China Mobile Earnings: Free Cash Flow Set to Increase

China Mobile’s fourth-quarter 2023 result was a bit underwhelming, with services revenue up 3.6%, EBITDA down 6.1%, and net profit down 2.7%. The weak fourth-quarter EBITDA looks likely to be caused by a spike in employee costs related to bonus timing, given employee expenses increased by 8.2% year on year for the first nine months of the year but rose 18.7% in the fourth quarter. We saw a similar pattern in China Unicom’s fourth quarter. On a full-year basis, the 6.3% services revenue growth, 3.7% EBITDA growth, and 5% net profit growth looks quite solid. The lower net profit growth wasn't helped by a lower contribution from China Mobile’s 18%-owned Shanghai Pudong Development Bank, which reported 2023 net profit that declined 28% year on year.