China Mobile Profit Falls 4.2% in Q1 on Rising Network Costs

China Mobile (00941.HK) reported a 4.2% drop in first-quarter net profit to RMB29.34 billion as rising costs offset a slight revenue beat.

"Citigroup maintained its Buy rating on the telecom giant with a price target of HKD105.1, seeing value despite the weaker-than-expected profitability in the quarter.

The company’s net profit and EBITDA missed market expectations by 2.8% and 5.2%, respectively. Total revenue grew 1% to RMB266.48 billion, but service revenue declined 1.1% to RMB219.85 billion, while the EBITDA margin narrowed by 1.8 percentage points to 28.8%.

The results highlight a squeeze on profitability from higher R&D and network-related expenses, a trend investors will watch closely. The divergence between revenue growth and declining profits puts pressure on management to control costs to protect shareholder returns.

The earnings miss was primarily attributed to a surge in operational costs. China Mobile has been investing heavily in its 5G network expansion and research and development for next-generation technologies, which weighed on its bottom line during the quarter.

Despite the profit decline, the 1% year-over-year increase in total revenue suggests resilient demand for the company's core services. However, the 1.1% dip in service revenue indicates potential pricing pressure or a shift in service mix.

The Q1 results signal that cost control will be a critical factor for China Mobile's performance in 2026. Investors will be looking for updates on efficiency measures and margin stabilization in the company's next earnings report.

This article is for informational purposes only and does not constitute investment advice.