007

41,854

53,505

1,847

1,264

179

248

Interest income

1,123

1,709

Finance costs

(610)

(855)

(14,187)

(17,906)

Profit for the period

30,206

37,965

Attributable to:
Equity shareholders
of the Company

30,168

37,907

38

58

30,206

37,965

Profit from operations

(cont)

Usage fees

87,806

107,661

Monthly fees

12,867

10,176

Other net income

41,915

Non-operating net
income

Value-added
services fees
Other operating
revenue

30,926
5,380

6,828

136,979

166,580

Operating expenses
Leased lines

1,230

1,180

Interconnection

8,946

10,488

34,542

34,938

7,990

8,667

42,417

57,802

95,125

113,075

41,854

53,505

Depreciation
Personnel
Other operating
expenses
Profit from operations

Taxation

Minority interests
Profit for the period

33

Extracts from unaudited consolidated balance sheet as at

30 June 2007 Appendix II

Audited
at 31.12.2006

Unaudited
at 30.6.2007

Current assets

171,507

204,007

Non-current assets

323,169

340,251

Total assets

494,676

544,258

(140,607)

(167,769)

(34,696)

(34,353)

(175,303)

(202,122)

319,373

342,136

(RMB Million)

Current liabilities
Non-current liabilities
Total liabilities
Net assets

34

Operating Data Appendix III

2006

1H2007

65.269

67.354

235.963

265.024

381/671/293

440/794/346

90/207/55

88/216/55

0.236

0.201

Value-added Business Users (Million)

270.384

314.853

SMS Usage (Billion Messages)

353.384

235.376

2.73%

2.72%

Contract Subscribers (Million)

Prepaid Subscribers (Million)
Blended/Contract/Prepaid MOU (Minutes)
Blended/Contract/Prepaid ARPU (RMB)
Average Revenue per Minute (RMB)

Average Monthly Churn Rate (%)

35

Forward-looking Statements
Certain statements contained in this document may be viewed as
forward-looking statements within the meaning of Section 27A of the U.S.
Securities Act of 1933, as amended, and Section 21E of the U.S.
Securities Exchange Act of 1934, as amended. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual performance, financial condition or
results of operations of China Mobile Limited (the Company) to be
materially different from any future performance, financial condition or
results of operations implied by such forward-looking statements. Further
information regarding these risks, uncertainties and other factors is
included in the Companys most recent Annual Report on Form 20-F filed
with the U.S. Securities and Exchange Commission (the SEC) and in the
Companys other filings with the SEC.

36