CHL [CHINA MOBILE] 6-K: 99 China Mobile Annual Report 2018 Our way

Ticker: CHL, Company: CHINA MOBILE LTD /ADR/, Type: 6-K, Date: 2019-04-12
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Webplus: CHL/20190412/6-K/2_EX-99.1/000.htm SEC Original: chl-ex991_6.htm
99 China Mobile Annual Report 2018 Our way ahead China Mobile Limited Stock Code: 941 China Mobile Limited Milestones FEBRUARY 2018 Joined hands with 20 global device industry partners to launch the “5G Device Forerunner Initiative” MAY 2018 Mobile customer base achieved a landmark breakthrough of 900 million APRIL 2018 Obtained the operating permit for LTE/4G Digital Cellular Mobile Service



s:399165:" EX-99.1 2 chl-ex991_6.htm EXHIBIT 99.1

Exhibit99.1

China Mobile Annual Report 2018 Our way ahead China Mobile Limited Stock Code: 941



Theme The technology revolution and industry transformation continue in waves. Beyond this, information and communications technology (ICT) is also facing an intergenerational transition as attention turns to the potential of 5G. The shift towards innovative and integrated technological application across industries is another factor driving the intelligent evolution of society. The future of 5G is unveiling itself over the horizon, giving us a path and direction of development. Planning our way ahead, China Mobile will seize every opportunity presented to us and steel ourselves for the inevitable challenges. Taking this course will enable us to sustain the quality development of the Company and be pioneers on the exciting journey to build a smart society. FORWARD-LOOKING STATEMENTS Certain statements contained in this annual report 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 the Company to be materially different from those implied by such forward-looking statements. In addition, we do not intend to update these forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in the Company’s most recent Annual Report on Form 20-F filed and other filings with the U.S. Securities and Exchange Commission.



Contents 2 Milestones 4 Corporate Information 5 Financial Highlights 6 Company Profile 8 Biographies of Directors and Senior Management 14 Chairman’s Statement 24 Corporate Recognitions 28 Business Review 36 Financial Review 41 Corporate Governance Report 58 Human Resources Development 59 Report of Directors 67 Notice of the Annual General Meeting 69 Independent Auditor’s Report 75 Consolidated Statement of Comprehensive Income 77 Consolidated Balance Sheet 79 Consolidated Statement of Changes in Equity 80 Consolidated Statement of Cash Flows 82 Notes to the Consolidated Financial Statements 146 Financial Summary



China Mobile Limited Milestones FEBRUARY 2018 Joined hands with 20 global device industry partners to launch the “5G Device Forerunner Initiative” MAY 2018 Mobile customer base achieved a landmark breakthrough of 900 million APRIL 2018 Obtained the operating permit for LTE/4G Digital Cellular Mobile Service (LTE FDD) JUNE 2018 Connected the world’s first holographic video call using 5G SA NR standards 02


Annual Report 2018 Milestones JULY 2018 Completely cancelled domestic handset data “roaming” tariffs NOVEMBER 2018 Ranked first in “Corporate Social Responsibility Development Index of Chinese Enterprises (10-year cumulative score)” award AUGUST 2018 MIGU, Device Company and Online Services Company were included on the “Double- Hundred Action” enterprise list for stateowned enterprise reforms DECEMBER 2018 Obtained the permit for 5th Generation Mobile Networks (5G) test frequencies: 2515MHz-2675MHz and 4800MHz- 4900MHz Revamped “GoTone” with an “innovative, proactive, classy” brand image Assisted China Media Group to build the first national-level “5G new media platform” 03


China Mobile Limited Corporate Information BOARD OF DIRECTORS Executive Directors Mr. YANG Jie (Executive Director & Chairman) Mr. LI Yue (Executive Director & Chief Executive Officer) Mr. DONG Xin (Executive Director, Vice President & Chief Financial Officer) Independent Non-Executive Directors Dr. Moses CHENG Mo Chi Mr. Paul CHOW Man Yiu Mr. Stephen YIU Kin Wah Dr. YANG Qiang PRINCIPAL BOARD COMMITTEES Audit Committee Mr. Stephen YIU Kin Wah (Chairman) Dr. Moses CHENG Mo Chi Mr. Paul CHOW Man Yiu Dr. YANG Qiang Remuneration Committee Dr. Moses CHENG Mo Chi (Chairman) Mr. Paul CHOW Man Yiu Mr. Stephen YIU Kin Wah Nomination Committee Mr. Paul CHOW Man Yiu (Chairman) Dr. Moses CHENG Mo Chi Mr. Stephen YIU Kin Wah COMPANY SECRETARY Ms. WONG Wai Lan, Grace (FCS, FCIS) AUDITORS PricewaterhouseCoopers PricewaterhouseCoopers Zhong Tian LLP LEGAL ADVISER Sullivan & Cromwell (Hong Kong) LLP REGISTERED OFFICE 60/F, The Center 99 Queen’s Road Central Hong Kong PUBLIC AND INVESTOR RELATIONS Tel: 852 3121 8888 Fax: 852 2511 9092 Website:www.chinamobileltd.com Stock code: (HKEX) 941 (NYSE) CHL CUSIP Reference Number: 16941M109 SHARE REGISTRAR Hong Kong Registrars Limited Shops 1712–1716,17/F Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong AMERICAN DEPOSITARY RECEIPTS DEPOSITARY BNY Mellon Shareowner Services P.O. Box 505000 Louisville, KY 40233-5000 USA Overnight Correspondence: The Bank of New York Mellon Shareholder Correspondence 462 South 4th Street, Suite 1600 Louisville, KY 40202 USA Tel: 1-888-269-2377 (toll free in USA) 1-201-680-6825 (international call) Email:shrrelations@cpushareownerservices.com Website:www.mybnymdr.com PUBLICATIONS As required by the United States securities laws and regulations, the Company shall file an annual report on Form 20-F with the US SEC before 30 April each year. Copies of the annual report of the Company as well as the annual report on Form 20-F, once filed, will be available at: Hong Kong: China Mobile Limited 60/F, The Center 99 Queen’s Road Central Hong Kong The United States: BNY Mellon 240 Greenwich Street, 22nd Floor New York, NY 10286 USA 04


Annual Report 2018 Financial Highlights 201 8 201 7 Operating revenue (RMB million) 736,819 740,514 Of which: Revenue from telecommunications services (RMB million) 670,907 668,351 EBITDA1 (RMB million) 275,541 270,421 EBITDA margin2 37.4% 36.5% EBITDA as % of revenue from telecommunications services 41.1% 40.5% Profit attributable to equity shareholders (RMB million) 117,781 114,279 Margin of profit attributable to equity shareholders3 16.0% 15.4% Basic earnings per share (RMB) 5.7 5 5.5 8 Dividend per share – Interim (HK$) 1.826 1.623 – Final (HK$) 1.391 1.582 – Special dividend (HK$) – 3.200 – Full year (HK$) 3.21 7 6.40 5 Revenue from Telecommunications Services (RMB million) Profit Attributable to Equity Shareholders (RMB million) EBITDA (RMB million) Basic Earnings Per Share (RMB) 2018 117,781 2017 114,279 2018 670,907 2017 668,351 2018 275,541 2017 270,421 2018 5.75 2017 5.58 1 The Company defines EBITDA as profit for the year before taxation, income from investments accounted for using the equity method, finance costs, interest and other income, other gains, depreciation and amortization of other intangible assets. 2 EBITDA margin = EBITDA/Operating revenue 3 Margin of profit attributable to equity shareholders = Profit attributable to equity shareholders/Operating revenue 05


China Mobile Limited Company Profile China Mobile Limited (the “Company”, and together with its subsidiaries, the “Group”) was incorporated in Hong Kong on 3 September 1997. The Company was listed on the New York Stock Exchange (“NYSE”) and The Stock Exchange of Hong Kong Limited (“HKEX” or the “Stock Exchange”) on 22 October 1997 and 23 October 1997, respectively. The Company was admitted as a constituent stock of the Hang Seng Index in Hong Kong on 27 January 1998. As the leading telecommunications services provider in Mainland China, the Group provides full communications services in all 31 provinces, autonomous regions and directly-administered municipalities throughout Mainland China and in Hong Kong Special Administrative Region, and boasts a world-class telecommunications operator with the world’s largest network and customer base, a leading position in profitability and market value ranking. Its businesses primarily consist of mobile voice and data business, wireline broadband and other information and communications services. As of 31 December 2018, the Group had a total of 459,152 employees, and a total connection of 1.633 billion, with its annual revenue totalling RMB736.8 billion. The Company’s ultimate controlling shareholder is China Mobile Communications Group Co., Ltd. (formerly known as China Mobile Communications Corporation, “CMCC”), which, as of 31 December 2018, indirectly held approximately 72.72% of the total number of issued shares of the Company. The remaining approximately 27.28% was held by public investors. In 2018, the Company was once again selected as one of “The World’s 2,000 Biggest Public Companies” by Forbes magazine and Fortune Global 500 (100) by Fortune magazine, and recognized for three consecutive years in the global carbon disclosure project CDP’s 2018 Climate A List as the first and only company from Mainland China. The China Mobile brand was once again listed in BrandZ Top 100 Most Valuable Global Brands by Millward Brown ranking 21 in 2018. Currently, the Company’s corporate credit ratings are equivalent to China’s sovereign credit ratings, namely, A+/Outlook Stable from Standard & Poor’s and A1/Outlook Stable from Moody’s. 06


Annual Report 2018 Company Profile China Mobile Principal Organizational Structure China Mobile Communications Group Co., Ltd. China Mobile (Hong Kong) Group Limited 72.72% 27.28% China Mobile Hong Kong (BVI) Limited China Mobile Limited Public shareholders Operating subsidiaries in 31 provinces, autonomous regions and directly–administered municipalities in Mainland China and Hong Kong Other specialized subsidiaries* China Mobile Communication Co., Ltd * Other specialized subsidiaries include: • China Mobile Group Design Institute Co., Ltd. • China Mobile Group Finance Co., Ltd. • China Mobile Group Device Co., Ltd. • China Mobile IoT Company Limited • China Mobile International Limited • China Mobile Information Technology Company Limited • China Mobile Online Services Co., Ltd. • MIGU Co., Ltd. • China Mobile (Suzhou) Software Technology Co., Ltd. • China Mobile (Hangzhou) Information Technology Company Limited • China Mobile Internet Company Limited • China Mobile TieTong Company Limited • China Mobile Investment Holdings Co., Ltd. • China Mobile Quantong System Integration Co., Ltd. • China Mobile Financial Technology Co., Ltd. • China Mobile (Chengdu) ICT Co., Ltd. • China Mobile (Shanghai) ICT Co., Ltd. • Aspire Holdings Ltd. 07


China Mobile Limited Biographies of Directors and Senior Management EXECUTIVE DIRECTORS Mr. YANG Jie Age 56, Executive Director and Chairman of the Company, in charge of the overall management of the Company, joined the Board of Directors of the Company in March 2019. He is currently the Chairman of CMCC and a director and the Chairman of China Mobile Communication Co., Ltd. (“CMC”). Mr. Yang formerly served as Deputy Director General of Shanxi Posts and Telecommunications Administration, General Manager of Shanxi Telecommunications Corporation, Vice President of China Telecom Beijing Research Institute, General Manager of Business Department of the Northern Telecom of former China Telecommunications Corporation, President and Chairman of China Telecommunications Corporation, and President and Chief Operating Officer, Chairman and Chief Executive Officer of China Telecom Corporation Limited. Mr. Yang graduated from the Beijing University of Posts and Telecommunications majoring in radio engineering in 1984 and obtained a doctorate degree in business administration from the ESC Rennes School of Business, France in 2008. Mr. Yang is a professor-level senior engineer with extensive experience in management and telecommunications industry. Mr. LI Yue Age 59, Executive Director and Chief Executive Officer of the Company, in charge of the operation, strategic development as well as international business of the Company, joined the Board of Directors of the Company in March 2003. He is also the President and Director of CMCC and CMC. Mr. Li started his career in 1976 and previously served as Deputy Director General and Chief Engineer of Tianjin Long-Distance Telecommunications Bureau, Deputy Director General of Tianjin Posts and Telecommunications Administration, President of Tianjin Mobile Communications Company, Deputy Head of the preparatory team and Vice President of CMCC, Chairman of Aspire, non-executive director of Phoenix Satellite Television Holdings Limited and Chairman of Union Mobile Pay Limited. Mr. Li holds a Bachelor’s degree in telephone exchange from the Correspondence College of Beijing University of Posts and Telecommunications, a Master’s degree in business administration from Tianjin University and a doctoral degree in business administration from Hong Kong Polytechnic University. He is a professor-level senior engineer and had won many national, provincial and ministerial level scientific and technological progress awards. Mr. Li has been engaging in telecommunications network operations and maintenance, planning and construction, operational management, development strategies and has many years of experience in the telecommunications industry. 08


Annual Report 2018 Biographies of Directors and Senior Management EXECUTIVE DIRECTOR Mr. DONG Xin Age 52, Executive Director, Vice President and Chief Financial Officer of the Company, principally in charge of corporate affairs, planning and construction, finance, human resources, internal audit and investor relations of the Company, joined the Board of Directors of the Company in March 2017. He is also a Vice President and Chief Accountant of CMCC and a Director and Vice President of CMC. In May 2018, Mr. Dong was appointed as a non-executive director of China Tower Corporation Limited (“China Tower”, a company listed in Hong Kong since 8 August 2018). Mr. Dong formerly served as a Deputy Director of Corporate Finance Division of Finance Department of the former Ministry of Posts and Telecommunications, a Director of Economic Adjustment Division of the Department of Economic Adjustment and Communication Clearing of the former Ministry of Information Industry of China, Director General of the Finance Department of CMCC, Chairman and President of Hainan Mobile, Director General of the Planning and Construction Department of CMCC, Chairman and President of Henan Mobile and Beijing Mobile. Mr. Dong received a Bachelor’s degree from Beijing University of Posts and Telecommunications in 1989, a Master’s degree in financial and accounting management from Australian National University, and a Doctoral degree in business administration jointly issued by Shanghai Jiao Tong University and ESC Rennes School of Business, France. Mr. Dong is a senior engineer and senior accountant with many years of experience in the telecommunications industry and financial management. INDEPENDENT NON-EXECUTIVE DIRECTORS Dr. Moses CHENG Mo Chi, GBM, GBS, OBE, JP Age 69, Independent Non-Executive Director of the Company, joined the Board of Directors of the Company in March 2003. He was appointed as the Chairman of the Remuneration Committee in May 2016. Dr. Cheng is a practising solicitor and a consultant of Messrs. P.C. Woo & Co. after serving as its Senior Partner from 1994 to 2015. Dr. Cheng was a member of the Legislative Council of Hong Kong. He is the founder chairman of the Hong Kong Institute of Directors of which he is now the Honorary President and Chairman Emeritus. He is now also serving as chairman of the Insurance Authority. Dr. Cheng currently holds directorships in Liu Chong Hing Investment Limited, China Resources Beer (Holdings) Company Limited, Towngas China Company Limited, Kader Holdings Company Limited, K. Wah International Holdings Limited, Guangdong Investment Limited, Tian An China Investments Company Limited and The Hong Kong and China Gas Company Limited, all of which are public listed companies in Hong Kong. Dr Cheng had ceased to be an independent non-executive director of ARA Asset Management Limited, a company formerly listed in Singapore. 09


China Mobile Limited Biographies of Directors and Senior Management Mr. Paul CHOW Man Yiu, GBS, SBS, JP Age 72, Independent Non-Executive Director of the Company, joined the Board of Directors of the Company in May 2013. He was appointed as the Chairman of the Nomination Committee in May 2016. He was the Chief Executive of the Asia Pacific Region (ex-Japan) of HSBC Asset Management (Hong Kong) Limited from 1997 to 2003, an executive director and Chief Executive of Hong Kong Exchanges and Clearing Limited from April 2003 to January 2010, the Chairman of Hong Kong Cyberport Management Company Limited from June 2010 to May 2016, an independent non-executive director of Bank of China Limited from October 2010 to August 2016 and a member of the Advisory Committee on Innovation and Technology of the Government of the Hong Kong Special Administrative Region from April 2015 to March 2017. Mr. Chow currently serves as an independent nonexecutive director of Julius Baer Group Ltd. and Bank Julius Baer & Co. Ltd, and CITIC Limited. Mr. Stephen YIU Kin Wah Age 58, an Independent Non-Executive Director of the Company, joined the Board of Directors of the Company in March 2017. He was appointed as the Chairman of the Audit Committee in May 2018. Mr. Yiu is currently a Non-Executive Director of the Insurance Authority, an Independent Non-Executive Director of Hong Kong Exchanges and Clearing Limited and ANTA Sports Products Limited, a Council member of The Hong Kong University of Science and Technology, and a member of the Exchange Fund Advisory Committee of The Hong Kong Monetary Authority and ICAC Complaints Committee. Mr. Yiu joined the global accounting firm KPMG (“KPMG”) in Hong Kong in 1983 and was seconded to KPMG in London, the United Kingdom from 1987 to 1989. Mr. Yiu became a partner of KPMG in 1994, served as the Partner in Charge of Audit of KPMG from 2007 to 2010, and served as the Chairman and Chief Executive Officer of KPMG China and Hong Kong as well as a member of the Executive Committee and the Board of KPMG International and KPMG Asia Pacific from April 2011 to March 2015. Mr. Yiu formerly also served as a member of the Audit Profession Reform Advisory Committee and the Mainland Affairs Committee of the Hong Kong Institute of Certified Public Accountants. Mr. Yiu is a fellow member of the Association of Chartered Certified Accountants, a fellow member of the Hong Kong Institute of Certified Public Accountants and a member of the Institute of Chartered Accountants of England and Wales. Mr. Yiu received a professional diploma in accountancy from The Hong Kong Polytechnic (now known as The Hong Kong Polytechnic University) in 1983, and holds a master’s degree in business administration from the University of Warwick in the United Kingdom. 10


Annual Report 2018 Biographies of Directors and Senior Management Dr. YANG Qiang Aged 57, Independent Non-Executive Director of the Company, joined the Board of Directors of the Company in May 2018. Dr. Yang is currently the Chief AI Officer of WeBank Co., Ltd., the Founding Director of the Big Data Institute, the Chair Professor and former New Bright Professor of Engineering and the former Head of the Department of Computer Science and Engineering of the Hong Kong University of Science and Technology (“HKUST”), as well as the Chief Scientific Consultant to Shenzhen Qianhai 4Paradigm Data Technology Co., Ltd. Dr. Yang had served as, among other posts, an Assistant Professor and a Tenured Associate Professor at the Department of Computer Science of the University of Waterloo in Canada from September 1989 to August 1995, a Tenured Associate Professor, an Industrial Research Chair and a Full Professor at the School of Computing Science of Simon Fraser University in Canada from August 1995 to August 2001, and an Associate Professor, a Full Professor and an Associate Head of the Department of Computer Science and Engineering of HKUST from August 2001 to June 2012. From 2009 to November 2014, Dr. Yang was also a Technical Consultant to the 2012 Laboratories of Huawei Technologies Co., Ltd. (“Huawei”) in charge of big data research, and served as, among other posts, the Founding Head of Huawei’s Noah’s Ark Research Lab and the Head of Huawei’s Big Data Committee. Dr. Yang received a bachelor’s degree in astrophysics from Peking University in 1982, master’s degrees in astrophysics and computer science from the University of Maryland, College Park in the United States in 1985 and 1987 respectively, and a doctor’s degree in computer science from the University of Maryland, College Park in 1989. 11




5G+ 4G Long-term Co-existence Promoting Synergistic Development


China Mobile Limited Chairman’s Statement I was honoured to be appointed Chairman of China Mobile in March 2019. I feel grateful for the trust of the Board, and the support of our shareholders, customers and the wider community. At the same time, I am well aware of the great responsibility bestowed on me and am keen to live up to the expectations of all our stakeholders. In the past few years, China Mobile has taken solid steps to implement our “Big Connectivity” strategy and made substantial progress. We boast the largest connection scale in the world and industry-leading profitability. Our development in 5G also places us firmly among the top operators in the world. This has ensured that we have a solid foundation in place to support our development into a global telecommunications operator defined by our cutting edge in digital innovation and helping us achieve a level of competitiveness that places us among the industry leaders from around the world. The technology revolution and industry transformation continue in waves. Beyond this, information and communications technology (ICT) is also facing an intergenerational transition as attention turns to the potential of 5G. The shift towards innovative and integrated technological application across industries is another factor driving the intelligent evolution of society. The future of 5G is unveiling itself over the horizon, giving us a path and direction of development. Planning our way ahead, I and my team here at China Mobile will seize every opportunity presented to us and steel ourselves for the inevitable challenges. Taking this course will enable us to sustain the quality development of the Company and be pioneers on the exciting journey to build a smart society. 14


Annual Report 2018 15 Chairman’s Statement 15


China Mobile Limited Chairman’s Statement Dear Shareholders, 2018 was a challenging year for telecommunications operators. Competition amongst peers changed in characteristics as products and services have become homogenized while cross-sector challenges have intensified. The value of traditional telecommunications business rapidly diminished, coupled with multiple challenges from a complex and rapidly-changing policy environment. In order to counter market competition, overcome the major obstacles in the ongoing reforms and enhance management, we continued to encourage everyone across the Company to take the “Big Connectivity” strategy even further and implement the integrated development of the “four growth engines”. Our concerted efforts and hard work have seen tangible results as we have established a clear direction of development for ourselves, delivering stable and healthy growth in operating results and continuously enhancing long-term sustainability. The combination of these hardearned achievements is the foundation for our strength in the future. OPERATING RESULTS China Mobile recorded operating revenue of RMB736.8 billion for the 2018 financial year, up by 1.8%1 compared to 2017. Amongst which, telecommunications services revenue amounted to RMB670.9 billion, or growth of 3.7%1 year-on-year. The structure of the “four growth engines” continued to improve, where the respective proportions of revenues from household, corporate and emerging businesses to the Company’s total revenue have increased. Total number of connections reached 1.633 billion, amongst which, 925 million were mobile connections. The number of wireline broadband connections leapt to 157 million with a robust expansion of connection scale. The Company also had an industryleading number of IoT (Internet of Things) smart connections totalling 551 million. Our main focus in 2018 was on further reducing costs and increasing efficiency, and our efforts yielded favourable results with a reduction in unit cost. Profit attributable to equity shareholders reached RMB117.8 billion, or RMB5.75 per share and an increase of 3.1% year-on-year, aligning our profitability over the years with the top operators internationally. The Board recommends a final dividend payment of HK$1.391 per share for the year ended 31 December 2018. Together with the interim dividend payment of HK$1.826 per share, the total dividend payment for the 2018 financial year increased by 0.4% year-on year and amounted to HK$3.217 per share. Full-year dividend payout ratio increased to 49%. Taking into consideration the Company’s financial position, its ability to generate cash flow and its future development needs, the Company will maintain a stable dividend payout ratio in 2019 and strive to create greater value for shareholders. The Board believes that our industry-leading profitabilityand ability to generate healthy cash flow will provide sufficient support for the Company’s future development and create favourable returns for our shareholders. BUSINESS TRANSFORMATION YIELDING SIGNIFICANT RESULTS We have furthered the integrated development of the “four growth engines” by maintaining our leadership in the personal mobile market while expanding our household, corporate and emerging businesses. This has resulted in an effective enhancement to our business structure and a shift of revenue growth streams. Faced with ever-escalating peer competition in the personal mobile market, we have moved swiftly to adjust our business strategy and seized the initiative to optimize our product portfolio. We have launched precision marketing initiatives and streamlined our service and management mechanisms, which resulted in enhanced customer satisfaction and business momentum. We maintained our market leadership with the market shares in terms of 4G customer net addition and data traffic increasing to about 50% in the fourth quarter of 2018. The total number of 4G customers reached 713 million in 2018, amongst whom 380 million were VoLTE (Voice over LTE) customers. Total handset data traffic increased by 182.1% year-onyear and in December 2018 4G DOU (average handset data traffic per user per month) stood at 6.6 GB. Mobile ARPU (average revenue per user per month) reached an industry-leading level of RMB53.1. The revenue growth rates are derived on a comparable basis after applying the new revenue standard (IFRS/HKFRS 15) to the revenue figures of last year pursuant to a static calculation. 16


Annual Report 2018 Chairman’s Statement We put a special focus on enhancing quality, speed and value for customers and furthering the development of our digital household business as we strive to cement ourselves as the recognized premium broadband provider. Our efforts have fuelled strong growth momentum in the household market. With a net increase of 37.42 million, the number of household broadband customers totalled 147 million and accounted for a market share of 41.5%. The number of customers for our digital set-top box “Mobaihe” reached 96.81 million, or a penetration rate of 65.9% in the household market. Household broadband blended ARPU reached RMB34.4, up by 3.2% year-on-year. The Company focused on the key sectors we had identified to develop our corporate business at the same time as being mindful of the massive addressable market from informatization. This strategy has greatly strengthened our competitiveness in the market. The number of corporate customers increased to 7.18 million, or year-on-year growth of 19.2%, bringing a 2.2 percentage point increase to our revenue market share in corporate telecommunications and informatization services, which stood at 38.5%. In order to grow our business by extending into verticals, we stepped up our business development efforts across major markets, broadening our one-stop service offering. In 2018, we had 11 industry applications that generated individual annual revenue of more than RMB100 million. Total number of connections reached 1,633 million, amongst which, the numbers of mobile, wireline broadband and IoT smart connections were 925 million, 157 million and 551 million respectively 17


China Mobile Limited Chairman’s Statement Our innovative operating model has assisted us to capitalize on emerging business opportunities by focusing on key products and achieving growth through high scalability. We have recorded a net addition of 322 million in IoT smart connections, boosting the total number of connections to 551 million. In some provinces and cities across China, the number of machine-tomachine connections has exceeded that of human-tohuman connections. Viewership of more than 4.3 billion was recorded for matches broadcasted on “MIGU Video” during the FIFA World Cup. Revenue of “MIGU Reading” exceeded RMB2.3 billion while the transaction value of our mobile payment business “and-Wallet” exceeded RMB2.5 trillion. ONGOING ENHANCEMENT TO SUSTAINABILITY The long-term development of the Company depends on our ability to draw on our established core strengths. Therefore, we placed great importance on upgrading our network infrastructure, enhancing innovative technology and boosting our research and development capability. The furtherance of open collaboration and internal reforms is also key to our sustainable growth. Our network coverage and quality continued to improve, with the number of 4G base stations increasing to 2.41 million. To effectively respond to the fast-growing demands for 4G handset data traffic, we have built a network covering more than 97.8% of administrative villages in China. Continuous coverage of our NB-IoT (Narrow band-Internet of Things) network has been extended to reach areas at township level and above across China. All our household broadband services are equipped with access capability of 100Mbps or above. We have also enhanced customer perception by the more efficient deployment of CDN (Content Delivery Network) edge nodes. Buoyed by our ongoing work to lay international submarine cables, cross-border terrestrial cables and PoPs (Points of Presence), we managed to achieve significant enhancements to our network capabilities, which is central to the progressive formulation of our international network comprising Information Highway (connectivity resources), Information Station (PoPs) and Information Island (data centres). Research on key technologies and technology standards has yielded encouraging developments. We led the formulation of 5G architecture standards and contributed a large number of proposals on R15 standard setting, which in this aspect put us ahead of other global telecommunications operators. The Company also served important roles in a number of international organizations for standard formulation, which have increased our influence in international information and communications discourse. We have steadily pushed ahead on network evolution and upgrade, and are proactively conducting tests on the 5G network and trials on 5G business applications. We accelerated the development of NFV (Network Function Virtualization) and SDN (Software Defined Networking) and put our virtualized NB-IoT core network into commercial use. We have actively built out the infrastructure for “5G+ edge computing” smart connection and continued to drive the application of our new technologies such as cloud computing, big data and artificial intelligence on a large scale. We continued to promote open collaboration with other industry participants. Initiatives have included furthering the roll-out of the “1-3-9 Collaborative Plan” to drive the development of one new network, three industry alliances and nine capability applications. The capability sharing platform, which was part of this collaboration initiative, was recognized as a national model of shared economy platform in China. The capability applications on the platform were deployed more than 800 billion times cumulatively while more than 300,000 other applications were incubated on it. In order to achieve synergy across industries, we have made equity investments to enable collaborative development. We have initiated the 5G Joint Innovation Industry Fund to facilitate endto- end 5G industry adoption. We have made favourable progress in a number of strategic co-operations with local governments and large corporations to develop innovative 5G applications. This has included “5G+ High Definition Videos”, and applications for key verticals such as transportation and healthcare. Further reforms have also produced positive results such as centralized IT systems. We have taken steps to consolidate our IT capabilities and seen a clear improvement in the response rate for IT support across the network. We have established three industrial research institutes in Shanghai, Xiong’an New Area in Hebei Province and Chengdu in Sichuan Province to promote professional operations in businesses such as e-commerce and location services, further streamlining the organizational structure relating to our digital services. We have established centralized operation centres, developed a multi-layer online and offline marketing system, and launched an all-round innovative shared service model, all of which have enhanced 18


Annual Report 2018 Chairman’s Statement our management structure and operating efficiency. Reforms have also been extended to and sped up in our subsidiaries, three of which – MIGU Co., Ltd., China Mobile Group Device Co., Ltd. and China Mobile Online Services Co., Ltd. – were selected by China’s State-owned Assets Supervision and Administration Commission following its initiative of implementing state-owned enterprise reforms in certain selected subsidiaries of central enterprises and local state-owned backbone enterprises (the “Double-hundred Action”). CORPORATE GOVERNANCE We always uphold the principles of integrity, transparency, openness and efficiency and fully complied with all applicable listing rules to ensure good corporate governance. We have been enhancing the composition of our Board membership, ensuring diversity and fully leveraging the experience and expertise of our independent non-executive directors, so as to introduce ongoing improvements to our governance structure and decisionmaking mechanisms. Throughout the Company there is a commitment to enhancing compliance management and ensuring best practices in our daily operations through initiatives such as the “Safeguarding Compliance” programme. We further reinforced the legal accountability of the first responsible persons as we improve our regulatory system to ensure that the Company complies with the law. We are dedicated to enhancing our risk and internal control systems, increasing the level of competence in risk detection and management. Further strengthening the supervision over key issues and critical areas, such as procurement and capital deployment, allows us to more effectively mitigate business risks and close any gaps in our business management processes as we strive for sustainable and quality operations. SOCIAL RESPONSIBILITY AND ACCOLADES During 2018 the Company made a substantial effort to fulfil our social responsibility, making use of our expertise to satisfy more people’s needs as they pursue a better life. To play our part in narrowing the digital divide and alleviating poverty, we continuously improved mobile telecommunications and broadband networks in villages and remote areas of China. As of the end of 2018, we have covered a total of 546,000 administrative villages with 4G services and 417,000 administrative villages with wireline broadband services. At the same time, we have proactively launched tariff concession plans in targeted poverty-alleviation efforts for people in need. Our proprietary Targeted Poverty Alleviation System (TPAS) won the top prize under the E-government action line at the 2018 World Summit on the Information Society (WSIS). As of the end of 2018, the system has been adopted by 71 cities and counties in 14 provinces across China, covering 8.11 million disadvantaged individuals. The Company has successfully completed 4,899 emergency communications missions in 2018, participating in coordinated disaster and emergency r e s c u e e f f o r t s a n d e n s u r i n g u n i n t e r r u p t e d communications during major incidents. We have taken the initiative to combat evolving telecommunications frauds and cybercrime in order to create a healthy and safe industry environment. To protect our customers’ privacy, we launched various services such as “and- Multiples” (a service feature allowing an individual customer to have multiple numbers on one SIM card) and “Intermediate Number” (a service feature “encrypting” the numbers of two parties during business transactions). 19


China Mobile Limited Chairman’s Statement In terms of energy saving and emissions reduction, we continued to implement the “Green Action Plan” to reduce our carbon footprint. During the year, the overall energy consumption per unit of information flow further reduced by 57% compared to that of 2017. We advocated environmental protection among our suppliers, with the rate of eco-friendly packaging usage on new devices extending to 67%. China Mobile is the only company from Mainland China to be included in the CDP (Carbon Disclosure Project) managed global Climate A List for three consecutive years. Across the Company charitable projects were undertaken to help people in need. The “Blue Dream” education project has provided professional training for 115,782 primary and secondary school principals cumulatively in rural villages across Central and Western China. The “Heart Caring” campaign, since its inception, has sponsored the surgery of 5,358 impoverished children with congenital heart disease. This campaign won the “Outstanding Philanthropy Programme” award at the 10th China Philanthropy Awards. The “MIGU Run” philanthropy platform established by China Mobile’s innovative business unit has attracted participation from 4.5 million people to date. Our achievements have received wide recognition. To name a few, we were a Platinum Award winner at The Asset Corporate Awards 2018 and received Asia’s Icon on Corporate Governance award and Asia’s Best Investor Relations Company award from Corporate Governance Asia. We were top of the list of CSR Development Index – Chinese Enterprises in Ten Years (2009-2018) in the Research Report on Corporate Social Responsibility released by the Chinese Academy of Social Sciences. Moody’s and Standard & Poor’s maintained our corporate credit ratings at the same level as China’s sovereign ratings in 2018. REGULATORY POLICIES In 2018, in response to the government’s “speed upgrade and tariff reduction” requirements, we have completely cancelled domestic data “roaming” tariffs while lowering the tariffs for handset data, household broadband and dedicated corporate Internet access. This has brought benefit to a cumulative total of 1.93 billion customer engagements and 2.888 million small and medium-sized enterprises. As a result of the wider application of new technologies, we have managed to continuously reduce network costs which, in turn, enabled us to provide quality and value-for-money information services to more customers. We were able to effectively balance the requirements of “reducing tariffs” by increasing usage volume and maintaining value with the adoption of innovative operating models as well as enriching our product portfolio to scale up the level of sales despite a smaller profit margin. To promote the development of “Internet+” and “Digital China”, the Chinese government has decided to continue to impose the “speed upgrade and tariff reduction” requirements in 2019. This year will also see the pilot launch of gigabyte broadband connections in urban areas and reforms undertaken to upgrade long-distance education and healthcare networks. The authorities will also drive an upgrade in capacity for mobile network base stations. Broadband tariffs for small and medium enterprises will further reduce by 15% on average while tariffs for handset data will similarly see average reductions of more than 20%. Mobile Number Portability will also be implemented across the country. China Mobile will continue to implement the “speed upgrade and tariff reduction” regulatory requirements, and at the same time, leverage our established advantage in network quality. We will also strive to integrate further our businesses and promote product innovation. These efforts will allow us to maintain the growth momentum particularly through an acceleration in the Company’s pace of digital transformation. 20


Annual Report 2018 Chairman’s Statement INDUSTRY REFORMS The macro-economic environment and the industry landscape are currently undergoing “gear-changes” on four fronts. Overall, the economy is shifting from fastpaced expansion to high quality growth. Information and communications technology (ICT) has rapidly developed from being purely the enabling infrastructure to become a core force leading the wider economic growth. The fundamental telecommunications business is also shifting its dynamics from economies of scale to value creation by maximizing the connections and capabilities already in place. Finally, competition in the information and communications market has been changing fast. The winning factors now lie not only in the business fundamentals but also in the suite of capabilities. Against this backdrop, the Company will be presented with opportunities as well as facing challenges. As development accelerates further, 5G will become the key infrastructure to promote economic and social digitalization. The integration and innovation in artificial intelligence and big data will continue, driving the rapid evolution of connectivity, perception and intelligent technology, which will become an omnipresent reality. The Internet will expand from a technology that focuses on individual consumption to the Internet of Industries with industrial uses at the forefront. All these factors will present us with unique opportunities at this point in time to boost connectivity scale, strengthen connectivity application and optimizse connectivity service. The opposing force to this dynamic arises as the Company faces serious challenges related to technology upgrade and market competition. The revolutionary 5G network architecture will increase the complexity of both operations and management. Inevitably there will be some weaker parts in the industry chain and vertical application during the early stages at the very least. Business and operating models will require change. The homogenized offerings amongst competing telecommunications operators will continue to give rise to new dynamics and areas of competition. Facing this paradigm, ICT industry players equipped with broadbased technology are striving to dominate key nodes of the industrial value chain, forming a multi-faceted business landscape with players from both within the industry and cross-sector vying competitively. The Company will seek to anticipate the new trends in the macro-environment and industry development, making pre-emptive moves to seize the new opportunities arising with the transition between economic growth drivers. We will also plan and prepare to tackle future difficulties and challenges. OUTLOOK FOR 2019 As we move into the new year, we will continue to take thoughtful actions and practical steps, and have every confidence in maintaining our strategic focus on accelerating innovation and effective operations. These efforts, together with our adherence to openness and collaboration, will lead to new competitive strengths that support our high-quality development. First, we will further integrated development to reinforce our industry leadership. Responding to the changes in customers’ consumption behaviours and aspirations that lead to more demand, we will focus on the harmonized and balanced development of the “four growth engines”, in parallel with striving to increase revenue. We will leverage the synergy brought about by the interactions amongst our personal mobile, household, corporate and emerging businesses to reinforce customer touch points and speed up the integration of users, businesses and services. The keen focus on industry collaboration will not only lead to the creation of an integrated ecosystem with key partners from different areas such as digital content, vertical industry chains and international business, but also enable us to fully leverage the complementary strengths amongst these partners. Secondly, we will work to reduce costs, increase efficiency and scale up efforts to exercise delicate management. Following a policy of prudent cost control and adopting flexibility in a suite of asset management tools including disposal, restructuring and revitalization of resources, we will improve our asset operation quality and optimize resource efficiency. It will be possible to significantly reduce operational and maintenance costs by fully leveraging smart technology. We will speed up the development of digital channels and shut down underperforming and ineffective physical retail outlets. We will increase internal synergies throughout the Company to enhance our centralized operational 21


China Mobile Limited Chairman’s Statement capability and accelerate our response speed. We will strengthen our capabilities in risk prevention, putting in place sound procedures and mechanisms that cultivate a culture of governance clearly in line with the rule of law. Thirdly, we will enhance our customer service in order to obtain an industry-leading customer satisfaction rate. We will continue to strengthen customers’ perception of our 4G network, enhance our household broadband and dedicated corporate lines, and upgrade product quality to serve the changing needs of customers. We aim to build an operations and development system driven by the “four growth engines”, enhancing both the service levels to address our customers’ demands and the areas that need more attention. We will accelerate the rebranding of our “GoTone” product, making full use of its brand advantages to strengthen customer retention and maintain customer value. Fourthly, our innovation-led strategy will drive business transformation in a systematic way. We will continue to conduct tests on the 5G network and perform trials on business applications to ensure the pre-commercial launch of 5G services this year. We aim to provide direction and leadership for 5G development, exploring suitable 5G products and business models with industry partners. To build a strong foundation for the ongoing transformation towards an intelligent network, we will speed up the pace of network upgrades and strengthen our core capabilities. The Company will expand into new retail business and strive for the large-scale development of our own branded intelligent hardware. We will build up our capabilities in key business areas and develop an open and shared innovative ecosystem. In order to realize a win-win situation, we will continue to enhance the collaborative opening-up efforts, reinforcing industrial cooperation, investment planning and international expansion. Fifthly, deep reforms will infuse vitality into our organization and systems. The IT reform will help us centralize and optimize our overall IT capability. With regard to our digital business, we will develop solutions for verticals and build our professional operational ability in e-commerce. We will actively explore new operating models to further optimize and find innovative approaches to areas such as network maintenance and market operation. We were honoured to be selected as a showcase in developing China’s world class corporations, and will take this opportunity to increase engagement and infuse new energy into our organization by enhancing performance-related incentive and appraisal mechanisms. The Company is committed to implementing reforms in our subsidiaries and turning them into high-potential enterprises, as part of the “Double-hundred Action”. 2019 marks the starting point of our march into an information society powered by 5G. It is also a banner year in which we strive to realize the “Big Connectivity” strategic goal. The Company is determined to live up to the tremendous trust bestowed upon us by investors and shareholders by achieving ever-stronger operating results. We will strive to achieve more than 2.0 billion connections, favourable growth in telecommunications services revenue and, on a comparable basis2, stable-torising growth in profit in 2019. These targets are based on the assumption that there will be no unexpected changes to the regulatory environment in 2019. 2 “Profit on a comparable basis” : refers to net profit after excluding the impact of the one-off gain resulting from the public listing of China Tower Corporation Limited and the new accounting standard on leasing. 22


Annual Report 2018 Chairman’s Statement ACKNOWLEDGEMENT I would like to take this opportunity to express my sincere gratitude to Mr. Shang Bing, who has recently retired from the role of Chairman. During his service, Mr. Shang Bing made tremendous contribution in his leadership of the Company and achieved remarkable progress, leading the Company to achieve robust growth in the 4G era while laying a solid foundation for the Company’s 5G development. On behalf of the Board, I thank Mr. Shang Bing for his unequalled legacy to China Mobile. We would not have achieved what we have without the hard work and contribution of all our staff, the longstanding support of our customers and shareholders, partnership from all industry participants, the trust from the regulatory authorities, and the confidence bestowed upon us by members of the community. On behalf of the Board, I would like to extend my sincere thanks to all of them. We will continue to work towards our goal of becoming the “world’s leading operator in digital innovation”, striving to build a first-tier global enterprise with international competitiveness and continuing to create greater value and returns for our shareholders, customers, staff and the wider community. Yang Jie Chairman Hong Kong, 21 March 2019 23 Annual Report 2018 Chairman’s Statement ACKNOWLEDGEMENT I would like to take this opportunity to express my sincere gratitude to Mr. Shang Bing, who has recently retired from the role of Chairman. During his service, Mr. Shang Bing made tremendous contribution in his leadership of the Company and achieved remarkable progress, leading the Company to achieve robust growth in the 4G era while laying a solid foundation for the Company’s 5G development. On behalf of the Board, I thank Mr. Shang Bing for his unequalled legacy to China Mobile. We would not have achieved what we have without the hard work and contribution of all our staff, the longstanding support of our customers and shareholders, partnership from all industry participants, the trust from the regulatory authorities, and the confidence bestowed upon us by members of the community. On behalf of the Board, I would like to extend my sincere thanks to all of them. We will continue to work towards our goal of becoming the “world’s leading operator in digital innovation”, striving to build a first-tier global enterprise with international competitiveness and continuing to create greater value and returns for our shareholders, customers, staff and the wider community. Yang Jie Chairman Hong Kong, 21 March 2019 23


China Mobile Limited Corporate Recognitions 24


Annual Report 2018 Corporate Recognitions 25



5G+ AICDE Convergence of New Information Technologies Providing Applications in More Diverse Forms and Varieties AICDE (AI, IoT, Cloud Computing, Big Data, Edge Computing) 27


China Mobile Limited Business Review The “Big Connectivity” strategy and integrated development of the “four growth engines” continued to play an overarching role in the Group’s master plan for the year 2018. Following this plan were the Group’s meticulous and steadfast efforts to introduce reforms, foster innovation and leverage operational synergy, which constituted a springboard for ongoing sustainable growth. Attesting to this, the Group concluded 2018 with stable and healthy operating performance, delivering favourable growth in revenue and net profit with all business lines presenting a positive momentum of development. KEY OPERATING DATA 2018 2017 Change % Mobile Business Customer Base (million) 925 887 4.3 Of Which: 4G Customer Base (million) 713 650 9.7 Net Additional Customers (million) 37.9 38.3 –1.1 Of Which: Net Additional 4G Customers (million) 63 114 –44.8 Average Minutes of Usage per User per Month (MOU) (minutes/user/month) 320 366 –12.5 Average Handset Data Traffic per User per Month (DOU) (GB/user/month) 3.6 1.4 166.2 Average Handset Data Traffic per 4G User per Month (DOU) (GB/user/month) 4.3 1.7 151.2 Average Revenue per User per Month (ARPU) (RMB/user/month) 53.1 57.7 –8.0 Broadband Business Wireline Broadband Customer Base (million) 157 113 39.0 Of Which: Household Broadband Customer Base (million) 147 109 34.2 Wireline Broadband ARPU (RMB/user/month) 33.5 35.1 –4.5 Household Broadband Blended ARPU (RMB/user/month) 34.4 33.3 3.2 Internet of Things (“IoT”) Business Smart Connections (million) 551 229 140.7 28


Annual Report 2018 Business Review OPERATING PERFORMANCE The Group continued to enjoy market leadership in 2018. Telecommunications services revenue reached RMB670.9 billion and the Group has achieved a further enhancement to its revenue structure, where the respective proportions of revenues from its household market, corporate market and emerging business to its total revenue have remarkably increased. 4G customer base has recorded a net addition of 63.14 million to reach 713 million. Handset data traffic has risen by 182.1% and handset DOU has reached 3.6GB, maintaining burgeoning growth. The Group’s broadband business has also reported a big leap, with the number of household broadband customers increasing by 34.2% to reach 147 million. The Group’s corporate market has also demonstrated an upsurge in competitiveness, with the corporate customer base reaching 7.18 million subsequent to a net addition of 1.16 million. In the meantime, the IoT business witnessed notable growth with the number of IoT smart connections registering a net addition of 322 million to reach 551 million. THE “FOUR GROWTH ENGINES” DELIVERING VISIBLE RESULTS The Personal Mobile Market In response to intense market competition, the Group has swiftly adjusted its operating strategy and seized the initiative, making full use of price elasticity. In addition to further enhancing its product portfolios to better match customer needs, the Group has adopted precision marketing and taken retention measures to targeted customers by making use of big data. These efforts have shown a beneficial effect on the Group’s customer service level. In the fourth quarter of 2018, the market shares of the Group’s 4G net-add customers and data traffic have both rallied to around 50%, suggesting that the Group has preliminarily reversed the market competitive trend in its favour and continued to maintain a leading position in the industry. In addition to effectively responding to market competition, the Group further ploughed on with its data business by launching innovative “data + contents + customer benefits” combo packages that spurred usage growth and rapidly boosted data traffic. In December 2018 alone, 4G handset customer DOU has increased by 171.1% year-on-year to exceed 6.6GB. The Group has also put a persistent effort to enhance high definition VoLTE (Voice over LTE) services and the number of VoLTE customers has rapidly increased to 380 million. Integrated development of the “four growth engines” Further refined revenue structure 29


China Mobile Limited Business Review The Household Market By consistently adopting a business development approach focusing on enhancing network speed, quality and value, the Group continued to boost broadband quality and crafted a high-quality brand image for this business line. Thanks to these efforts, the Group’s household market has maintained a robust growth momentum in general. Household broadband customer base has recorded a net addition of 37.42 million to reach 147 million, of which, the proportion of customers subscribing to products with bandwidth of 100Mbps or above has increased by 45 percentage points year-on-year to reach 67%. To increase customer loyalty and value, the Group has also worked further on cultivating the digital family’s ecology, strengthened broadband accessibility and forged ahead with the integrated development of an array of businesses including “Mobaihe” (a set-top box that provides high-definition video-on-demand service), “and-Mu” (a family surveillance camera) and “Smart gateway”. The number of “Mobaihe” customers has reached 96.81 million subsequent to a net addition of 39.56 million, and accounted for 65.9% of the total number of broadband customers. Household broadband blended ARPU has risen by 3.2% year-on-year to reach RMB34.4. The Corporate Market As a move to extend its foothold in the blue-ocean corporate market, the Group has forged ahead with plans to further strengthen its corporate products and operations, with a special focus on key industry sectors. The Group’s corporate market has demonstrated increased competiveness and its contribution to the Group’s overall revenue growth has gone up further. The revenue market share of the Group’s corporate telecommunications and informatisation service has increased by 2.2 percentage points to reach 38.5%. The revenues of the Group’s key products, dedicated line services and IDC, recorded RMB18.03 billion and RMB7.25 billion respectively. In the meantime, the Group has also scaled up efforts to develop vertical markets. Specifically, more than 180 million pieces of equipment were connected with the Group’s Industrial Internet cloud platform and a total of 83.95 million vehicles were connected with the Group’s Internet of Vehicles network. The Emerging Business The Group has redoubled its efforts to develop an innovative business model and craft key products. Revenue from the Group’s emerging business has posted a rapid increase and become a major contribution to the Group’s overall revenue growth. The Group has also scaled up efforts to promote full-fledged product lines. Illustratively, FIFA World Cup viewership on “MIGU Video” has totalled 4.3 billion at all available viewing channels. At the same time, “and-Wallet” recorded a total annual transaction amount of more than RMB2.5 trillion. Additionally, spurred by the Group’s initiatives to accelerate the development of IoT business, the number of IoT smart connections amounted to 551 million, of which, a total of 79.88 million were machine or equipment connections under the OneNET open platform. This massive scale has enabled OneNET to become one of the largest IoT platforms in the world in terms of the number of connections. Following measures with a view to expediting industry applications and proactively expanding cloud computing and big data businesses, revenue from ICT, cloud computing and big data businesses realised a robust expansion to RMB4.19 billion. 30


Annual Report 2018 Business Review CONTINUOUSLY IMPROVING QUALITY AND SERVICE The Group realizes that quality is the lifeline for a telecommunications operator and the ability to provide exceptional services constitutes a core competitive advantage that enables a company to achieve sustainable growth. While the Group has stepped up efforts to lift network quality for its 4G, household broadband, corporate markets in 2018, it continued to show unwavering devotion to providing exceptional customer services and place a relentless focus on its valued customers. The Group has redoubled its efforts to raise service standard and striven to establish itself as a telecommunications operator with long-lasting prestige and reputation. The Group has persistently taken measures to enhance customer perception. As to the mobile market, the download speed of its 4G network has shown a stable-to-rising development trend. In addition, a focus has been placed on handling customer complaints and customer satisfaction showed steady improvements. As to the broadband market, the Group has witnessed a continuous increase in the proportion of customers subscribing to products with high bandwidth and a persistent enhancement to customer perception on its household broadband services. Furthermore, the Group has set the seal on the standard service workflow that comprises installation, maintenance and service. The turnaround time for installing household broadband products and handling complaints has shortened by 13% and 15% respectively. As to international roaming services, the Group has provided roaming services in 260 locations and LTE roaming services in 181 locations around the world. As to telecommunications security, the Group is devoted to implementing measures to protect customer information security and privacy, and has proactively taken part in activities to curb new types of unlawful behaviours and crimes taken place in the telecommunications networks. It has also regularly performed assessments on customer information security and strengthened closed loop management on an ongoing basis, creating a healthy and safe telecommunications environment for customers. The Group has stepped up efforts to persistently enhance products and services. It has completely cancelled domestic data “roaming” tariff and endeavoured to promote large data packages. Innovative products which combine contents and customer benefits have been launched to better satisfy customer needs. The Group has also striven to rebrand “GoTone” and adopted a more sophisticated brand management strategy stressing customer segmentation, resulting in a reinforced sense of loyalty and sense of gain amongst customers. Meanwhile, the Group has undertaken further work to transform marketing channels, where more traditional services are rendered via intelligent, internet-based channels. A total of 62.3% of key business transactions are handled via electronic channels, up by 4.8 percentage points from last year. As an effort to promote experiential and interactive marketing and services, the Group has also assigned certain physical retail outlets to pilot marketing transformation by adopting the “new retail” model. 31


China Mobile Limited Business Review STRENGTHENING BUSINESS TRANSFORMATION Taking into account the development needs of the “four growth engines”, the Group has proactively sharpened its competences and persistently enhanced its long-term sustainability by taking a number of initiatives with a special focus on spreading the tenets of “centralised management, operational specialisation, market-oriented mechanism, lean organisation structure and process standardisation”. Network capability has scaled new heights. With a total of 3.85 million mobile base stations (inclusive of 2.41 million 4G base stations), the Group boasted a 4G network covering more than 99% of the population in mainland China. The Group ranked first in the industry in terms of 4G coverage rate in urban areas, 4G overall coverage rate on High Speed Rail and successful VoLTE call connection rate. It also enjoyed an industry-leading 4G Customer Net Promoter Score and 4G network satisfaction rate. The Group’s NB-IoT network has achieved continuous coverage in areas at township level and above across China. Meanwhile, the Group has also set its sights on further enhancing broadband network coverage and quality, where broadband network connection with at least 100Mbps bandwidth is now available for all household customers and FTTH penetration rate has reached 92%. The Group has also launched the “content leadership” campaign which championed the efficient deployment of CDN (Content Delivery Network) service nodes. CDN capacity built by the Group has increased by 63% and unified content distribution traffic has increased by 3.6 times. At the same time, the Group has expedited the planning and construction of the distribution networks for international and corporate dedicated lines, resulting in an appreciable increase in the capacity of distribution networks. The Group continued to bolster internal core capabilities. It has taken a leading role in formulating the 5G network architecture standards and actively put forward proposals on 5G standard. To put this into perspective, the Group managed to capture the first place in the “network” category and the second place in the “wireless” category amongst global telecommunications operators in terms of the number of R15 proposals submitted. Serving important roles in a number of international organisations for standard formulation and owning a leading number of patents amongst global telecommunications operators in the international 4G patent pool, the Group has also increased its influence in the international information and communications discourse. In addition, the Group has fully capitalized on its research and development on artificial intelligence, with its intelligent robot “Yi Wa” serving the largest number of monthly customer service cases in the world. The Group has also left a mark on nurturing proprietary cloud computing and big data products. Attesting to this, the Group has scaled up efforts to internally penetrate their operational use and externally redraw their market boundary, and achieved the highest percentage of internally-developed resource pools and platforms in the industry. Meanwhile, the Group has taken actions to internally develop, centralise and optimise its overall IT capability, making a clear improvement in the response rate for IT support across the network. The Group continued to foster open co-operation. It has comprehensively launched the “1-3-9 Collaborative Plan” and constructed a well-rounded open platform that provides a broad avenue for participants to share their capabilities using online and offline channels, encouraging domestic and overseas industry chain players to explore the frontiers of innovation. The Group has also expedited measures that allow open access to existing fully-fledged service capabilities, in particular, the telecommunications capability open platform has served more than 150,000 companies, and the centralised certification platform has, on average, processed 670 million accreditations daily. By initiating the establishment of 5G Joint Innovation Industry Fund, the Group has facilitated end-to-end 5G industry adoption. With a view to strengthening strategic co-operation with external parties, the Group has entered into several strategic cooperation agreements with 11 local governments, 15 sizable enterprises and organizations, and achieved positive progress in more than 200 joint projects focusing on selected key areas. 32


Annual Report 2018 Business Review CONTINUOUSLY ENHANCING INVESTMENT EFFICIENCY The Group is at a critical stage of development with a pressing need to undertake business transformation and build up network capability reserves. While the Group will focus on laying a solid foundation for the rapid growth of core businesses and securing market leadership in the next phase of development, it will remain committed to raising investment efficiency by sophisticated planning, targeted investments and sensible deployment of resources. Actual capital expenditure amounted to RMB167.1 billion for 2018, with capital expenditure to service revenue ratio falling by 1.7 percentage points from 2017. Capital expenditure has effectively supported business development and the Group continued to see rising investment efficiency. Capital expenditure was spent primarily for the purposes of strengthening 4G network capacity in targeted areas, boosting broadband quality and speed, reinforcing the corporate market, bolstering transmission, improving IT support and so forth. In order to satisfy the needs arising from the growth of the “four growth engines” and the forthcoming network evolution, the Group plans to spend a total capital expenditure of RMB149.9 billion for 2019 (excluding 5G precommercial use), representing a decrease of 10.3% from 2018. The total capital expenditure for 2019 (including 5G pre-commercial use) will be less than the total capital expenditure for 2018. Capital expenditure will serve for a variety of purposes which primarily include catering for the growth of 4G data traffic, raising broadband quality and speed, securing investments for the corporate market, laying a solid foundation for the Group’s transformational development and promoting network evolution and upgrades. The capital expenditure plan will be mainly supported by cash generated from operating activities. Central to the Group’s overarching plan is to make investments that allow the Group to stay at the market forefront, foster innovation, ensure growth and enhance efficiency. The Group will continue to make targeted investments and refine its investment structure, with a view to satisfying business development needs and striving to continuously lift resource utilization efficiency. 33


5G+ ECOLOGY Construct an Ecosystem Fully Assimilated into all Society Sectors



China Mobile Limited Financial Review In 2018, the Company further deepened the implementation of the “Big connectivity” strategy and the integrated development of the “four growth engines”, enhanced the differentiation of products and services, fully utilized price elasticity and stimulated customer demand. In the face of severe adversities resulting from stiffening market competition, a rapid decline in data value and a significant reduction in revenue subsequent to the cancellation of data “roaming” charges, the Group has made prompt adjustments to its business strategy, proactively responded to market competition, further consolidated its market share and customer base, and improved the network and service quality. Following its endeavours to increase revenue and reduce costs, the Group’s annual results achieved steady growth. The Company has continued to actively promote its low-cost, high-efficiency operation model, conducted resources utilization evaluation in key areas, and optimized its strategies, budget and performance-based salary management. The Group’s operational efficiency has remained favorable, thereby maintaining its profitability at the international first-class operators’ level and continuously creating value for shareholders. 201 8 201 7 Chang e Operating revenue (RMB million) 736,819 740,514 –0.5% (1.8%*) Revenue from telecommunications services (RMB million) 670,907 668,351 0.4% (3.7%*) Revenue from sales of products and others (RMB million) 65,912 72,163 –8.7% (–14.0%*) EBITDA (RMB million) 275,541 270,421 1.9% EBITDA margin 37.4% 36.5% 0.9pp Profit attributable to equity shareholders (RMB million) 117,781 114,279 3.1% Margin of profit attributable to equity shareholders 16.0% 15.4% 0.6pp Basic earnings per share (RMB) 5.7 5 5.5 8 3.1% * The revenue growth rates in brackets are derived on a comparable basis after applying the new revenue standard (IFRS/HKFRS 15) to the revenue figures of last year pursuant to a static calculation. Strive to reduce costs and raise efficiency Maintain favourable profitability 36


Annual Report 2018 Financial Review OPERATING REVENUE In 2018, the Company’s operating revenue reached RMB736.8 million, down by 0.5% compared to the previous year, of which revenue from telecommunications services was RMB670.9 billion, up by 0.4% compared to the previous year. After applying the new revenue standard (IFRS/HKFRS 15) to the revenue figures of last year pursuant to a static calculation, the corresponding growth rate of operating revenue and telecommunications service revenue stood at 1.8% and 3.7%, respectively, on a comparable basis. The cancellation of domestic data “roaming” charges, which has been implemented since July 2018 in compliance with the state’s requirements, has posed a significant impact on the Group’s revenue. In addition, the increase in competition has led to a rapid decline in data value. The growth in the Group’s telecommunications services revenue has been under tremendous pressure. Revenue from voice services Due to the substitution effect of mobile Internet, the cancellation of handset domestic long-distances roaming tariffs and other factors, revenue from voice services continued to decline to RMB108.1 billion, down by an everaccelerating rate of 31.1% compared to the previous year, representing 16.1% of revenue from telecommunications services, down by 7.4 percentage points compared to the previous year. Revenue from data services Revenue from data services was RMB542.1 billion, up by 9.9% compared to the previous year, representing 80.8% of revenue from telecommunications services, up by 7.0 percentage points compared to the previous year. The Group’s revenue structure was further optimized. As a result of the Group’s continuous enrichment of its data products, enhancement of its precise marketing and deepening of its data traffic refined operation, data traffic business maintained a rapid growth. Revenue from wireless data traffic was RMB383.3 billion, up by 5.0% compared to the previous year, and was the significant engine of revenue growth. However, due to factors such as increasing competition and the cancellation of domestic data “roaming” charges, the revenue growth rate has declined. Wireless data traffic revenue as a proportion of revenue from telecommunications services rose to 57.1%. SMS/MMS services revenue was RMB28.8 billion, up by 2.6% compared to the previous year. The Group has actively established high-quality broadband products, enhanced network service quality and enriched the contents and applications for the household market, thereby maintaining a strong growth in the number of broadband customers. Revenue from wireline broadband services reached RMB54.3 billion, up by 36.6% compared to the previous year, and became the significant source of growth for the Group’s revenue. The applications and information services made a breakthrough, with a rapid growth in dedicated lines, IDC, Internet of Things, “MIGU Video” and other businesses. Revenue from applications and information services was RMB75.7 billion, up by 24.8% compared to the previous year, representing a further enlarged scale of operation. Revenue from sales of products and others In order to provide customers with a broader offering of terminals with more diversified functions, the Group actively promoted the sale of handsets through open channels, so its sales of handsets continued to decrease. Revenue from the sales of products and others was RMB65.9 billion, down by 8.7% compared to the previous year. The Group’s terminal sale business mainly serves to facilitate the expansion of the core telecommunications services, and hence its profit contribution is relatively low. 37


China Mobile Limited Financial Review OPERATING EXPENSES The Group continued to adhere to the principles of “forward-looking planning, effective resources allocation, rational investment and refined management” in cost control, strived to decrease expenditure and increase efficiency, reduced per unit business costs, and maintained a favorable profitability. In 2018, the Company’s operating expenses were RMB615.4 billion, down by 0.8% compared to the previous year. Operating expenses represented 83.5% of operating revenue. 2018 2017 RMB million RMB million Change Operating expenses 615,432 620,388 –0.8% Leased lines and network assets 47,470 46,336 2.4% Interconnection 20,692 21,762 –4.9% Depreciation 152,545 149,780 1.8% Employee benefit and related expenses 93,939 85,513 9.9% Selling expenses 60,326 61,086 –1.2% Cost of products sold 66,231 73,668 –10.1% Other operating expenses 174,229 182,243 –4.4% Leased Lines and Network Assets Leased lines and network assets expenses were RMB47.5 billion, up by 2.4% compared to the previous year and representing 6.5% of operating revenue. To maintain the Group’s advantages in the quality and coverage of its networks, the towers leasing fee increased continuously to RMB39.0 billion, up by 5.5% compared to the previous year. The leasing fees for TD-SCDMA network capacity were RMB0.4 billion, down by 61.6% compared to the previous year. The leasing fees of “Village Connect” assets were RMB2.2 billion, down by 11.2% compared to the previous year. Interconnection Interconnection expenses were RMB20.7 billion, down by 4.9% compared to the previous year and representing 2.8% of operating revenue. Depreciation Depreciation was RMB152.5 billion, up by 1.8% compared to the previous year and representing 20.7% of operating revenue. The growth rate of depreciation has slowdown mainly because the Group has made provisions for the impairment of 2G wireless network equipment in the previous year. Employee Benefit and Related Expenses Employee benefit and related expenses were RMB93.9 billion, up by 9.9% compared to the previous year and representing 12.7% of operating revenue. The Group continued to adjust and optimize its personnel structure, and reallocate its compensation and incentives in favor of primary frontline employees, leading to an increase in employee benefit and related expenses. Selling Expenses Selling expenses were RMB60.3 billion, down by 1.2% compared to the previous year and representing 8.2% of operating revenue. The Group actively promoted the transformation of its marketing model, enhanced its precision marketing to customers, and endeavored to improve the efficiency of its utilization of marketing resources. The ratio of selling expenses to telecommunications services revenue remained industry-lowest. Cost of Products Sold Cost of products sold was RMB66.2 billion, down by 10.1% compared to the previous year. With the Group’s promotion of the sale of handsets through open channels, cost of products sold decreased. 38


Annual Report 2018 Financial Review Other Operating Expenses Other operating expenses were RMB174.2 billion, down by 4.4% compared to the previous year and representing 23.6% of operating revenue. Among these, maintenance expenses, operating lease charges and utilities expenses totaled RMB102.7 billion, up by 1.3% compared to the previous year, due mainly to the expansion of assets scale and increase in resources prices. In order to support network transformation, business innovation and implementation, the Group increased its expenses in operation support, research & development and related cost, which reached RMB44.0 billion, up by 15.7% compared to the previous year. Administrative expenses such as conference, office, travelling and business entertainment expenses were under strict control, remaining flat. PROFITABILITY In 2018, the Group’s profitability continued to be industry-leading. Profit from operations was RMB121.4 billion, up by 1.0% compared to the previous year. EBITDA was RMB275.5 billion and EBITDA margin was 37.4%, up by 0.9 percentage points compared to the previous year. Profit attributable to equity shareholders was RMB117.8 billion and its margin was 16.0%. 2018 2017 RMB million RMB million Chang e Profit from operations 121,387 120,126 1.0% Other gains 2,906 2,389 21.6% Interest and other income 15,885 15,883 0.0% Finance costs 144 210 –31.4% Income from investments accounted for using the equity method 13,861 9,949 39.3% Taxation 35,944 33,723 6.6% Profit attributable to equity shareholders 117,781 114,279 3.1% CAPITAL STRUCTURE The Group’s financial position continued to remain steady. As at the end of 2018, total assets and total liabilities were RMB1,535.9 billion and RMB480.1 billion, respectively. The liabilities to assets ratio was 31.3%. The Group consistently and firmly adhered to its prudent financial risk management policies and maintained sound repayment capabilities. The effective interest coverage multiple was 959 times. As at 31 December 2018 As at 31 December 2017 RMB million RMB million Change Current assets 535,116 558,196 –4.1% Non-current assets 1,000,794 963,917 3.8% Total assets 1,535,910 1,522,113 0.9% Current liabilities 474,398 529,982 –10.5% Non-current liabilities 5,703 3,250 75.5% Total liabilities 480,101 533,232 –10.0% Non-controlling interests 3,404 3,245 4.9% Total equity attributable to shareholders 1,052,405 985,636 6.8% Total equity 1,055,809 988,881 6.8% 39


China Mobile Limited Financial Review FUND MANAGEMENT AND CASH FLOW The Group consistently and firmly adhered to its sound and prudent financial policies and stringent fund management systems and strived to maintain a healthy cash flow level, thereby ensuring the safety and integrity of its funds through its highly centralized management of investing and financing activities. Meanwhile, the Group continued to reinforce its centralized fund management efforts and made appropriate allocations of its funds, thereby enhancing the efficiency of funds utilization. In 2018, the Group’s cash flow remained healthy. Net cash inflow from operating activities, net cash outflow from investing activities and net cash outflow from financing activities were RMB206.2 billion, RMB212.2 billion and RMB57.8 billion, respectively. Free cash flow was RMB39.1 billion. As at the end of 2018, the Group’s cash and bank balances were RMB361.6 billion, of which 96.7%, 1.8% and 1.4% were denominated in Renminbi, U.S. dollars and Hong Kong dollars, respectively. The steady fund management and healthy cash flow provided a solid foundation for the sustainable healthy development of the Group. 2018 2017 RMB million RMB million Chang e Net cash inflow from operating activities 206,151 245,514 –16.0% Net cash outflow from investing activities 212,231 106,533 99.2% Net cash outflow from financing activities 57,820 108,231 –46.6% Free cash flow 39,076 67,981 –42.5% CREDIT RATINGS Currently, the Company’s corporate credit ratings are equivalent to China’s sovereign credit ratings, namely, A+/ Outlook Stable from Standard & Poor’s and A1/Outlook Stable from Moody’s. These ratings reflect that the Group’s sound financial strength, favourable business potential and solid financial management are highly recognized by the market. 40


Annual Report 2018 Corporate Governance Report Our goal has always been to enhance our corporate value, maintain our sustainable long-term development and generate greater returns for our shareholders. In order to better achieve the above objectives, we have established good corporate governance practices following the principles of integrity, transparency, openness and efficiency, and have implemented sound governance structure and measures. We have established and improved various policies, internal controls and other management mechanisms and procedure for the key participants involved in good corporate governance, including shareholders, board of directors and its committees, management and staff, internal auditors, external auditors and other stakeholders (including our customers, local communities, industry peers, regulatory authorities, etc.). In addition, as a company listed in both Hong Kong and New York, we also set forth in this report a summary of the significant differences between the corporate governance practices of the Company and the corporate governance practices required to be followed by U.S. companies under the NYSE’s listing standards. COMPLIANCE WITH THE CODE PROVISIONS OF THE CORPORATE GOVERNANCE CODE Our Board of Directors (the “Board”) is responsible for performing the corporate governance duties and setting out the terms of reference on corporate governance functions. Throughout the financial year ended 31 December 2018, the Company has complied with all other code provisions of the Corporate Governance Code (the “CP”) as set forth in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”), except that the Company and its directors (including independent non-executive directors (“INEDs”)) have not entered into any service contract with a specified term. All our directors are subject to retirement by rotation and re-election at our annual general meetings (the “AGM(s)”) every three years, and all newly-appointed directors are subject to re-election by shareholders at the first AGM after their appointment. We require our Board, the Board committees and other internal organs to strictly comply with their internal procedures in accordance with the principles of the CP. The following are the major respects in which China Mobile meets or exceeds the principles of the CP: More than one-third of the Board (4 out of 7 as of 31 December 2018) are INEDs. We disclose the interests of our directors and senior management in the shares of China Mobile and their confirmation of compliance with the “Model Code for Securities Transactions by Directors of Listed Issuers” set out in Appendix 10 to the Hong Kong Listing Rules (the “Model Code”). We publish the terms of reference and membership of the board committees on the Company’s and the HKEX’s websites. All members of our board committees are INEDs, with appropriate professional qualifications and/or expertise in business management, accounting and financial management, legal and compliance, artificial intelligence and scientific research, and so forth. China Mobile provides trainings to its directors and management on an annual basis. Each director discloses to the Company at the time of his appointment and then annually for any change of, his position holding in any public companies or organizations and other significant commitments. China Mobile publishes a Sustainability Report along with its annual report for twelve consecutive years, reporting its performance on ESG issues, which, in many respects, exceed the terms of the ESG Reporting Guide set out in Appendix 27 to the Listing Rules. 41


China Mobile Limited Corporate Governance Report We give more than 20 working days’ notice for our AGMs. Our CEO and CFO shall make annual written statements to the United States Securities and Exchange Commission (“US SEC”), and our management shall make annual back-up certifications to the Company, confirming their personal responsibilities with respect to a series of risk management and internal controls. Our Audit Committee conducts annual evaluation with respect to the effectiveness of risk management and internal control and procedures, and publishes its results. The Company and its operating subsidiaries have set up internal audit departments, which independently audit the business units of the Company and its operating subsidiaries. SHAREHOLDERS The Company is established in Hong Kong and owned by all shareholders. Our ultimate controlling shareholder is CMCC, which, as of 31 December 2018, indirectly held approximately 72.72% of the total number of issued shares of the Company. The remaining approximately 27.28% of the total number of issued shares were held by public investors. During 2018, there is no change in the Articles of Association (the “Articles”) of the Company, which are available on our website and the HKEXnews website. Shareholder Rights According to the Articles and the Companies Ordinance (Cap 622 of the Laws of Hong Kong) (the “Hong Kong Companies Ordinance”), shareholders holding the requisite voting rights may: (i) move a requisition to move a resolution at the AGM; (ii) requisition to convene an extraordinary general meeting (the “EGM”); and (iii) propose a person other than a retiring director for election as a director at a general meeting. Such details and procedures are available in our website. Shareholders may make inquiries in writing to the Board. The requisition must be deposited at our registered office at 60/F, The Center, 99 Queen’s Road Central, Hong Kong (the “Registered Office”), for the attention of the Company Secretary, providing sufficient contact information so that such inquiries can be properly handled. In addition, shareholders may also raise their concerns and suggestions in the Q&A session at our AGMs. I. Requisition to move a resolution at an AGM The Company holds a general meeting as its AGM every year, which is usually held in May. In accordance with section 615 of the Hong Kong Companies Ordinance, a requisition to move a resolution at the AGM may be submitted by: (i) any number of shareholders representing not less than one-fortieth (1/40th) of the total voting rights of all shareholders having the right to vote on that resolution at the AGM; or (ii) not less than 50 shareholders having the right to vote on that resolution at the AGM. The requisition must identify the resolution and must be signed by all the requisitionists. The requisition must be deposited at the Registered Office, for the attention of the Company Secretary, not later than: (i) 6 weeks before the AGM to which the request relates; or (ii) if later, when the Notice of AGM is dispatched. 42


Annual Report 2018 Corporate Governance Report II. Requisition to convene an EGM Shareholders holding not less than one-twentieth (1/20th) of the total voting rights of all the members having a right to vote at general meetings of the Company can deposit a requisition to convene an EGM pursuant to sections 566 to 568 of the Hong Kong Companies Ordinance. The requisition must state the general nature of the business to be dealt with at the meeting, and must be signed by the requisitionists. The requisition must be deposited at our Registered Office for the attention of the Company Secretary. III. Proposing a person other than a retiring director for election as a director at a general meeting If a shareholder wishes to propose a person other than a retiring director for election as a director at a general meeting, he/she must lodge a written notice to that effect at our Registered Office for the attention of the Company Secretary. The written notice must state the full name and biographical details of the person proposed for election as a director as required by Rule 13.51(2) of the Hong Kong Listing Rules and signed by such shareholder. A written notice signed by the person proposed for election as a director indicating his/ her willingness to be elected must also be lodged with the Company. The above shall be dispatched during a period of not less than seven days commencing no earlier than the dispatch of the notice of the AGM and at least seven days before the date of the AGM. For requesting the Company to circulate to shareholders a statement with respect to a matter mentioned in a proposed resolution or any other business to be dealt with at a general meeting, shareholders are requested to follow the requirements and procedures as set out in section 580 of the Hong Kong Companies Ordinance. Shareholder Value and Communication The Company’s established principle is to strive to create value and bring favorable returns for shareholders. The Company believes that our industry-leading profitability and ability to generate healthy cash flow will provide sufficient support for the Company’s future development while continuing to create higher value for our shareholders. Financial Year Ordinary Dividend Per Share Special Dividend Per Share Total Dividend Per Share Dividend Payout Ratio (HKD) (HKD) (HKD) 2018 final1 1.391 – 3.217 49% interim 1.826 – 2017 final 1.582 – 6.405 48%3 interim 1.623 3.2002 2016 final 1.243 – 2.732 46% interim 1.489 – 2015 final 1.196 – 2.721 43% interim 1.525 – 2014 final 1.380 – 2.920 43% i nterim 1.540 – 1 Pending approval at the AGM. 2 Being a special dividend of HK$3.200 per share in celebration of the 20th anniversary of our public listing. 3 Excluding the special dividend in celebration of the 20th anniversary of our public listing. To ensure the effective communications between the Company and its shareholders, we have formulated the communication policies with shareholders. We regularly review these policies to ensure its effectiveness. We have established an investor relations department, dedicated to provide necessary information and services to, and communicate with, shareholders and investors and other participants in the capital market, to maintain an active dialogue with them and make sure they are fully informed of the Company’s operation and development. 43


China Mobile Limited Corporate Governance Report We use a number of formal channels to report to shareholders on the performance and operations of the Company, particularly through our annual and interim reports. Generally, when announcing interim results, annual results or any major transactions in accordance with the relevant regulatory requirements, the Company arranges investment analyst conferences, press conferences and investor telephone conferences to explain the relevant results or major transactions to the shareholders, investors and the general public, listen to their opinions and address any questions that they may have. In addition, the Company adheres to the practice of voluntarily disclosing on a quarterly basis certain key, unaudited operational and financial data, and on a monthly basis the net increase in the number of customers on its website to further increase the Group’s transparency and to provide shareholders, investors and the general public with additional information so as to facilitate their understanding of the Group’s operations. The Company maintains close communication with investors through investment conferences, one-on-one meetings, video-conferencing and other forms of exchange interaction to timely deliver our operating conditions to the capital markets. In 2018, our management attended 15 investor conferences and 188 routine investor meetings, and met with an aggregate of nearly 1000 investors. We will continue our efforts to enhance the investor relations work. The Company also attaches high importance to the AGMs, and makes substantial efforts to enhance communications between the Board and the shareholders. At the AGMs, the Board always makes efforts to fully address the questions raised by shareholders. In 2018, we held our AGM on 17 May 2018 in the Conference Room, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong. The major items discussed and the percentage of votes cast in favor of the resolutions are set out as follows: 1. The review and consideration of the audited financial statements and the reports of the directors and auditors for the year ended 31 December 2017 (99.9966%); 2. The declaration of a final dividend for the year ended 31 December 2017 (99.9990%); 3. The re-election of Mr. SHANG Bing and Mr. LI Yue as executive directors (99.1494% and 99.5927%); 4. The re-appointment of PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP as auditors of the Group for Hong Kong financial reporting and US financial reporting purposes, respectively, and authorizing the Board to fix their remuneration (99.7210%); 5. To give a general mandate to the directors of the Company to buy back shares in the Company not exceeding 10% of the number of issued shares (99.9609%); 6. To give a general mandate to the directors of the Company to allot, issue and deal with additional shares in the Company not exceeding 20% of the number of issued shares (82.9642%); 7. To extend the general mandate granted to the directors of the Company to allot, issue and deal with shares by the number of shares bought back (83.1654%). All resolutions were duly passed at the 2018 AGM. As at the date of the AGM, the number of issued shares of the Company was 20,475,482,897 shares, which was the total number of shares entitling the holders to attend and vote for or against all the resolutions proposed at the AGM. No shareholders were required to abstain from voting on the resolutions proposed at the AGM. Hong Kong Registrars Limited, the share registrar of the Company, acted as scrutineer for vote-taking at the AGM. Poll results were announced at the meeting and on the websites of the Company and the HKEXnews on the day of the AGM. 44


Annual Report 2018 Corporate Governance Report Shareholders’ Calendar The following table sets out the tentative key dates for our shareholders for the financial year ending 31 December 2019. Such dates are subject to change pursuant to actual situations. Shareholders should note our announcements issued from time to time. FY 2019 Shareholders’ Calendar 21 March Announcement of final results and final dividend for the financial year ended 31 December 2018 12 April Upload of 2018 annual report on the websites of the Company and the HKEX 15 April Dispatch of 2018 annual reports to shareholders 22 May 2019 AGM End of June Payment of final dividend for the financial year ended 31 December 2018 Mid-August Announcement of interim results and interim dividend for the six months ending 30 June 2019, if any End of September Payment of interim dividend for the six months ending 30 June 2019, if any THE BOARD OF DIRECTORS AND THE BOARD COMMITTEES The Board of Directors The key responsibilities of the Board include, among others, formulating the Group’s overall strategies, setting management targets, monitoring internal controls and financial management, supervising the performance of our management, developing and reviewing the policies and practices of corporate governance (the Terms of Reference of its corporate governance function are available on the websites of our Company and the HKEXnews), while day-today operations and management are delegated by the Board to the executives of the Company. The Board operates in accordance with established practices (including those relating to reporting and supervision). The Board currently comprises seven directors, namely Mr. YANG Jie (Chairman), Mr. LI Yue (Chief Executive Officer) and Mr. DONG Xin (Chief Financial Officer) as executive directors, and Dr. Moses CHENG Mo Chi, Mr. Paul CHOW Man Yiu, Mr. Stephen YIU Kin Wah and Dr. YANG Qiang as INEDs. The list of directors and their role and function is available on the websites of our Company and HKEXnews. The biographies of our directors are presented on pages 8 to 11 of this annual report and on our website. Mr. SHANG Bing resigned from his positions as an Executive Director and the Chairman of the Company by reason of age with effect from 4 March 2019. Mr. Frank WONG Kwong Shing resigned from his positions as an Independent Non-Executive Director, the Chairman of the Audit Committee, a member of the Nomination Committee and a member of the Remuneration Committee of the Company by reason of retirement, with effect from 17 May 2018. Mr. SHA Yuejia resigned from his positions as an Executive Director and Vice President of the Company by reason of retirement with effect from the conclusion of the AGM on 17 May 2018. Each of Mr. Shang, Mr. Wong and Mr. Sha has confirmed that there is no disagreement with the Board and that there is no matter relating to his resignation that needs to be brought to the attention of the shareholders of the Company. As proposed by the Nomination Committee of the Company and after review and approval by the Board, Mr. YANG Jie was appointed as the Executive Director and Chairman of the Company with effect from 21 March 2019. Dr. YANG Qiang was appointed as an Independent Non-Executive Director and a member of the Audit Committee of the Company, with effect from 17 May 2018. The Company has not entered into any service contract with Mr. Yang Jie and Dr. Yang Qiang which provides for a specified length of service. They both will be duly subject to retirement by rotation and reelection at the AGMs of the Company in accordance with the Articles of Association of the Company. 45


China Mobile Limited Corporate Governance Report In addition, based on the work arrangements of the Board committees, after review and approval by the Board, Mr. Stephen YIU Kin Wah was appointed as the Chairman of the Audit Committee, a member of the Nomination Committee and a member of the Remuneration Committee of the Company, with effect from 17 May 2018. Board meetings are held at least once a quarter and as and when necessary. Directors are requested to declare their direct or indirect interests, if any, in any proposals or transactions to be considered by the Board at Board meetings and abstain from voting as appropriate. During the financial year ended 31 December 2018, the Board met on four occasions and the directors’ attendances at the meetings are as follows: Board of directors Audit committee Remuneration committee Nomination committee AGM INEDs Mr. Frank WONG Kwong Shing4 2 3 2 1 1 Dr. Moses CHENG Mo Chi 4 4 2 1 1 Mr. Paul CHOW Man Yiu 4 5 2 1 1 Mr. Stephen YIU Kin Wah 4 5 – – 1 Dr. YANG Qiang4 3 2 – – – Executive Directors Mr. SHANG Bing5 (Chairman) 4 – – – 1 Mr. LI Yue (CEO) 4 – – – 1 Mr. SHA Yuejia4 1 – – – 0 M r. DONG Xin (CFO) 4 – – – 1 4 With effect from 17 May 2018, (i) Mr. Wong resigned from his positions as an INED, the Chairman of our Audit Committee and a member of our Nomination Committee and Remuneration Committee; (ii) Dr. Yang was appointed as an INED and a member of our Audit Committee; and (iii) Mr. Sha resigned from his positions as an Executive Director and the Vice President of the Company (taking effect at the conclusion of the 2018 AGM held on that day). 5 With effect from 4 March 2019, Mr. Shang resigned from his position as an Executive director and Chairman of the Company. All board meetings and committee meetings were attended by the directors in person or by telephone conferencing. In 2018, the Board has met and discussed the matters relating to the annual results, interim results, dividend, renewal of continuing connected transactions, corporate strategic planning, annual investment status, adjustments to the composition of the Board and its committees, sustainability report and others. In addition, the Board reviewed and approved our quarterly results by means of written resolutions. The Board is responsible for performing the corporate governance duties and setting and reviewing the terms of reference on corporate governance functions, which you may review or download on our company website, as well as our corporate governance policies and practices. In 2018, the Board met and discussed our corporate governance report. 46


Annual Report 2018 Corporate Governance Report The Board has adopted a Board Diversity Policy since September 2013. In considering the composition of the Board, diversity will be considered from a number of perspectives in accordance with our business model and specific needs, including professional experience and qualifications, regional and industry experience, educational and cultural background, skills, industry knowledge and reputation, knowledge of the laws and regulations applicable to the Group, age, gender, ethnicity, language skills and length of service etc. Such perspectives under the Board Diversity Policy shall be taken into account in recommending appointment and re-election of directors and be monitored on an on-going basis. To ensure the timely disclosure of any change of directors’ personal information, we have set up a specific communication channel with each of our directors. There is no financial, business, family or other material relationships among members of the Board. The Company purchases a directors and officers’ liabilities insurance on behalf of its directors and officers and reviews the terms of such insurance annually. In compliance with the requirement of Hong Kong Listing Rules, the Company has received a confirmation of independence from each of our INEDs, namely Dr. Moses CHENG Mo Chi, Mr. Paul CHOW Man Yiu, Mr. Stephen YIU Kin Wah and Dr. YANG Qiang, and considers them to be independent. The Board is of the view that they not only are able to completely fulfill their responsibilities as an INED, but will also continue to play a role and contribute to our Board Committees. They being our INEDs will benefit the Company and all shareholders as a whole. The directors have disclosed to the Company the positions held by them in other listed public companies or organizations or associated companies, and the information regarding their directorships in other listed public companies in the last three years is set out in the biographies of directors and senior management on pages 8 to 11 of this annual report and on the Company’s website. All our directors confirmed that they have complied with Paragraph A.6.5 of the Corporate Governance Code with respect to directors’ training. Throughout the financial year ended 31 December 2018, we provided all our directors and management (including the newly-appointed director Dr. YANG Qiang) with a training in relation to updates on Hong Kong Listing Rules and HKEX’s guidance for boards and directors. The Company has adopted the Model Code set out in Appendix 10 to the Hong Kong Listing Rules to regulate the directors’ securities transactions. Save and except for the interests disclosed in the report of the directors on page 62 of this annual report, none of the directors had any other interest in the shares of the Company as of 31 December 2018. All directors have confirmed, following specific enquiry by the Company that they have complied with the Model Code during the period between 1 January 2018 and 31 December 2018. The directors of the Company are responsible for the preparation of the consolidated financial statements of the Company. The Company has received acknowledgments from the directors of their responsibility for preparing the financial statements and the declaration by the auditors of the Company about their reporting responsibilities. For the reporting responsibilities of the auditors with respect to our financial statements, please refer to the Independent Auditor’s Report on pages 69 to 74 in this annual report. THE BOARD COMMITTEES The Board currently has three principal board committees, which are the Audit Committee, the Remuneration Committee and the Nomination Committee, and all of which are comprised solely of INEDs. With the appointment and authorization of the Board, each of the board committees operates under its written terms of reference. The terms of reference of the board committees are available on the HKEXnews’ and the Company’s websites, and can be obtained from the Company Secretary upon written request. 47


China Mobile Limited Corporate Governance Report Audit Committee Membership The current members of the Company’s Audit Committee are Mr. Stephen YIU Kin Wah (Chairman), Dr. Moses CHENG Mo Chi, Mr. Paul CHOW Man Yiu and Dr. YANG Qiang, who are all INEDs. The members of our Audit Committee possess professional qualifications in areas including finance, accounting and laws and have many years of experience and expertise in finance, legal, regulatory, artificial intelligence and/or business management. Responsibilities The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is also authorised to seek any information it requires from any employee and to seek outside legal or other independent professional advice at the Company’s expense. The duties of our Audit Committee are to be primarily responsible for, among other things, making recommendations to the Board on the appointment, re-appointment and removal of external auditors, approving the remuneration and terms of engagement of external auditors, dealing with any questions of resignation or dismissal of such auditors; reviewing and monitoring external auditors’ independence and objectivity and the effectiveness of the audit process in accordance with applicable standards; developing and implementing policies on the engagement of external auditors to provide non-audit services; monitoring the integrity of financial statements of the Company and the annual reports and accounts, interim report and, where applicable, quarterly reports, and reviewing significant financial reporting judgments contained in them; and overseeing the Company’s financial reporting system, risk management and internal control procedures. Work Done in 2018 In 2018, the Audit Committee met on five occasions and the attendance of each member is disclosed on page 46 of this annual report. In addition, the Audit Committee met with the external auditors for four times in 2018 and one of such meeting was held without any executive directors being present. In 2018, the principal work performed by the Audit Committee includes: reviewed and approved the financial statements, annual results, report of the directors, financial review, etc. for the financial year ended 31 December 2017; reviewed and approved our 2017 Annual Report on Form 20-F, which was filed with the US SEC; reviewed and approved the 2017 conflict mineral report to be filed with the US SEC; reviewed and approved the interim results for the six months ended 30 June 2018; reviewed and approved the budgets and remuneration of the external auditors; reviewed and approved the assessment report on the disclosure controls and procedures; reviewed and approved the internal control assessment report; reviewed and approved the 2018 internal audit project plan and budget for external engagements; reviewed and approved the 2018 risk assessment report; reviewed and approved the 2017 evaluation report on accounting and financial reporting system; reviewed and approved the renewal of continuing connected transactions; reviewed and approved the report on compliance with relevant laws and regulations in 2017; and reviewed and approved various internal audit reports. In 2018, our Audit Committee has completed its review on risk management and internal control systems and their enforcement, and confirmed its discharge of its duties and responsibilities. 48


Annual Report 2018 Corporate Governance Report Remuneration Committee Membership The current members of the Company’s Remuneration Committee are Dr. Moses CHENG Mo Chi (Chairman), Mr. Paul CHOW Man Yiu and Mr. Stephen YIU Kin Wah, who are all INEDs. Responsibilities The duties of the Remuneration Committee are, among others, to make recommendations to the Board on the remuneration packages of individual executive directors and senior management, including benefits in kind, pension rights and compensation payments including any compensation payable for loss or termination of their office or appointment, and make recommendations to the Board on the remuneration of non-executive directors; to review and approve the management’s remuneration proposals with reference to corporate goals and objectives resolved by the Board from time to time; to review and approve compensation payable to executive directors and senior management for any loss or termination of office or appointment, and compensation arrangements relating to dismissal or removal of directors for misconduct to ensure that they are consistent with contractual terms; to ensure that no director or any of his associates is involved in deciding his own remuneration; to make recommendations to the Board on the policy and structure for remuneration of all directors, senior management and employees including salaries, incentive schemes and other share option schemes, and on the establishment of formal and transparent procedures for developing remuneration policy; to make recommendations to the Board on disclosure of directors’ remuneration in the annual report (if applicable) sent by the Board to the shareholders; to make recommendations to the Board annually on whether the shareholders shall be requested to approve the policies set out in the report on directors’ remuneration (if applicable) at the AGM. Work Done in 2018 In 2018, the Remuneration Committee met twice, during which the committee: considered and approved the remuneration package and other terms of appointment of the newly appointed directors, and resolved to approve the target and realized amounts of annual appraisal indicators of senior management. Nomination Committee Membership The current members of the Company’s Nomination Committee are Mr. Paul CHOW Man Yiu (Chairman), Dr. Moses CHENG Mo Chi and Mr. Stephen YIU Kin Wah, who are all INEDs. Responsibilities The duties of the Nomination Committee, among other things, are to review the structure, size and composition (including the skills, knowledge and experience) of the Board at least annually and make recommendations on any proposed changes to the Board to complement the corporate strategy; to identify individuals suitably qualified to become board members and select or make recommendations to the Board on the selection of, individuals nominated for directorships; to assess the independence of independent non-executive directors; to make recommendations to the Board on the appointment or reappointment of directors and succession planning for directors, in particular the Chairman and the Chief Executive Officer. Work Done in 2018 In 2018, the Nomination Committee met once, during which the committee discussed the board diversity policy and recommended the Board to approve the appointment of new director. 49


China Mobile Limited Corporate Governance Report REMUNERATION, APPOINTMENT AND ROTATION OF DIRECTORS The Remuneration Committee is responsible for determining the remuneration packages of all executive directors and senior management. The remuneration package of our executive directors consists of a basic salary, a performance-linked annual bonus and a term incentive. The remuneration of independent non-executive directors is determined in part by reference to their experience, the prevailing market conditions and their workload as independent non-executive directors and members of the board committees of the Company. Please refer to note 10 to the consolidated financial statements on page 110 of this annual report for directors’ and senior management’s remuneration in 2018. The Board has adopted a Director Nomination Policy. The Nomination Committee and/or the Board should, upon receipt of the proposal on appointment of new director and the biographical information (or relevant details) of the candidate, evaluate such candidate based on the criteria as set out above to determine whether such candidate is qualified for directorship. The Nomination Committee should then recommend to the Board to appoint the appropriate candidate for directorship, as applicable. In evaluating and selecting any candidate for directorship, the following criteria should be taken into account: • Character and integrity; Qualifications including professional qualifications, skills, knowledge and experience that are relevant to the Company’s business and corporate strategy, and consideration on diversity under the Board Diversity Policy; Requirement for the Board to have independent directors in accordance with the Hong Kong Listing Rules and whether the candidate would be considered independent with reference to the independence guidelines set out in the Listing Rules; Any potential contributions the candidate can bring to the Board in terms of qualifications, skills, experience, independence and gender diversity; Willingness and ability to devote adequate time to discharge duties as a member of the Board and/or Board committee(s) of the Company; and Such other perspectives that are appropriate to the Company’s business and succession plan and where applicable, may be adopted and/or amended by the Board and/or the Nomination Committee from time to time for nomination of directors and succession planning. All newly-appointed directors receive a comprehensive induction of directors’ duties to make sure that they have a proper understanding of the operations and business of the Company, and that they are fully aware of their responsibilities as a director, the listing rules of the stock exchanges on which the Company is listed, applicable laws and regulations, and the operation and governance policies of the Company. All newly-appointed directors are subject to re-election by shareholders at the first AGM after their appointment. Every director is subject to retirement by rotation and needs to stand for re-election at least once every three years. 50


Annual Report 2018 Corporate Governance Report The nomination and appointment of Mr. YANG Jie in 2019 and Dr. YANG Qiang in 2018 were conducted in accordance with the relevant policy. As proposed by the Board, Mr. YANG Jie will receive an annual director’s fee of HK$180,000 as approved by the shareholders of the Company. Dr. Yang Qiang will receive an annual director’s fee of HK$180,000 as approved by the shareholders of the Company and an annual fee of HK$150,000 as a member of the Audit Committee of the Company. The aforesaid fees are payable on a time pro-rata basis for any non-full year’s service. The remuneration of Mr. YANG Jie and Dr. YANG Qiang has been determined by the Board with reference to his duties, responsibilities, experience, prevailing market conditions and so forth. Mr. YANG Jie and Dr. YANG Qiang have voluntarily waived the above-mentioned fees. The Company believes that Dr. Yang’s waiver of the fees would not affect his independence as an Independent Non-Executive Director of the Company. In addition, based on the work arrangements of the Board committees, after review and approval by the Board, Mr. Stephen YIU Kin Wah has been appointed as the Chairman of the Audit Committee, a member of the Nomination Committee and a member of the Remuneration Committee of the Company, with effect from 17 May 2018. As proposed by the Board, Mr. Yiu will receive annual fees of HK$180,000, HK$50,000 and HK$60,000 as the Chairman of the Audit Committee, a member of the Nomination Committee and a member of the Remuneration Committee of the Company, respectively, in addition to his annual director’s fee of HK$180,000. MANAGEMENT AND EMPLOYEES The task of the Company’s management is to implement the strategy and direction as determined by the Board, and to take care of day-to-day operations and functions of the Company. The division of responsibilities among our Chief Executive Officer and other members of the senior management is set out in the biographies of directors and senior management on pages 8 to 11 of this annual report and on the Company’s website. Our management is required to adhere to certain business principles and ethics while performing management duties. For the purpose of promoting honest and ethical conducts and deterring wrongdoings, the Company, in 2004, adopted a code of ethics, which is applicable to our chief executive officer, chief financial officer, deputy chief financial officer, assistant chief financial officer and other designated senior officers of the Group, in accordance with the requirements of the SOX Act. In the event of a breach of the code of ethics, the Company may take appropriate preventive or disciplinary actions after consultation with the Board. The code of ethics has been filed with the U.S. SEC as an exhibit to our annual report on Form 20-F for the financial year ended 31 December 2003, which may also be viewed and downloaded from our website. The Company established an on-going disclosure control procedure to formulate potential insider dealings. Our CEO and CFO have a personal obligation to maintain the effectiveness of the disclosure controls and internal controls over financial reporting, and to report to the Audit Committee and the external auditor any significant changes, deficiencies and material weaknesses in, and fraud related to, such controls. Besides, the Company provides directors’ monthly reports to board members giving the latest development of the Company to enable them to discharge their duties. 51


China Mobile Limited Corporate Governance Report To continuously improve corporate governance, we further optimized our management system and improved our business processes, thereby establishing a stringent internal control system and comprehensively preventing risks. We have formulated the Anti-Bribery Guidance for employees to learn more about business bribery and how to identify and deal with it. In 2018, focusing on key areas of business operations, we continued to improve our “Safeguarding Compliance” management mechanism by integrating it into our businesses such as procurement bidding, construction, employment, conflict minerals supply chain, export control, cyber security and market competition. We also organized trainings on compliance risk prevention within the Group, which have covered 78% of all of our staff. With respect to anti-corruption, we continued to improve our 4-in-1 anti-corruption system combining education, prevention, punishment and accountability. We carried out in-depth investigations at the grassroots units and included the “micro-corruption” behaviors that infringe the interests of customers and employees into our internal supervision and examination priorities. Meanwhile, we further strengthened our internal audit by demanding rectification of all issues found in the audit process and holding the relevant personnel accountable for major cases of violation and loss discovered during audits. We conducted anti-corruption trainings and education for employees, which have also been expanded to our suppliers by having them sign a clean commitment agreement. In 2018, we continued to carry out anti-corruption education monthly activities, organized a total of 3,717 educational activities covering more than 90% employees. During the year, the Company received a total of 1,263 complaints from the petition, and the settlement rate was 85%. We revised and improved our decision-making policies and implementation method, refined our major issue catalogue and criteria to prevent risks in decision-making. We strengthened the inspection mechanism, especially on key areas such as procurement biddings to look for loopholes in our management system and resolve them. Within the Group, we urge for honest operation, healthy development, good performance and shareholders’ interests protection. For whistle blowing, the Company has set an e-mail account (jubao@chinamobile.com), CEO mailbox, a telephone hotline (010-52616186), fax and other channels to encourage employees and the public to raise concerns about misconducts, malpractices or irregularities in any matters related to the Company. The Company will keep the whistleblowers’ personal information strictly confidential to protect his/her rights, and carefully verify and investigate issues reported. INTERNAL AUDIT IA Dept. conducts independent and objective confirmation and provides consulting services in respect of the appropriateness, compliance and effectiveness of the Company’s business activities, internal controls and risk management by applying systematic and standardized auditing procedures and methods. The IA Dept. also assists the Company in improving the effectiveness of corporate governance, risk management and control process, with an aim to increasing its corporate value, improving its operations, promoting its sustainable and healthy development as well as contributing to the achievement of its strategic objectives. The Company and its operating subsidiaries have set up internal audit departments, which independently audit the business units of the Company and its operating subsidiaries. The head of the IA Dept. directly reports, four times a year, to the Audit Committee which, in turn, reports to the Board regularly. The Board and Audit Committee give instructions with respect to internal auditing. The IA Dept. regularly reports to the senior management for auditing resources and authorization as well as deployment of rectification. The IA Dept. has unrestricted access to the relevant businesses, assets, records and personnel in the course of performing their duties. 52


Annual Report 2018 Corporate Governance Report The IA Dept. establishes an internal audit scope and framework and carries out risk investigations on an annual basis. According to the results of the risk investigations, the IA Dept. formulates an internal audit project rolling plan and an annual audit plan and, together with the Audit Committee and the Board, reviews and approves the annual audit plan and resources allocation. The annual audit plan of the internal audit department covers various areas, namely financial, internal controls, information systems and risk assessment audits. For financial audit, the IA Dept. reviews and assesses the truthfulness, accuracy, compliance and efficiency of the Company’s financial activities and financial information as well as the management and utilization of the Company’s capital and assets. For internal controls audit, the IA Dept. audits and assesses the effectiveness in the design and implementation of the Company’s internal control system. According to the requirements under the Corporate Governance Code of Hong Kong Listing Rules, section 404 of the SOX Act and Mainland China laws and regulations, the IA Dept. organizes and performs audit assessment on the internal control over financial and non-financial reporting of the Group covering all material areas of financial, operation and compliance controls, on an annual basis, to provide assurance for the Company’s management in its issuance of the internal control assessment report. The information systems audit focuses on reviewing and assessing the information systems, information technology applications, information security and the related internal controls and procedures. The IA Dept. shall report to the senior management and the Board on an interim and annual basis. At the same time, the IA Dept. carries on special projects and investigations in response to requests from the Company’s management or the Audit Committee or if otherwise required. In addition, without prejudice to its independence, if requested by the Company’s management and as required by business needs, the IA Dept. provides management advice or consultancy services by making use of audit resources and audit information to facilitate the Company’s decision-making and operational management. The IA Dept. makes improvement recommendations in respect of its findings in the course of the audits and requests the management to undertake and to confirm the implementation plan, the methods and the timing. It regularly monitors the status of the implementation of the recommendations to ensure their completion. In 2018, to maintain the healthy development of the Company, we established a new internal audit plan clarifying its path of centralization, specialization and informatization forward. We completed the reform of our centralized two-tier audit organization system at the headquarters and affiliated units, which strengthened the independence, intensity and depth of our internal audit. Moreover, we achieved full coverage of audits on our affiliated units, effectively promoting our risk prevention capabilities and management standards. In 2018, focusing on the “four orientations” of strategies, key issues, risks and problems identified, we further strengthened auditing and supervision on Internet channels, marketing resources, information security, system control, asset management and other areas to support our strategic initiatives and improve our management and risk prevention capabilities. We deepened the application of big data and cloud computing technologies in developing our audit informatization. The application of artificial intelligence technology in auditing also saw breakthroughs in 2018. Thus, the audit efficiency has been significantly improved. We report regularly to the Board and Audit Committee with respect to the building up of our internal audit organization, its human resources and qualifications, staff training, annual audit plan and budget, and the audit results. In 2018, we focused our audit on the main findings of each audit project and their rectification. We provide specific guidance on audit focus, rectification advice, team building and others to ensure the effectiveness of internal audit functions. In 2019, the IA Dept. will concentrate on new tasks of strategic transformation, continue to carry out audits adhering to the “four orientations”, accelerate the application of artificial intelligence technologies in internal audits and realize the “Remote + Onsite” auditing model, thereby greatly improving our data auditing capacities and auditing efficiency, thoroughly identifying issues and risks, actively plugging loopholes in management, unceasingly perfecting the Company’s processes and systems as well as further enhancing the value of audit work. 53


China Mobile Limited Corporate Governance Report EXTERNAL AUDITORS In 2018, the Group engaged PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP as external auditors of the Group for Hong Kong financial reporting and U.S. financial reporting purposes, respectively. The principal services provided by the external auditors included: review of interim consolidated financial information of the Group; audit of annual consolidated financial statements of the Group and annual financial statements of its subsidiaries; and audit of the effectiveness of the Group’s internal control over financial reporting as of 31 December 2018. Apart from providing the above-mentioned audit services to the Group, the external auditors also provided other nonaudit services to the Group, which were permitted under section 404 of the SOX Act and pre-approved by the Audit Committee. The following table sets forth the types of, and fees for, the principal audit services and non-audit services provided by the external auditors (please refer to note 6 to the consolidated financial statements for details): 2017 2018 RMB million RMB million Audit fees 6 107 108 N on-audit services fees 7 15 9 6 Including the fees rendered for the audit of internal control over financial reporting as required by section 404 of the SOX Act. 7 Including the fees for tax compliance and advisory services, risk assessment and compliance advisory services, performance improvement and business process optimization advisory services, and other advisor services. ESG AND OTHER STAKEHOLDERS The Board has overall responsibility for our ESG strategy and reporting, for evaluating and determining the ESGrelated risks, and ensuring that appropriate and effective ESG risk management and internal control systems are in place. Our Management provides a confirmation to the Board on the effectiveness of these systems. Good corporate governance practices require due attention to the impact of our business decisions on our shareholders as well as other relevant stakeholders such as customers, local communities, industry peers and regulatory authorities. Our sustainability report for the year of 2018 (the “Sustainability Report”), which is issued together with this annual report, highlights our development approach, management policies and objectives of corporate social responsibility and our performance in the areas of social and environmental management in 2018. This annual report and the Sustainability Report illustrate our efforts and development in the areas of industry development, community advancement and environmental protection and also explain how we have fulfilled our obligations to our employees, customers, environment, local communities and other stakeholders. In 2018, for the third consecutive year, we were the first and only company from Mainland China to be included in the global carbon disclosure project CDP’s Climate A List. 54


Annual Report 2018 Corporate Governance Report RISK MANAGEMENT AND INTERNAL CONTROLS Our Audit Committee under the Board is responsible for conducting annual review of the effectiveness of the Group’s risk management and internal control systems to reasonably ensure that the Company is operating legally and the assets are safeguarded and to ensure the accuracy and reliability of the financial information that the Company employs in its business or releases to the public. The said systems are designed to manage rather than eliminate the risk of failure to meet business targets and to make reasonable but not absolute assurances with respect to material misrepresentations or losses. As of 31 December 2018, our Audit Committee has evaluated the effectiveness of the Group’s risk management and internal controls covering all important aspects including financial, operational and compliance, to ensure we provide sufficient resources in accounting, internal audit and financial reporting, staff qualification and experience, staff training courses and related budget. Based on such review, we consider the Group’s risk management and internal control systems to be effective and adequate. The management of the Company reports to Audit Committee annually about the building-up and performance of its risk management and internal controls, including interim and annual evaluation reports, and receives guidance and supervision from Audit Committee. In 2018, the Company has received the management affirmation with respect to the effectiveness of the risk management and internal controls. Our management is responsible for establishing and maintaining internal control over financial reporting. We adopted the control criteria framework set out in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013). In compliance with the provisions and requirements under section 404 of the SOX Act and the CP issued by HKEX, we refined our routine management mechanism of internal controls, in establishing a stringent internal control system over financial reporting. We established a hierarchical top-down risk assessment mechanism, relying on the strategic level risk assessment (material risk assessment), the management level risk assessment (major projects risk assessment) and the operational level risk assessment (procedure risk assessment), to assist the management to acknowledge risk information in a timely manner in order to make a reasonable decision. Based on risk assessment, we established a three-tier internal controls of “the top level internal control system, the internal control professional system and the internal control practices guidelines”, which brought the control requirements to the whole process of marketing, production and management. Based on our business operation, we focus on high risk and key management areas and perform risk assessment, so as to enforce our internal control requirement into our daily operation. Meanwhile, we assigned specific responsibilities to individuals and input the control requirements in our IT systems to strengthen the internal controls. And through multiple internal and external supervision and inspections, including self-assessment, management evaluation, external audit, etc., we effectively improved the execution efficiency and effectiveness of our internal controls. Based on the evaluation conducted by the management of the Company, the management believes that, as of 31 December 2018, the Company’s internal control over financial reporting was effective which provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for reporting purposes in accordance with generally accepted accounting principles. All disclosure of material information relating to the Company is made through the unified leadership and management of the Board, with the Company’s management performing its relevant duties. The Company has performed an annual review of the effectiveness of the Company’s disclosure controls and procedures, and concluded that, as of 31 December 2018, the Company’s disclosure controls and procedures were effectively executed at a reasonable assurance level. 55


China Mobile Limited Corporate Governance Report INFORMATION DISCLOSURE AND INSIDER DEALINGS According to the Hong Kong Listing Rules and United States Securities Act, since 2003, the Company has implemented the information disclosure internal control and procedures, and established a Disclosure Committee, the members of which include our Chairman, chief executive officer, chief financial officer and heads of main functional departments. Empowered by the Board, the Disclosure Committee is responsible for organizing and coordinating the routine reporting and disclosure job to prompt timely, fair, truthful and complete disclosure of information, ensure good corporate governance and transparency, properly get back to the investors, analysts and media inquiries, to prevent volatility of our share price caused by false market information. Under circumstances where any departments or officers are in breach of disclosure procedures and internal controls, resulting in reporting or disclosure errors, or in breach of disclosure related laws and regulations, the Company shall hold the relevant personnel accountable. Members of the Disclosure Committee, heads of our IA Dept. and other relevant departments and each of our subsidiaries shall give confirmations annually and take personal responsibilities with respect to their disclosure duties. Our IA Dept. conducts annual evaluation with respect to the effectiveness of disclosure internal control and procedures and its performance, and issues audit reports for management and the Audit Committee to evaluate. Depending on such reports, our CEO and CFO shall make written statements with respect to our annual report on Form 20-F and take personal responsibilities in accordance with the requirements of the US Securities Act. The Disclosure Committee can revise the disclosure internal control and procedure in accordance with its performance and the development of relevant laws with approval of the senior management. The revised internal control procedure and articles shall be circulated to all departments and subsidiaries within the Group. The Company attaches great importance to the management of insider information. In compliance with the provisions of Hong Kong Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”) and others, we formulated China Mobile Management Method on Inside Information, setting up rules and black-out periods on directors, management and employees in dealing with the shares of the Company or exercising share options while they are in possession of inside information. Those who may come into possession of inside information in performing their duties are required to sign an undertaking on their duty of confidentiality and prohibition against insider dealing. Unauthorized use of confidential or inside information for profits is strictly prohibited to prevent violation of laws and regulations and internal disciplines. In general, any authorized speaker from the Company only makes clarification and explanation on information already available in the market, avoiding any unpublished inside information. Before any external interview, such speaker shall seek verification from the relevant department about any information to be disclosed. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATE GOVERNANCE PRACTICES OF THE COMPANY AND THE CORPORATE GOVERNANCE PRACTICES REQUIRED TO BE FOLLOWED BY U.S. COMPANIES UNDER THE NYSE’S LISTING STANDARDS As a foreign private issuer (as defined in Rule 3b-4 under the U.S. Securities Exchange Act of 1934, as amended), we are permitted to follow home country practices in lieu of some of the corporate governance practices required to be followed by U.S. companies listed on the NYSE. As a result, our corporate governance practices differ in some respects from those required to be followed by U.S. companies listed on the NYSE. 56


Annual Report 2018 Corporate Governance Report In accordance with the requirements of section 303A.11 of the NYSE Listed Company Manual, a summary of the significant differences between the Company’s corporate governance practices and those required to be followed by U.S. companies under the NYSE’s listing standards is disclosed as below. Section 303A.01 of the NYSE Listed Company Manual provides that listed companies must have a majority of independent directors. As a listed company in Hong Kong, the Company is subject to the requirement under the Hong Kong Listing Rules that at least one-third of its board shall be independent non-executive directors as determined under the Hong Kong Listing Rules. The Company has four (4) independent non-executive directors out of a total of seven (7) directors. The Hong Kong Listing Rules set forth standards for establishing independence, which differ from those set forth in the NYSE Listed Company Manual. Section 303A.03 of the NYSE Listed Company Manual provides that listed companies must schedule regular executive sessions in which non-management directors meet without management participation. According to the Code Provision A.2.7 of the Corporate Governance Code in Appendix 14 of the Hong Kong Listing Rules, the chairman of a listing company in Hong Kong shall hold meetings at least annually with the non-executive directors (including INEDs) without the presence of executive directors. In 2018, our Audit Committee comprising four INEDs met once with our external auditors without any executive directors present. Section 303A.04 of the NYSE Listed Company Manual provides that the nominating/corporate governance committee of a listed company must have a written charter that addresses the committee’s purpose and responsibilities, which include, among others, the development and recommendation of corporate governance guidelines to the listed company’s board of directors. Our Board is responsible for performing the corporate governance duties, including developing and reviewing our policies and practices of corporate governance. Section 303A.07 of the NYSE Listed Company Manual provides that if an audit committee member simultaneously serves on the audit committee of more than three public companies, and the listed company does not limit the number of audit committees on which its audit committee members serve to three or less, then in each case, the board of directors must determine that such simultaneous service would not impair the ability of such member to effectively serve on the listed company’s audit committee and disclose such determination. The Company is not required, under the applicable Hong Kong law, to make such determination. Section 303A.10 of the NYSE Listed Company Manual provides that listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees. While the Company is not required, under the Hong Kong Listing Rules, to adopt such similar code, as required under the SOX Act, the Company has adopted a code of ethics that is applicable to the Company’s principal executive officer(s), principal financial officer(s), principal accounting officers or persons performing similar functions. Section 303A.12(a) of the NYSE Listed Company Manual provides that each listed company’s chief executive officer must certify to the NYSE each year whether he or she is not aware of any violation by the company of NYSE corporate governance listing standards. The Company’s chief executive officer is not required, under the applicable Hong Kong law, to make similar certifications. CONTINUOUS EVOLVEMENT OF CORPORATE GOVERNANCE We will closely study the development of corporate governance practices among the world’s leading corporations, future evolution of the relevant regulatory environment and the requirements of the investors on an ongoing basis. We will also review and enhance our corporate governance procedures and practices from time to time so as to ensure the long-term sustainable development of the Company. 57


China Mobile Limited Human Resources Development In 2018, with the goal of lending full support to the Company’s “Big Connectivity” strategy, the emphasis of our human resources work was to build a high-quality professional leadership team and digital talent team. Focusing on leadership development, structure optimization, capability transformation, mechanism innovation and management concentration, we gave further impetus to the enhancement and perfection of our human resources management systems, policies, mechanisms, processes as well as ways and methods, continuously improved the efficiency and effectiveness of our human resources management, and provided stronger capacity assurance and talent support for the Company’s transformation and development. We profoundly implemented the Company’s strategic transformation requirements, and comprehensively and thoroughly optimized our personnel structure in conjunction with our business development. We reduced traditional business personnel through centralized management and other methods, gave priority to the demand for talent from new technologies and new businesses, focused on the satisfaction of manpower needs in areas undergoing transformation, and continuously strengthened our workforce in terms of academic qualifications and professional expertise. These measures have led to an increase in the number of employees in charge of emerging areas, effectively supporting our digital transformation and business expansion in the vertical industries. At the same time, the Company continued to empower its professional backbone teams, focusing on the future trends of technological evolution in the face of new technology directions and reshaping our core competence during the transformation period. Striving to be market-oriented and performance-driven, the Company continuously optimized its total compensation allocation model, strengthened the link between performance and compensation, and encouraged our subsidiaries to perform better according to performance indicators. In light of changes in the competitive landscape, the Company formulated targeted ad hoc incentives and special incentive programs to guide our subsidiaries to boost their revenue and increase their market share, thereby driving the effective attainment of the Group’s performance targets. In accordance with the philosophy of hierarchical classification, we enriched our incentive measures, expanded the contents of our incentives and made our incentives more explicit. For core backbone employees, the synergies between remuneration and resources were unleashed. For professional and technical personnel, technological innovation rewards were implemented in an in-depth manner to stimulate the innovative and entrepreneurial vitality of technical personnel. For frontline employees, the structure of quantitative performance-based remuneration was continuously optimized to encourage “more pay for more work”. The Company strengthened the full-process closed-loop management of its training projects, continued to carry out annual training project evaluation, and promoted various types of professional training work, with progress being continuously made. Meanwhile, the Company actively explored and applied a variety of employee training methods, and designed training programs that matched the subject matter of trainings and characteristics of participants. We adopted online and offline community-based learning, guided discussion, online learning, outreach training and other learning methods to improve the pertinence and effectiveness of our trainings. At the same time, China Mobile University was awarded the “Outstanding Contribution Award” under China’s Best Enterprise University Rankings and other awards, receiving high recognition and wide acclaim for our training and development work. 58


Annual Report 2018 Report of Directors The directors take pleasure in submitting their annual report together with the audited financial statements for the year ended 31 December 2018. PRINCIPAL ACTIVITIES The Group’s principal activity is providing mobile telecommunications and related services in 31 provinces, autonomous regions and directly-administered municipalities in Mainland China and Hong Kong. The principal activity of the Company is investment holding. The revenue of the Group during the financial year consisted primarily of revenue generated from the provision of mobile telecommunications services. MAJOR CUSTOMERS AND SUPPLIERS The Group’s aggregate revenue with its five largest customers did not exceed 30% of the Group’s total revenue in 2018. Purchases from the largest supplier for the year represented 16% of the Group’s total purchases. The five largest suppliers accounted for an aggregate of 43% of the Group’s purchases in 2018. Purchases for the Group include network equipment purchases, leasing of transmission lines and payments in relation to interconnection arrangements. Purchases from suppliers, other than suppliers of leased lines and network equipment and interconnection arrangements, were not material to the Group’s total purchases. At no time during the year ended 31 December 2018 have the directors, their close associates or any shareholder of the Company (which to the knowledge of the directors owns more than 5% of the number of issued shares of the Company) had any interest in these five largest suppliers. SUBSIDIARIES AND INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Particulars of the Company’s subsidiaries and the Group’s investments accounted for using the equity method as at 31 December 2018 are set out in notes 18 and 19, respectively, to the consolidated financial statements, and the list of directors of each of the Company’s subsidiaries is available on the Company’s website. FINANCIAL STATEMENTS The profit of the Group for the year ended 31 December 2018 and the financial conditions of the Company and the Group as at that date are set out in the consolidated financial statements on pages 75 to 145. DIVIDENDS The Board has adopted a dividend policy. In recommending or declaring dividends, the Company shall allow its shareholders to participate in the Company’s profits whilst to retain adequate cash reserves for meeting its working capital requirements and long-term sustainable development. The Board has the discretion to propose, declare and distribute dividends to the shareholders of the Company, subject to the Articles of Association of the Company and all applicable laws and regulations and taking into account the following factors of the Company and its subsidiaries: • the actual financial performance of the Group; • the Group’s business strategies and operations, including future capital requirements and investment needs; • economic conditions and other internal or external factors that may have an impact on the business or financial performance and situation of the Group; and • any other factors that the Board may consider relevant. 59


China Mobile Limited Report of Directors The Board recommends a final dividend payment of HK$1.391 per share for the year ended 31 December 2018. Together with the interim dividend payment of HK$1.826 per share, the total dividend payment for the 2018 financial year increased by 0.4% year-on year and amounted to HK$3.217 per share. Full-year dividend payout ratio increased to 49%. Taking into consideration the Company’s financial position, its ability to generate cash flow and its future development needs, the Company will maintain a stable dividend payout ratio in 2019 and strive to create greater value for shareholders. The Board believes that our industry-leading profitability and ability to generate healthy cash flow will provide sufficient support for the Company’s future development and create favourable returns for our shareholders. DONATIONS Donations made by the Group during the year amounted to RMB82,242,686 (2017: RMB89,532,505). PROPERTY, PLANT AND EQUIPMENT Changes to the property, plant and equipment of the Group during the year ended 31 December 2018 are set out in note 14 to the consolidated financial statements. SHARE CAPITAL Details of the Company’s share capital are set out in note 32 to the consolidated financial statements. RESERVES Changes to the reserves of the Group during the year are set out in the consolidated statement of changes in equity. Changes to the reserves of the Company during the year are set out in note 32 to the consolidated financial statements. DIRECTORS The directors of the Company during the financial year were: Executive Directors: YANG Jie (Chairman) (appointed on 21 March 2019) SHANG Bing (resigned on 4 March 2019) LI Yue SHA Yuejia (resigned on 17 May 2018) DONG Xin Independent Non-Executive Directors: Frank WONG Kwong Shing (resigned on 17 May 2018) Moses CHENG Mo Chi Paul CHOW Man Yiu Stephen YIU Kin Wah YANG Qiang (appointed on 17 May 2018) 60


Annual Report 2018 Report of Directors In accordance with Article 99 of the Company’s Articles of Association, Mr. YANG Jie and Dr. YANG Qiang will hold office until the forthcoming annual general meeting of the Company and will then be eligible for re-election. Besides, in accordance with Article 95 of the Company’s Articles of Association, Mr. DONG Xin and Dr. Moses CHENG Mo Chi will retire by rotation at the forthcoming annual general meeting of the Company and, being eligible, offer themselves for re-election. The biographies of the directors proposed for re-election at the forthcoming annual general meeting (“Directors for Re-election”) are set out on pages 8 to 11 of this annual report. Except as disclosed in such biographies, the Directors for Re-election have not held any other directorships in any listed public companies in the last three years. Further, except as noted in the biographies, none of the Directors for Re-election is connected with any directors, senior management or substantial or controlling shareholders of the Company and, except as disclosed in the paragraph headed “Directors’ and Chief Executive’s Interest and Short Positions in Shares, Underlying Shares and Debentures” below, none of them has any interests in the shares of the Company within the meaning of Part XV of the SFO. The service contracts of all the Directors for Re-election do not provide for a specified length of service and each of such directors will be subject to retirement by rotation and re-election at annual general meetings of the Company every three years. Each of the Directors for Re-election is entitled to an annual director’s fee of HK$180,000 as proposed by the Board and approved by the shareholders of the Company. Director’s fees are payable on a time prorata basis for any non-full year’s service. Mr. YANG Jie, Mr. DONG Xin and Dr. YANG Qiang have voluntarily waived their director’s fees, and Dr. YANG Qiang has also waived his annual fee of HK$150,000 on a voluntary basis as a member of the Audit Committee. The remuneration of the Directors for Re-election has been determined with reference to the individual’s duties, responsibilities and experience, and to prevailing market conditions. Details of the remuneration of the directors of the Company are set out in note 10 to the consolidated financial statements. None of the Directors for Re-election has an unexpired service contract which is not determinable by the Company or any of its subsidiaries within one year without payment of compensation, other than under normal statutory obligations. Save as disclosed herein, there are no other matters relating to the re-election of the Directors for Re-election that need to be brought to the attention of the shareholders of the Company nor is there any information to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Hong Kong Listing Rules. DIRECTORS’ INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF SIGNIFICANCE No transaction, arrangement or contract of significance to which the Company, any of its holding companies or subsidiaries, or any of its holding companies’ subsidiaries has been a party and in which a director of the Company or an entity connected with a director of the Company is or was materially interested, whether directly or indirectly, subsisted at the end of the year or at any time during the year. PERMITTED INDEMNITY PROVISION Pursuant to Article 159 of the Company’s Articles of Association, every director or other officer of the Company shall be indemnified out of the assets of the Company against all liabilities (to the extent permitted by the Hong Kong Companies Ordinance) sustained or incurred by such director or officer in or about the execution of his office or otherwise in relation thereto. In addition, the Company has purchased directors and officers’ liabilities insurance on behalf of its directors and officers. 61


China Mobile Limited Report of Directors DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES One of the directors of the Company personally held ordinary shares of the Company. Details of the director’s holding of ordinary shares of the Company as at 31 December 2018 are as follows: Long Positions in the Shares and Underlying Shares of the Company Director Capacity Ordinary shares held Percentage of the total number of issued shares * M oses CHENG Mo Chi B eneficial owner 300,00 0 0.00% * The calculation is based on the total number of issued ordinary shares of the Company (i.e. 20,475,482,897 ordinary shares) as at 31 December 2018, and rounded off to two decimal places. Apart from those disclosed herein, as at 31 December 2018, none of the directors nor the chief executive of the Company had any interests or short positions in any of the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) that is recorded in the register required to be kept under section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code. DIRECTORS’, CHIEF EXECUTIVE’S AND EMPLOYEES’ RIGHTS TO ACQUIRE SHARES At no time during the year ended 31 December 2018 was the Company, any of its holding companies or subsidiaries, or any of its holding companies’ subsidiaries a party to any arrangement to enable the directors or chief executive of the Company or any of their spouses or children under eighteen years of age to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. SUBSTANTIAL SHAREHOLDERS’ AND OTHER PERSONS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES The Company has been notified of the following interests in the Company’s issued shares as at 31 December 2018 amounting to 5% or more of the ordinary shares in issue: Long Positions in the Shares and Underlying Shares of the Company Ordinary shares held Percentage of the total number directly indirectly of issued shares (i) China Mobile Communications Group Co., Ltd. (“CMCC”) – 14,890,116,842 72.72% (ii) China Mobile (Hong Kong) Group Limited (“CMHK (Group)”) – 14,890,116,842 72.72% (iii) China Mobile Hong Kong (BVI) Limited ( “CMHK (BVI)”) 14,890,116,842 – 72.72% Note: In light of the fact that CMCC and CMHK (Group) directly or indirectly control one-third or more of the voting rights in the shareholders’ meetings of CMHK (BVI), in accordance with the SFO, the interests of CMHK (BVI) are deemed to be, and have therefore been included in, the interests of CMCC and CMHK (Group). 62


Annual Report 2018 Report of Directors Apart from the foregoing, as at 31 December 2018, no other person (other than a director or the chief executive of the Company) had any interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO, or as otherwise notified to the Company and the Stock Exchange. CONNECTED TRANSACTIONS Continuing Connected Transactions Details of the continuing connected transactions are set out in note 34 to the consolidated financial statements. For the financial year ended 31 December 2018, the following continuing connected transactions (the “Continuing Connected Transactions”) have not exceeded their respective annual caps: (1) rental and property management service charges paid by the Group to CMCC did not exceed RMB2,200 million. The charges payable by the Group in respect of properties owned by CMCC and its subsidiaries are determined with reference to any one of the following benchmarks: (i) the value determined by independent intermediaries; (ii) applicable market rates or charges which are publicly published; or (iii) rates charged by CMCC or its subsidiaries to independent third parties, whilst the charges payable in respect of properties which CMCC or its subsidiaries lease from third parties and sub-let to the Group are determined according to the actual rent payable by CMCC or its subsidiaries to such third parties together with the amount of any tax payable; (2) leasing fees paid by the Company to CMCC for the leasing of the TD-SCDMA network capacity by the Company from CMCC did not exceed RMB3,300 million. The leasing fees are determined on a basis that reflects the Group’s actual usage of CMCC’s TD-SCDMA network capacity and to compensate CMCC for the costs of such network capacity; and (3) leasing fees paid by the Company to CMCC for the leasing of telecommunications network operation assets by the Company from CMCC did not exceed RMB3,500 million. The leasing fees are determined with reference to the prevailing market rates. In determining the market rates for the leasing fees, the Company has taken into account the charges payable by the Company and CMCC to other industry players as well as the charges receivable by the Company and CMCC from other industry players. The leasing fees payable by the Company to CMCC were not more than the leasing fees charged to other industry players, being independent third parties, for same kinds of network operation assets. The aggregate amount of leasing fees received by the Company from CMCC under the Network Assets Leasing Agreement was below 0.1% of each of the applicable percentage ratios set out in Rule 14.07 of the Hong Kong Listing Rules. The transactions referred to in paragraph (1) above were entered into pursuant to the 2017-2019 property leasing and management services agreement dated 11 August 2016 between the Company and CMCC (the “2017-2019 Property Leasing Agreement”). The Company announced the entering into and the terms of the 2017-2019 Property Leasing Agreement on 11 August 2016. The 2017-2019 Property Leasing Agreement has a term of three years commencing on 1 January 2017. The transactions referred to in paragraph (2) above were entered into pursuant to the network capacity leasing agreement between the Company and CMCC dated 29 December 2008 (the “Network Capacity Leasing Agreement”). The entering into of the Network Capacity Leasing Agreement was announced by the Company on 29 December 2008. The Network Capacity Leasing Agreement has been renewed and the latest renewal was announced by the Company on 10 August 2017 for a period of one year from 1 January 2018. 63


China Mobile Limited Report of Directors The transactions referred to in paragraph (3) above were entered into pursuant to the telecommunications network operation assets leasing agreement between the Company and CMCC dated 18 August 2011 (the “Network Assets Leasing Agreement”). The entering into of the Network Assets Leasing Agreement was announced by the Company on 18 August 2011. The Network Assets Leasing Agreement has been renewed and the latest renewal was announced by the Company on 9 August 2018 for a period of one year from 1 January 2019. CMCC is the ultimate controlling shareholder of the Company and therefore, a connected person of the Company. Accordingly, all the transactions referred to in paragraphs (1) to (3) above constitute connected transactions for the Company under the Hong Kong Listing Rules. In the opinion of the independent non-executive directors, the Continuing Connected Transactions were entered into by the Group: (i) in the ordinary and usual course of its business; (ii) on normal commercial terms or better; and (iii) according to the agreements governing such transactions on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole. The auditors of the Company were engaged to report on the Group’s Continuing Connected Transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” and with reference to Practice Note 740 “Auditor’s Letter on Continuing Connected Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified Public Accountants. The auditors have issued their unqualified letter containing their findings and conclusions in respect of the Continuing Connected Transactions in accordance with Rule 14A.56 of the Hong Kong Listing Rules. The auditors’ letter has confirmed that nothing has come to their attention that cause them to believe that the Continuing Connected Transactions: (A) have not been approved by the Board; (B) were not, in all material respects, in accordance with the pricing policies of the Group as stated in this annual report; (C) were not entered into, in all material respects, in accordance with the relevant agreements governing the Continuing Connected Transactions; and (D) have exceeded their respective annual caps for the financial year ended 31 December 2018 set out in the previous announcements of the Company. A copy of the auditors’ letter in relation to the Continuing Connected Transactions has been provided by the Company to the Stock Exchange. In respect of the Continuing Connected Transactions, the Company has complied with the disclosure requirements under the Hong Kong Listing Rules in force from time to time, and has followed the policies and guidelines as laid down in the guidance letter HKEx-GL73-14 issued by the Stock Exchange when determining the price and terms of the transactions conducted during the year ended 31 December 2018. 64


Annual Report 2018 Report of Directors PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES The Company and its subsidiaries did not purchase, sell or redeem any of the listed securities of the Company during the year ended 31 December 2018. FINANCIAL SUMMARY A summary of the results and of the statements of the assets and liabilities of the Group for the last five financial years is set out on pages 146 to 148 of this annual report. EMOLUMENT POLICY In order to continue to maintain the sustainable development of the Group’s competitiveness, the Group has always emphasized the importance of recruiting, incentivizing, developing and retaining its employees, paid close attention to the external competitiveness, internal fairness of its remuneration structure and the cost-effectiveness of remuneration and emphasized the importance of the correlation between remuneration management and performance management. For the year ended 31 December 2018, employees’ remuneration comprised a basic salary and a performance-based bonus. EMPLOYEE RETIREMENT BENEFITS Particulars of the employee retirement benefits of the Group are set out in note 5 to the consolidated financial statements. PUBLIC FLOAT As at the date of this annual report and based on the information that is publicly available to the Company and to the knowledge of the directors of the Company, the Company has maintained the public float prescribed under the Hong Kong Listing Rules. AUDITORS A resolution will be proposed at the forthcoming annual general meeting for the re-appointment of PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP as the auditors of the Group for Hong Kong financial reporting and U.S. financial reporting purposes, respectively. LIST OF DIRECTORS OF SUBSIDIARIES A list of directors of the Group’s subsidiaries is set out on the Company’s website. 65


China Mobile Limited Report of Directors OTHERS Please also refer to the sections headed “Chairman’s Statement”, “Business Review”, “Financial Review” and “Human Resources Development” in this annual report (which form part of this Report of Directors) for further details. By order of the Board Yang Jie Chairman Hong Kong, 21 March 2019 66


Annual Report 2018 Notice of the Annual General Meeting Notice is hereby given that the Annual General Meeting of China Mobile Limited (the “Company”) will be held on Wednesday, 22 May 2019 at 10:00 a.m. in the Ballroom, InterContinental Hong Kong, 18 Salisbury Road, Kowloon, Hong Kong for the following purposes: 1. To receive and consider the audited financial statements and the Reports of the Directors and Auditors of the Company and its subsidiaries for the year ended 31 December 2018. 2. To declare a final dividend for the year ended 31 December 2018. 3. To re-elect executive directors. 4. To re-elect independent non-executive directors. 5. To re-appoint PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP as the auditors of the Group for Hong Kong financial reporting and U.S. financial reporting purposes, respectively, and to authorize the directors to fix their remuneration. And to consider and, if thought fit, to pass the following as ordinary resolutions: ORDINARY RESOLUTIONS 6. “THAT: (a) subject to paragraph (b) below, the exercise by the directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to buy back shares in the capital of the Company including any form of depositary receipt representing the right to receive such shares (“Shares”) be and is hereby generally and unconditionally approved; (b) the aggregate number of Shares which may be bought back on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or any other stock exchange on which securities of the Company may be listed and which is recognized for this purpose by the Securities and Futures Commission of Hong Kong and the Stock Exchange pursuant to the approval in paragraph (a) above shall not exceed or represent more than 10 per cent. of the number of issued shares of the Company at the date of passing this resolution, and the said approval shall be limited accordingly; (c) for the purpose of this resolution “Relevant Period” means the period from the passing of this resolution until whichever is the earlier of: (1) the conclusion of the next annual general meeting of the Company; or (2) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; or (3) the revocation or variation of the authority given under this resolution by ordinary resolution of the shareholders of the Company in general meeting.” 7. “THAT a general mandate be and is hereby unconditionally given to the directors of the Company to exercise full powers of the Company to allot, issue and deal with additional shares in the Company (including the making and granting of offers, agreements and options which might require shares to be allotted, whether during the continuance of such mandate or thereafter) provided that, otherwise than pursuant to (i) a rights issue where shares are offered to shareholders on a fixed record date in proportion to their then holdings of shares; (ii) the exercise of options granted under any share option scheme adopted by the Company; or (iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend in accordance with the articles of association of the Company, the aggregate number of the shares allotted shall not exceed the aggregate of: (a) 20 per cent. of the number of issued shares of the Company at the date of passing this resolution, plus 67


China Mobile Limited Notice of the Annual General Meeting (b) (if the directors of the Company are so authorized by a separate ordinary resolution of the shareholders of the Company) the number of Shares bought back by the Company subsequent to the passing of this resolution (up to a maximum equivalent to 10 per cent. of the number of issued shares of the Company at the date of passing this resolution). Such mandate shall expire at the earlier of: (1) the conclusion of the next annual general meeting of the Company; or (2) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; or (3) the date of any revocation or variation of the mandate given under this resolution by ordinary resolution of the shareholders of the Company at a general meeting.” 8. “THAT the directors of the Company be and are hereby authorized to exercise the powers of the Company referred to in the resolution set out in item 7 in the notice of the annual general meeting in respect of the shares of the Company referred to in paragraph (b) of such resolution.” By Order of the Board China Mobile Limited Wong Wai Lan, Grace Company Secretary 12 April 2019 Notes: 1. Any member entitled to attend and vote at the annual general meeting is entitled to appoint one or, if he is the holder of two or more shares, more proxies to attend and, on a poll, vote in his stead. A proxy need not be a member of the Company. 2. In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be deposited at the Company’s registered office at 60/F, The Center, 99 Queen’s Road Central, Hong Kong at least 24 hours before the time for holding the annual general meeting. Completion and return of a form of proxy will not preclude a member from attending and voting in person if he is subsequently able to be present. 3. The Board of Directors has recommended a final dividend of HK$1.391 per share for the year ended 31 December 2018 and, if such dividend is declared by the members passing resolution number 2, it is expected to be paid on or about 26 June 2019 to those shareholders whose names appear on the Company’s register of members on 31 May 2019. Shareholders should read the announcement issued by the Company on 21 March 2019 regarding the closure of register of members and the withholding and payment of enterprise income tax for non-resident enterprises in respect of the proposed 2018 final dividend. 4. To ascertain shareholders’ eligibility to attend and vote at the annual general meeting, the register of members of the Company will be closed from 16 May 2019 to 22 May 2019 (both days inclusive), during which period no transfer of shares in the Company will be effected. In order to be entitled to attend and vote at the annual general meeting, all transfers, accompanied by the relevant share certificates, must be lodged with the Company’s share registrar, Hong Kong Registrars Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not later than 4:30 p.m. on 15 May 2019. To ascertain shareholders’ entitlement to the proposed final dividend upon passing resolution number 2, the register of members of the Company will be closed from 29 May 2019 to 31 May 2019 (both days inclusive), during which period no transfer of shares in the Company will be effected. In order to qualify for the proposed final dividend, all transfers, accompanied by the relevant share certificates, must be lodged with the Company’s share registrar, Hong Kong Registrars Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not later than 4:30 p.m. on 28 May 2019. 5. Concerning resolution number 6 above, the directors of the Company wish to state that they will exercise the powers conferred thereby to buy back shares of the Company in circumstances which they deem appropriate for the benefit of the shareholders. The explanatory statement containing the information necessary to enable the shareholders to make an informed decision on whether to vote for or against the resolution to approve the buy-back by the Company of its own shares, as required by the Rules Governing the Listing of Securities on the Stock Exchange will be set out in a separate circular from the Company to be enclosed with the 2018 Annual Report. 68


Annual Report 2018 Independent Auditor’s Report Pwc Independent Auditor’s Report To the Members of China Mobile Limited (incorporated in Hong Kong with limited liability) OPINION What we have audited The consolidated financial statements of China Mobile Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 75 to 145, which comprise: • the consolidated balance sheet as at 31 December 2018; • the consolidated statement of comprehensive income for the year then ended; • the consolidated statement of changes in equity for the year then ended; • the consolidated statement of cash flows for the year then ended; and • the notes to the consolidated financial statements, which include a summary of significant accounting policies. Our opinion In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2018, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance. BASIS FOR OPINION We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. 69


China Mobile Limited Independent Auditor’s Report KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters identified in our audit are summarized as follows: • Revenue recognition • Impairment assessment on the interest in associates • Leasing arrangement K ey Audit Matter How our audit addressed the Key Audit Matter Revenue recognition Refer to Note 2 – Significant accounting policies (r), Note 3 – Changes in accounting policies and Note 4 – Operating revenue to the consolidated financial statements. We focused on this area due to the volume of transactions, the complexity of the IT systems, the variety of tariff and package structures and the complexity of multiple performance obligation arrangements, such as voice and data service packages, handset and service bundled packages and customer point rewards. This involved a number of key judgements and estimates on the allocation of the transaction prices among various performance obligations and timing as to when the revenue of each performance obligation can be recognized. In addition, the Group has adopted IFRS/ HKFRS 15 “Revenue from Contracts with Customers” from 1 January 2018 using the modified retrospective approach, which required judgements and estimates being made in the impacted areas and the implementation of changes to the Group’s systems, processes and controls. In response to this key audit matter, our audit work included controls testing and substantive procedures as follows: • tested the IT environment in which billing and other relevant support systems reside, including the changes and upgrades made to the relevant systems and processes to support the implementation of IFRS/HKFRS 15; • evaluated and tested the design and operating effectiveness of controls over the capture and measurement of revenue transactions; • evaluated the appropriateness of the accounting policies on revenue recognition for the existing and new business models, such as multiple performance obligation arrangements, and the appropriateness of related accounting estimates and judgements made; • examined the allocation of transaction prices among various performance obligations and tested the accuracy of revenue recognition by using sampling techniques; • performed substantive testing on the accuracy and occurrence of revenue using sampling techniques by examining customer contracts, customer bills, billing reports, and financial records; • tested the balances of accounts receivable and advances from customers in the billing system by using computer assisted audit techniques and examined the reconciliation of such balances between the billing system and financial records; and • assessed the appropriateness of the methods used to determine the impact of the transition of IFRS/HKFRS 15 and tested the accuracy of the adjustments to the opening retained earnings arising from the adoption of IFRS/HKFRS 15 by using sampling techniques. Based on the procedures performed, the revenue recognized was supported by the audit evidence that we obtained and consistent with the accounting policies of the Group. 70


Annual Report 2018 Independent Auditor’s Report K ey Audit Matter How our audit addressed the Key Audit Matter Impairment assessment on the interest in associates Refer to Note 2 – Significant accounting policies (d) and (j), Note 19 – Investments accounted for using the equity method and Note 38 – Accounting estimates and judgements to the consolidated financial statements. The Group held interests in associates, which is accounted for using the equity method. In accordance with IAS/HKAS 36 “Impairment of Assets”, where an indication of impairment of these assets exists, the Group will estimate the recoverable amounts of the relevant assets, based on the higher of the value-in-use and the fair value less costs of disposal. An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. Due to the capital market fluctuations, the Group identified that the carrying amount of its investment in Shanghai Pudong Development Bank Co., Ltd. exceeded its market value. Hence, the Group performed an impairment assessment on this investment in associate by calculating its recoverable amount based on value-in-use as determined by the discounted cash flow model. Based on the assessment result, management determined that there was no impairment loss on this investment in the associate. In the impairment assessment, judgements were required in the assessment of key assumptions, as the discounted cash flow model is sensitive to these. In response to this key audit matter, we performed the following procedures: • evaluated management’s process for preparing its impairment assessment and evaluated management’s prior years’ experience and the critical judgements in the assessment; • assessed the recoverable amount based on its value-in-use as determined by the discounted cash flow model, reviewed documentation supporting key judgements and assumptions on the cash flows, considered external evidence and the historical accuracy of management’s assumptions and forecasts, including the growth rate, the margin and the discount rate; • reconciled input data to supporting evidence, such as approved budgets; • tested mathematical accuracy and considered the appropriateness of the cash flows included in the discounted cash flow model; and • checked sensitivity analysis around the key assumptions, to ascertain the extent to which adverse changes, both individually or in aggregate, would indicate that the investment was impaired. Based on the procedures performed, the key assumptions and estimates made by management were supported by the audit evidence we gathered and consistent with our understanding. 71


China Mobile Limited Independent Auditor’s Report Key Audit Matter How our audit addressed the Key Audit Matter Leasing arrangement Refer to Note 2 – Significant accounting policies (i) and Note 38 – Accounting estimates and judgements to the consolidated financial statements. In accordance with IAS/HKAS 17 “Leases”, management assessed the classification of leases. Significant judgements are required in the assessment of the classification. In particular, management assessed the lease term, the present value of minimum lease payments, the nature of leased assets, and that there were no ownership transfers and no purchase options at the end of the lease terms. The key judgements are in respect of the economic lives and fair values of the leased assets and the interest rate implicit in the leases in the calculation of the present value of minimum lease payments. In response to this key audit matter, we performed the following procedures to assess management’s classification of leases: • examined the Lease Agreement and discussed with management the key terms in order to identify any inconsistency from our understanding; • in respect of the appropriateness of the judgements made by management in the determination of classification of the Lease Agreement, we performed the following: • assessed the impact of the agreed terms in the Lease Agreement on the classification; • tested the mathematical accuracy of the present value of minimum lease payment calculation, assessed the key assumptions and estimates made in the calculation and verified relevant data; • assessed the reasonableness of the interest rate implicit in the lease and performed sensitivity analysis; and • evaluated the appropriateness of the economic lives and the fair value of leased assets. Based on the procedures performed, the key assumptions and estimates made by management were agreed with the audit evidence we reviewed, and consistent with our understanding. 72


Annual Report 2018 Independent Auditor’s Report OTHER INFORMATION The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual report other than the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. RESPONSIBILITIES OF DIRECTORS AND AUDIT COMMITTEE FOR THE CONSOLIDATED FINANCIAL STATEMENTS The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs issued by the IASB, HKFRSs issued by the HKICPA, and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. The Audit Committee is responsible for overseeing the Group’s financial reporting process. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a body, in accordance with Section 405 of the Hong Kong Companies Ordinance and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 73


China Mobile Limited Independent Auditor’s Report Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Chow Wai Yin. PricewaterhouseCoopers Certified Public Accountants Hong Kong, 21 March 2019 74


Annual Report 2018 Consolidated Statement of Comprehensive Income for the year ended 31 December 2018 (Expressed in Renminbi (“RMB”)) Consolidated Statement of Comprehensive Income  Annual Report 2018 2018 2017 Note Million Million Operating revenue 4 Revenue from telecommunications services 670,907 668,351 Revenue from sales of products and others 65,912 72,163 736,819 740,514 Operating expenses Leased lines and network assets 47,470 46,336 Interconnection 20,692 21,762 Depreciation 152,545 149,780 Employee benefit and related expenses 5 93,939 85,513 Selling expenses 60,326 61,086 Cost of products sold 66,231 73,668 Other operating expenses 6 174,229 182,243 615,432 620,388 Profit from operations 121,387 120,126 Other gains 7 2,906 2,389 Interest and other income 8 15,885 15,883 Finance costs 9 (144) (210) Income from investments accounted for using the equity method 13,861 9,949 Profit before taxation 153,895 148,137 Taxation 12(a) (35,944) (33,723) PROFIT FOR THE YEAR 117,951 114,414 Other comprehensive income for the year, net of tax: Items that will not be subsequently reclassified to profit or loss Changes in the fair value of equity investments at fair value through other comprehensive income (168) – Share of other comprehensive income of investments accounted for using the equity method 60 – Items that may be subsequently reclassified to profit or loss Change in value of available-for-sale financial assets – (5) Currency translation differences 1,160 (735) Share of other comprehensive income/(loss) of investments accounted for using the equity method 1,188 (1,038) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 120,191 112,636 75


China Mobile Limited Consolidated Statement of Comprehensive Income (Continued) for the year ended 31 December 2018 (Expressed in RMB) Consolidated Statement of Comprehensive Income (Continued) 2018 2017 Note Million Million Profit attributable to: Equity shareholders of the Company 117,781 114,279 Non-controlling interests 170 135 P ROFIT FOR THE YEAR 117,951 114,414 Total comprehensive income attributable to: Equity shareholders of the Company 120,021 112,501 Non-controlling interests 170 135 T OTAL COMPREHENSIVE INCOME FOR THE YEAR 120,191 112,636 E arnings per share – Basic and diluted 13 RMB5.75 RMB5.58 The notes on pages 82 to 145 are an integral part of these consolidated financial statements. 76


Consolidated Balance Sheet as at 31 December 2018 (Expressed in RMB) Annual Report 2018 As at As at 31 December 2018 31 December 2017 Note Million Million Assets Non-current assets Property, plant and equipment 14 666,496 648,029 Construction in progress 15 72,180 78,112 Land lease prepayments and others 16 27,778 28,322 Goodwill 17 35,343 35,343 Other intangible assets 2,620 1,721 Investments accounted for using the equity method 19 145,325 132,499 Deferred tax assets 20 29,654 33,343 Financial assets at fair value through other comprehensive income 21 587 – Available-for-sale financial assets 21 – 44 Restricted bank deposits 22 12,369 6,504 Other non-current assets 4(a) 8,442 – 1,000,794 963,917 Current assets Inventories 23 8,857 10,222 Contract assets 4(a) 5,022 – Accounts receivable 24 26,540 24,153 Other receivables 25 39,543 31,201 Prepayments and other current assets 25 27,002 24,552 Amount due from ultimate holding company 26 570 221 Tax recoverable 1,959 1,519 Financial assets at fair value through profit or loss 21 76,425 – Available-for-sale financial assets 21 – 65,630 Restricted bank deposits 22 9 691 Bank deposits 27 291,887 279,371 Cash and cash equivalents 28 57,302 120,636 535,116 558,196 T otal assets 1,535,910 1,522,113 Equity and liabilities Liabilities Current liabilities Accounts payable 29 190,847 233,169 Bills payable 3,221 3,303 Deferred revenue 30 63,185 85,282 Accrued expenses and other payables 31 195,572 190,866 Amount due to ultimate holding company 26 11,020 8,646 Income tax payable 10,553 8,716 474,398 529,982 77



China Mobile LimitedConsolidated Balance Sheet (Continued)as at 31 December 2018 (Expressed in RMB)As at As at31 December201831 December2017Note Million MillionNon-current liabilitiesDeferred revenue – non-current 30 4,881 2,888Deferred tax liabilities 20 822 3625,703 3,250T otal liabilities 480,101 533,232EquityShare capital 32(a) 402,130 402,130Reserves 650,275 583,506Total equity attributable to equity shareholders of the Company 1,052,405 985,636N on-controlling interests 3,404 3,245T otal equity 1,055,809 988,881T otal equity and liabilities 1,535,910 1,522,113The consolidated financial statements on pages 75 to 145 were approved by the Board of Directors on 21 March2019 and were signed on its behalf.Li YueName of DirectorDong XinName of DirectorThe notes on pages 82 to 145 are an integral part of these consolidated financial statements.78

Annual Report 2018 Consolidated Statement of Changes in Equity for the year ended 31 December 2018 (Expressed in RMB) Attributable to equity shareholders of the Company Share capital Capital reserve General reserve Exchange reserve PRC Statutory and other reserves Retained profits Total Noncontrolling interests Total equity Million Million Million Million Million Million Million Million Million As at 1 January 2017 402,130 (265,308) 72 609 305,205 536,313 979,021 3,117 982,138 Changes in equity for 2017: Profit for the year – – – – – 114,279 114,279 135 114,414 Change in value of available-for-sale financial assets – (5) – – – – (5) – (5) Currency translation differences – – – (735) – – (735) – (735) Share of other comprehensive loss of investments accounted for using the equity method – (1,038 ) – – – – (1,038 ) – (1,038 ) Total comprehensive income for the year – (1,043) – (735) – 114,279 112,501 135 112,636 Dividends approved in respect of previous year (note 32(b)(ii)) – – – – – (22,204) (22,204) (7) (22,211) Dividends declared in respect of current year (note 32(b)(i)) – – – – – (83,832) (83,832) – (83,832) Transfer to PRC statutory reserves (note 32(d)(ii)) – – – – 21,808 (21,808) – – – Others – – – – 150 – 150 – 150 As at 31 December 2017 402,130 (266,351 ) 72 (126 ) 327,163 522,748 985,636 3,245 988,881 As at 31 December 2017 (As previously reported) 402,130 (266,351) 72 (126) 327,163 522,748 985,636 3,245 988,881 Changes in accounting policies (note 3) – 548 – – 1,181 4,802 6,531 – 6,531 As at 1 January 2018 (As restated) 402,130 (265,803) 72 (126) 328,344 527,550 992,167 3,245 995,412 Changes in equity for 2018: Profit for the year – – – – – 117,781 117,781 170 117,951 Changes in the fair value of financial assets at fair value through other comprehensive income – (168) – – – – (168) – (168) Currency translation differences – – – 1,160 – – 1,160 – 1,160 Share of other comprehensive income of investments accounted for using the equity method – 1,248 – – – – 1,248 – 1,248 Total comprehensive income for the year – 1,080 – 1,160 – 117,781 120,021 170 120,191 Dividends approved in respect of previous year (note 32(b)(ii)) – – – – – (27,060) (27,060) (10) (27,070) Dividends declared in respect of current year (note 32(b)(i)) – – – – – (32,870) (32,870) – (32,870) Transfer to PRC statutory reserves (note 32(d)(ii)) – – – – 19,148 (19,148) – – – Others – – – – 147 – 147 (1 ) 146 As at 31 December 2018 402,130 (264,723 ) 72 1,034 347,639 566,253 1,052,405 3,404 1,055,809 The notes on pages 82 to 145 are an integral part of these consolidated financial statements. 79


China Mobile Limited. Consolidated Statement of Cash Flows for the year ended 31 December 2018 (Expressed in RMB) 2018 2017 Note Million Million Operating activities Profit before taxation 153,895 148,137 Adjustments for: – Depreciation of property, plant and equipment 152,545 149,780 – Amortization of other intangible assets 6 1,609 515 – Amortization of land lease prepay ments 16 467 446 – Loss on disposal of property, plant and equipment 6 8 8 – Write-off and impairment of property, plant and equipment 6 1,250 12,593 – Impairment loss of doubtful accounts 6 4,635 3,392 – Write-down of inventories 6 155 297 – Interest and other income 8 (15,885) (15,883) – Finance costs 9 144 210 – Income from investments accounted for using the equity method (13,861) (9,949) – Net exchange gain (46) (27) Operating cash flow before changes in working capital 284,916 289,519 Decrease/(increase) in inventories 1,212 (1,690) Increase in contract assets 4(a) (874) – Increase in contract cost 4(a) (2,021) – Increase in accounts receivable (7,058) (8,367) Decrease in other receivables 1,784 648 Increase in prepayments and other current assets (2,999) (6,330) Increase in amount due from ultimate holding company (348) – Increase in deposited customer reserves 22 (4,835) (3,047) Decrease in accounts payable (16,400) (1,246) Increase in bills payable 873 1,695 (Decrease)/increase in deferred revenue (19,588) 1,811 Increase in accrued expenses and other payables 4,613 9,956 I ncrease in amount due to ultimate holding company 112 24 Cash generated from operations 239,387 282,973 Tax paid – PRC enterprise income tax paid (33,003) (37,324) – Hong Kong profits tax paid (233) (135) N et cash generated from operating activities 206,151 245,514 80


Annual Report 2018Consolidated Statement of Cash Flows (Continued) for the year ended 31 December 2018 (Expressed in RMB) Consolidated Statement of Cash Flows (Continued) 2018 2017 Note Million Million Investing activities Capital expenditure (192,395) (193,015) Land lease prepayments and others (580) (590) Acquisition of other intangible assets (2,189) (638) Proceeds from disposal of property, plant and equipment 8 287 (Increase)/decrease in bank deposits (11,578) 53,889 (Increase)/decrease in restricted bank deposits (excluding deposited customer reserves) 22 (348) 578 Interest received 11,810 15,204 Payment for investments accounted for using the equity method (375) (168) Dividends received from investments accounted for using the equity method 19 691 847 Purchase of available-for-sale financial assets – (106,296) Maturity of available-for-sale financial assets – 75,550 Purchase of financial assets at fair value through profit or loss (116,810) – Maturity of financial assets at fair value through profit or loss 21 110,087 – Purchase of financial assets at fair value through other comprehensive income 21 (711) – Short-term loans granted by China Mobile Finance and payment for other investments (16,210) (14,417) Maturity of short-term loans granted by China Mobile Finance and other investments 6,367 4,650 Receipt of consideration from China Tower – 57,585 Others 2 1 Net cash used in investing activities (212,231) (106,533) Financing activities Interest paid (142) (247) Dividends paid to the Company’s equity shareholders 32(b) (59,930) (106,036) Dividends paid to non-controlling shareholders of subsidiaries (10) (7) Short-term deposits placed by ultimate holding company 34(a) 10,873 8,611 Repayment of short-term deposits placed by ultimate holding company 34(a) (8,611) (5,552) Repayment of bonds – (5,000) Net cash used in financing activities (57,820) (108,231) Net (decrease)/increase in cash and cash equivalents (63,900) 30,750 Cash and cash equivalents at beginning of year 120,636 90,413 E ffect of changes in foreign exchange rate 566 (527) Cash and cash equivalents at end of year 28 57,302 120,636 Significant non-cash transactions The Group recorded payables of RMB74,816 million (2017: RMB100,584 million) to equipment suppliers as at 31 December 2018 for additions of construction in progress during the year then ended. Changes in liabilities arising from financing activities There are no changes in liabilities arising from financing activities other than the placement and repayment of shortterm deposits of ultimate holding company (note 26). The notes on pages 82 to 145 are an integral part of these consolidated financial statements. 81


China Mobile LimitedNotes to the Consolidated Financial Statements 82 China Mobile Limited (Expressed in RMB unless otherwise indicated) 1 GENERAL INFORMATION China Mobile Limited (the “Company”) was incorporated in the Hong Kong Special Administrative Region (“Hong Kong”) of the People’s Republic of China (the “PRC”) on 3 September 1997. The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are the provision of telecommunications and related services in Mainland China and in Hong Kong (for the purpose of preparing the consolidated financial statements, Mainland China refers to the PRC excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan). The Company’s immediate holding company is China Mobile Hong Kong (BVI) Limited (incorporated in British Virgin Islands), and the Company’s ultimate holding company is China Mobile Communications Group Co., Ltd. (“CMCC”, incorporated in Mainland China). The address of the Company’s registered office is 60th Floor, The Center, 99 Queen’s Road Central, Hong Kong. The shares of the Company have been listed on The Stock Exchange of Hong Kong Limited (the “HKEX”) since 23 October 1997 and the American Depositary Shares of the Company have been listed on the New York Stock Exchange since 22 October 1997. 2 SIGNIFICANT ACCOUNTING POLICIES (a) Statement of compliance These financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the IASB. Hong Kong Financial Reporting Standards (“HKFRSs”), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), are consistent with IFRSs that relates to the Group’s financial statements. These financial statements also comply with HKFRSs, the requirements of Hong Kong Companies Ordinance Cap. 622, and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”). A summary of the significant accounting policies adopted by the Group is set out below. (b) Basis of preparation The consolidated financial statements for the year ended 31 December 2018 comprise the Group and the Group’s interest in associates and joint ventures. The measurement basis used in the preparation of the financial statements is the historical cost basis, as modified by the revaluation of financial assets at fair value through other comprehensive income (“FVOCI”) and fair value through profit or loss (“FVPL”) which are carried at fair value. All of the new or amended standards or interpretations that effective for the year beginning on 1 January 2018 have been applied for the first time by the Group. The impact of adopting these new or amended standards or interpretations is disclosed in note 3. The preparation of financial statements in conformity with IFRSs and HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. 82


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Basis of preparation (Continued) The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of IFRSs and HKFRSs that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in note 38. (c) Subsidiaries and non-controlling interests (i) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealized gains arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealized losses resulting from intra-group transactions are eliminated in the same way as unrealized gains but only to the extent that there is no evidence of impairment. Accounting policies of subsidiaries would be changed where necessary in the consolidated financial statements to ensure consistency with the policies adopted by the Group. Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. For each business combination, the Group can elect to measure any non-controlling interests either at fair value or at their proportionate share of the subsidiary’s net identifiable assets. Non-controlling interests are presented in the consolidated balance sheet within equity, separately from equity attributable to the equity shareholders of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated statement of comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling interests and the equity shareholders of the Company. Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and noncontrolling interests within consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognized. When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognized in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognized at fair value and this amount is regarded as the fair value on initial recognition of a financial asset or, when appropriate, the cost on initial recognition of an investment in an associate or a joint venture. 83


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Subsidiaries and non-controlling interests (Continued) (ii) Separate financial statements In the Company’s balance sheet, an investment in a subsidiary is stated at cost less impairment losses (see note 2(j)). The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable. Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill. (iii) Business combination other than under common control The Group applies the acquisition method to account for business combination of entities and businesses which are not under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred. (iv) Business combination under common control Under IFRSs and HKFRSs, the Group use merger accounting to account for the business combination of entities and businesses under common control in accordance with the Accounting Guideline 5 “Merger Accounting for Common Control Combinations” issued by the HKICPA. The consolidated financial statements incorporate the financial statements of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party. The assets and liabilities of the combining entities or businesses are combined using the carrying book values from the controlling parties’ perspective. No amount is recognized in consideration for goodwill or excess of acquirers’ interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over the consideration at the time of common control combination, to the extent of the continuation of the controlling party’s interest. The consolidated statement of comprehensive income includes the results of each of the combining entities or businesses from the earliest date presented or since the date when the combining entities or businesses first came under the common control, where there is a shorter period, regardless of the date of the common control combination. Transaction costs, including professional fees, registration fees, costs of furnishing information to shareholders, costs or losses incurred in combining operations of the previously separate businesses, etc., incurred in relation to the common control combination that is to be accounted for by using merger accounting is recognized as an expense in the period in which they were incurred. 84


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Investments accounted for using the equity method An associate is an entity in which the Group has significant influence, but not control or joint control, over its management, including participation in the financial and operating policy decisions. The Group has applied IFRS/HKFRS 11 to all joint arrangements. Under IFRS/HKFRS 11, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. The Group accounted for its investment in associates and joint ventures using the equity method. Under the equity method, the investment is initially recorded at cost. Thereafter, the investment is adjusted for the post-acquisition change in the Group’s share of the investee’s net assets and any impairment loss relating to the investment (see note 2(j)). The Group’s share of the post-acquisition posttax results of the investee for the year is recognized as income from investments accounted for using the equity method in the consolidated statement of comprehensive income, whereas the Group’s share of the post-acquisition post-tax items of the investee’s other comprehensive income is recognized as its share of other comprehensive income in the consolidated statement of comprehensive income. When the Group’s share of losses exceeds its interest in the associate or joint ventures, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. For this purpose, the Group’s interest in the investee is the carrying amount of the investment under the equity method together with the Group’s long-term interests that in substance form part of the Group’s net investment in the associates or joint ventures. Unrealized profits and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s interest in the investee, except where unrealized losses provide evidence of an impairment of the asset transferred, in which case they are recognized immediately in profit or loss. Accounting policies of associates or joint ventures would be changed where necessary in the consolidated financial statements to ensure consistency with the policies adopted by the Group. Gain or loss on dilution of equity interest in associates and joint ventures are recognized in profit or loss. 85


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Goodwill Goodwill represents the excess of: (i) the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree; over (ii) the net fair value of the acquiree’s identifiable assets and liabilities measured as at the acquisition date. When (ii) is greater than (i), then this excess is recognized immediately in profit or loss as a gain on a bargain purchase. Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating unit, or groups of cash-generating units, that is expected to benefit from the synergies of the combination and is tested annually for impairment (see note 2(j)). Each unit or groups of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose. Goodwill is monitored at the operating segment level. On disposal of a cash-generating unit during the year, any attributable amount of purchased goodwill is included in the calculation of the gain or loss on disposal. (f) Other intangible assets Other intangible assets such as operating license and copyrights that are acquired by the Group are stated in the balance sheet at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses (see note 2(j)). Amortization of intangible assets with finite useful lives is recorded in other operating expenses on a straight-line basis over the assets’ estimated useful lives, from the date they are available for use. Both the period and method of amortization are reviewed annually. Intangible assets are not amortized where their useful lives are assessed to be indefinite. The useful life of an intangible asset that is not being amortized is reviewed annually to determine whether events and circumstances continue to support the indefinite useful life assessment for that asset. Otherwise, the change in useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortization of intangible assets with finite lives as set out above. 86


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (g) Property, plant and equipment Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see note 2(j)). The cost of property, plant and equipment comprises the purchase price and any directly attributable costs of bringing the asset to its working location and condition for its intended use. Subsequent expenditure relating to an item of property, plant and equipment that has already been recognized is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the entity. All other subsequent expenditure is recognized as an expense in the period in which it is incurred. Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognized in profit or loss on the date of retirement or disposal. Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows: Buildings 8–30 years Telecommunications transceivers, switching centers, transmission and other network equipment 5–10 years Office equipment, furniture, fixtures and others 3–10 years Both the assets’ useful lives and residual values, if any, are reviewed annually. (h) Construction in progress Construction in progress is stated at cost less impairment losses (see note 2(j)). Cost comprises direct costs of construction as well as interest expense and exchange differences capitalized during the periods of construction and installation. Capitalization of these costs ceases and the construction in progress is transferred to property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for in respect of construction in progress until it is completed and ready for its intended use. 87


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Leased assets An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease. (i) Classification of assets leased to the Group Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases. (ii) Assets acquired under finance leases Where the Group acquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if lower, the present value of the minimum lease payments of such assets is included in property, plant and equipment and the corresponding liabilities, net of finance charges, are recorded as obligations under finance leases. Depreciation is provided for at rates, which write off the cost of the assets over the term of the relevant lease or, where it is likely the Group will obtain ownership of the asset, the useful life of the asset as set out in note 2(g). Impairment losses are accounted for in accordance with the accounting policy as set out in note 2(j). Finance charges implicit in the lease payments are charged to profit or loss over the period of the leases so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. (iii) Leased lines and network assets and operating lease charges Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the time pattern of benefits to be derived from the leased asset. Lease incentives received are recognized in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. The cost of acquiring land held under an operating lease is amortized on a straight-line basis over the period of the lease term. 88


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (j) Impairment of non-financial assets (i) Impairment of investments accounted for using the equity method Investments accounted for using the equity method are reviewed at the end of each reporting period to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the following loss events: – significant financial difficulty of the entity; – a breach of contract, such as a default or delinquency in interest or principal payments; – it becoming probable that the entity will enter bankruptcy or other financial reorganization; – significant changes in the technological, market, economic or legal environment that have an adverse effect on the entity; and – decline in the fair value of an investment in an equity instrument below its cost. If any such evidence exists, the impairment loss is measured by comparing the recoverable amount of the investment with its carrying amount in accordance with note 2(j)(ii). The impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount in accordance with note 2(j)(ii). (ii) Impairment of other assets Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, except in the case of goodwill and other intangible assets with indefinite useful lives, an impairment loss previously recognized no longer exists or may have decreased: – property, plant and equipment; – construction in progress; – prepaid interests in leasehold land classified as being held under an operating lease; – investments in subsidiaries; – goodwill; and – other intangible assets. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill and other intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment. 89


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (j) Impairment of non-financial assets (Continued) (ii) Impairment of other assets (Continued) – Calculation of recoverable amount The recoverable amount of an asset is the higher of its fair value less costs of disposal and value in use (“VIU”). In assessing VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit). – Recognition of impairment losses An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal, or VIU, if determinable. – Reversals of impairment losses In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed. A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized. (k) Inventories Inventories are carried at the lower of cost and net realizable value. Cost represents purchase cost of goods calculated using the weighted average cost method. Net realizable value is determined by reference to the sales proceeds of items sold in the ordinary course of business or to management’s estimates based on prevailing market conditions. When inventories are sold, the carrying amount of those inventories is recognized as cost of products sold. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs. No reversal of any write-down of inventories occurred during the years presented. 90


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Investments and other financial assets Recognition and derecognition Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Classification From 1 January 2018 onwards, the Group classifies its financial assets, depending on the Group’s business model for managing the financial assets and the contractual terms of the related cash flows, under the following measurement categories: • those to be measured at amortized cost, and • those to be measured at fair value (either through other comprehensive income, or through profit or loss). Measurement At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. (i) The Group’s financial assets measured at amortized cost represent those financial assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest from these financial assets is included in interest income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly in profit or loss and presented in other gains together with foreign exchange gains and losses. Impairment losses are presented in other operating expenses. (ii) For equity instruments that are not held for trading, the Group has made an irrevocable election at the time of initial recognition to account for these equity investments at FVOCI. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investments. Dividends from such investments continue to be recognized in profit or loss when the Group’s right to receive payments is established. (iii) Assets that do not meet the criteria for amortized cost or are not elected/classified as FVOCI are classified as FVPL. A gain or loss on a financial instrument that is subsequently measured at FVPL is recognized in profit or loss and presented net within interest and other income in the period in which it arises. 91


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Investments and other financial assets (Continued) Impairment From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortized cost. The Group has adopted the simplified expected credit loss model for its accounts receivable and contract assets, which requires expected lifetime losses to be recognized from their initial recognition. For other debt instruments carried at amortized cost, which have low credit risk at both the beginning and end of the reporting period, the Group adopted the expected credit loss model. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Financial assets are written off when the Group is satisfied that recovery is remote. When loans or receivables have been written off, the Group continues to attempt to recover the receivable due. When recoveries are made, the recovered amount is recognized in profit or loss. Accounting policies applied until 31 December 2017 The Group has retrospectively applied IFRS/HKFRS 9, but has elected not to restate comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the Group’s previous accounting policy. Until 31 December 2017, the Group classifies its financial assets in the following categories: • Financial assets at fair value through profit or loss; • Held-to-maturity investments; • Loans and receivables; and • Available-for-sale financial assets. The classification determined on the purpose for which the investments were acquired. Management determined the classification of its investments at initial recognition. The Group assessed at the end of each reporting period whether there was objective evidence that a financial asset or group of financial assets was impaired. A financial asset or a group of financial assets was impaired and impairment losses were incurred only if there was objective evidence of impairment as a result of one or more loss events and that loss event (or events) had an impact on the estimated future cash flows of the financial asset or group of financial assets that could be reliably estimated. 92


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Investments and other financial assets (Continued) Accounting policies applied until 31 December 2017 (Continued) If any such evidence exists, any impairment loss is determined and recognized as follows: – For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for such equity securities are not reversed. – For debt instruments classified as available-for-sale financial assets, if any impairment evidence exists, the cumulative loss (measured as the difference between the acquisition cost (net of any principal repayment and amortization) and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss) is reclassified from equity and recognized in profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as availablefor- sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through profit or loss. For equity instruments classified as available-for-sale financial assets, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any impairment evidence exists, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss) is reclassified from equity and recognized in profit or loss. Impairment losses recognized in profit or loss on equity instruments are not reversed through profit or loss. – For trade and other current receivables carried at amortized cost, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where these financial assets share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group. If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognized, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognized in prior years. Impairment losses are written off against the corresponding assets directly, except for impairment losses recognized in respect of debtors included within trade and other receivables, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade debtors directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognized in profit or loss. 93


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) Accounts receivable and other receivables Accounts receivable and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method less loss allowance for impairment loss of accounts receivable and other receivables (see note 2(l)), except where the effect of discounting would be immaterial. (n) Cash and cash equivalents Cash and cash equivalents comprise bank deposits with original maturity within three months, cash at banks and in hand, demand deposits with banks, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. (o) Accounts payable and other payables Accounts payable and other payables are initially recognized at fair value and subsequently stated at amortized cost unless the effect of discounting would be immaterial. (p) Deferred revenue Deferred revenue consists primarily of contract liability which is from the excess of the cumulative consideration received or receivables from the contracted customer over the cumulative revenue, mainly including prepaid service fees received from customers which are generally not refundable and revenue deferred for unredeemed point rewards under customer point reward program (“Reward Program”). (q) Interest-bearing borrowings Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method. (r) Revenue recognition from contracts with customers The Group mainly provides voice, data and other telecommunications services and sells telecommunication related products to its customers through entering into contracts that are either cancellable on monthly basis or for a fixed contract period generally with prepayment term and/or penalty for early termination. For the telecommunications services (such as voice and data services), telecommunication related products (such as handsets), customer point rewards and/or other promotional goods/services provided by the Group, if the customer can benefit from the goods or services and the Group’s promise to transfer the services or products is separately identifiable, the Group identifies them as separate performance obligations. Revenue is measured at the transaction price which is the amount of consideration to which the Group is entitled in exchange for transferring promised performance obligations to the customer excluding amounts collected on behalf of third parties. The amount of consideration is generally explicitly stated in the contract and does not include significant financing component. The Group may provide cash subsidies to third party agents in respect of specific telecommunications service contracts obtained via the agents. As the cash subsidies are ultimately enjoyed by end customers via the indirect sales channel, they represent consideration payable to customers and accounted for as a reduction of the transaction price. 94


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Revenue recognition from contracts with customers (Continued) When control of a service or product is transferred to a customer, revenue is generally recognized using an output method in profit or loss as follows: (i) Revenue for each performance obligation is recognized when the Group satisfies the performance obligation by transferring the promised goods or services to a customer. Generally, revenue is recognized when the customer obtains the control of the telecommunications services over the time of provision of the services. Revenue is recognized when a customer obtains the control of the product at a point of time. (ii) For contracts which include the provision of multiple performance obligations including services, products and/or customer point rewards, the Group allocates the transaction price to each performance obligation based on the relative stand-alone selling price. The stand-alone selling price of products and services are mainly based on its observable selling price. The standalone selling price of each point in the customer point rewards is based on its fair value. Revenue for each performance obligation is then recognized when the control of the promised goods or services transfers to the customer. (iii) The Group usually controls the services and the products it provided before they are transferred to the customer. In certain situations, the Group would consider the primary responsibilities in the arrangement, the establishment of selling price, and the inventory risks to determine if the Group is acting as a principal or agent. If the Group has assessed and concluded that it does not obtain the control of a specified good before transferring to the customer, the Group is acting as agent in satisfying a performance obligation, and the revenue is recognized in the net amount of any fee or commission to which it expects to be entitled from another party. The Group has both pre-paid and post-paid customers for its goods and services provided. Contract assets primarily relate to the Group’s rights to consideration for products or services provided to the customers but for which the Group does not have an unconditional right at the reporting date. In the post-paid contract, contract asset is created, which represents the difference between the amount of products revenue recognized upon sale of products or provision of service and the amount of consideration received from the customer. The contract asset is reclassified to accounts receivable as services are provided and billed. Contract liabilities arise when the Group receives consideration in advance of providing the goods or services promised in the contract. Contract liabilities are presented in deferred revenue on the consolidated balance sheet. The contract assets and the contract liabilities are classified as current and non-current portions based on their respective recovery or settlement periods. Non-current portion of contract assets are presented in other non-current assets. Incremental costs incurred to obtain a contract, which mainly comprise sales commissions payable to third party agents, are amortized on straight-line basis over the expected life of the customer contract and recorded in selling expense, if recoverable. When the expected amortization period is one year or less, the Group utilizes the practical expedient and expenses the costs as incurred. Capitalized incremental costs incurred to obtain a contract is recorded as other non-current assets. Cost incurred to fulfil a contract represents the cost directly related to the Group’s telecommunications service contracts which are not within the scope of another accounting standard. The amount is amortized based on straight-line basis over the expected life of the customer contract and recorded as other operating expense, if recoverable. Capitalized cost incurred to fulfil a contract is recorded as other non-current assets based on its amortization period. 95


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Revenue recognition from contracts with customers (Continued) Accounting policies applied until 31 December 2017 Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows: (i) revenue derived from voice and data services are recognized when the service is rendered; (ii) sales of products are recognized when the title is passed to the buyer; (iii) for offerings which include the provision of services and sale of mobile handset, the Group determines the revenue from the sale of the mobile handset by deducting the fair value of the service element from the total contract consideration; and (iv) for transactions which offer customer points reward when services are provided, the consideration allocated to the customer points reward is based on its fair value which is deducted from revenue and recorded as deferred revenue when the rewards are granted and recognized as revenue when the points are redeemed or expired. (s) Interest income Interest income is recognized as it accrues using the effective interest method. (t) Income tax Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognized in profit or loss except items recognized in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognized in other comprehensive income or directly in equity, respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilized, are recognized. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilized. 96`


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (t) Income tax (Continued) The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries and associates to the extent that, in the case of taxable temporary differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future. The amount of deferred tax recognized is measured based on the expected manner of realization or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted. The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available. Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met: – in the case of current tax assets and liabilities, the Group intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously; or – in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either: – the same taxable entity; or – different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously. (u) Provisions and contingent liabilities Provisions are recognized for liabilities of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and the amount can be estimated reliably. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. 97



China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (v) Employee benefits (i) Short-term employee benefits and contributions to defined contribution retirement plans Salaries, annual bonuses, paid annual leave, leave passage, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values. The Company and subsidiaries incorporated in Hong Kong are required to make contributions to Mandatory Provident Funds under the Hong Kong Mandatory Provident Fund Schemes Ordinance. Such contributions are recognized as an expense in profit or loss as incurred. The employees of the subsidiaries in Mainland China participate in the defined contribution retirement plans managed by the local government authorities whereby the subsidiaries are required to contribute to the schemes at fixed rates of the employees’ salary costs. In addition to the local governmental defined contribution retirement plans, the subsidiaries also participate in a pension scheme launched by the Group managed by an independent insurance company whereby the subsidiaries are required to make contributions to the retirement plans at fixed rates of the employees’ salary costs or in accordance with the terms of the plans. The Group’s contributions to these plans are charged to profit or loss when incurred. The Company and subsidiaries have no obligations for the payment of retirement and other postretirement benefits of staff other than the contributions described above. (ii) Share-based payments The fair value of share options granted to employees is recognized as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date using the binomial lattice model, taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking into account the probability that the options will vest. During the vesting period, the number of share options that is expected to vest is reviewed at each balance sheet date. Any resulting adjustment to the cumulative fair value recognized in prior years is credited/charged to the profit or loss for the year of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that vest (with a corresponding adjustment to the capital reserve). The equity amount is recognized in the capital reserve until either the option is exercised (when it is transferred to the share capital account) or the option expires (when it is released directly to retained profits). In the Company’s balance sheet, share-based payment transactions in which the Company grants share options to subsidiaries’ employees are accounted for as an increase in value of investments in subsidiaries, which is eliminated on consolidation. (iii) Termination benefits Termination benefits are recognized when, and only when, the Group demonstrably commits itself to terminate employment which is without realistic possibility of withdrawal or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal. 98


Annual Report 2018 (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(w) Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred. The capitalization of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalization of borrowing costs is suspended or ceased when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.(x) Translation of foreign currencies The functional currency of majority of the entities within the Group is RMB, which is the currency of the primary economic environment in which most of the Group’s entities operate. The Group adopted RMB as its presentation currency in the preparation of the consolidated financial statements. Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in currencies other than the functional currency are retranslated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was determined. The results of overseas entities are translated into RMB at the exchange rates approximating the foreign exchange rate ruling at the dates of transactions. Balance sheet items are translated into RMB at the exchange rates ruling at the balance sheet date. The resulting currency translation differences are recognized in other comprehensive income and accumulated separately in equity in the exchange reserve. On disposal of an overseas entity, the cumulative amount of the currency translation differences relating to that particular foreign operation is reclassified from equity to profit or loss. For the purpose of the consolidated statement of cash flows, the cash flows of overseas entities within the Group are translated into RMB by using the exchange rates approximating the foreign exchange rate ruling at the dates of the cash flows.


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (y) Related parties (a) A person, or a close member of that person’s family, is related to the Group if that person: (i) has control or joint control of the Group; (ii) has significant influence over the Group; or (iii) is a member of the key management personnel of the Group or the Group’s parent. (b) An entity is related to the Group if any of the following conditions applies: (i) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); (iii) Both entities are joint ventures of the same third party; (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity; (v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group; (vi) The entity is controlled or jointly controlled by a person identified in note 2(y)(a); or (vii) A person identified in note 2(y)(a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity. (z) Segment reporting An operating segment is a component of the Group that engages in business activities from which the Group may earn revenue and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Group’s Chief Operating Decision Maker (“CODM”) in order to allocate resources and assess performance of the segment. The CODM has been identified as the Executive Directors of the Company. For the years presented, the Group as a whole is an operating segment since the Group is only engaged in telecommunications and related businesses. No geographical information has been disclosed as the majority of the Group’s operating activities are carried out in Mainland China. The Group’s assets located and operating revenue derived from activities outside Mainland China are less than 5% of the Group’s assets and operating revenue, respectively. (aa) Dividend distribution Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s and the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders or directors, where appropriate. 100


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 3 CHANGES IN ACCOUNTING POLICIES The following new standards, annual improvements and interpretations are mandatory for the first time for the Group’s financial year beginning on 1 January 2018 and are applicable for the Group: IFRS/HKFRS 9 “Financial Instruments” IFRS/HKFRS 15 “Revenue from Contracts with Customers” Annual Improvement to IFRSs/HKFRSs 2014-2016 cycle* IFRIC/HK(IFRIC) – Int 22, “Foreign Currency Transactions and Advance Consideration” * It includes amendment to IFRS/HKFRS 12 “Disclosure of interests in other entities” which was effective on 1 January 2017 and does not have a material impact on the Group. New standards, annual improvement or interpretation to IFRS/HKFRS and IAS/HKAS effective for the financial year beginning on 1 January 2018 do not have a material impact on the Group other than IFRS/HKFRS 9 and IFRS/HKFRS 15, details of which are set out in note 3(b) and 3(c), respectively. In addition, the IASB and HKICPA also published a number of new standards, amendments to standards and interpretations which are effective for the financial year beginning on or after 1 January 2019 and have not been early adopted by the Group (see note 39). Management is assessing the impact of such new standards and amendments to standards and will adopt the relevant standards and amendments to standards in the subsequent periods as required.101


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 3 CHANGES IN ACCOUNTING POLICIES (CONTINUED) (a) Impact on the financial statements This note explains the impact of the adoption of IFRS/HKFRS 9 and IFRS/HKFRS 15 on the Group’s financial statements. As explained in note 3(b), in accordance with the transitional provisions, IFRS/HKFRS 9 was adopted without restating the comparative figures. And as explained in note 3(c), IFRS/HKFRS 15 was generally adopted using the modified retrospective approach without restating comparative figures. The reclassifications and the adjustments are therefore recognized in the balance sheet on 1 January 2018. The following tables show the adjustments recognized for each individual line item. Line items that were not affected by the changes have not been included. The adjustments are explained in more detail in note 3(b) and note 3(c). Consolidated Balance Sheet (Extract) 31 December 2017 (As previously reported) Changes in accounting policy – IFRS/ HKFRS 9 Changes in accounting policy – IFRS/ HKFRS 15 1 January 2018 (As restated) Million Million Million Million Assets Non-current assets Investments accounted for using the equity method 132,499 (2,194) – 130,305 Deferred tax assets 33,343 24 (2,879) 30,488 Financial assets at fair value through other comprehensive income – 44 – 44 Available-for-sale financial assets 44 (44) – – Other non-current assets – – 6,469 6,469 963,917 (2,170) 3,590 965,337 Current assets Contract assets – – 4,139 4,139 Accounts receivable 24,153 (195) – 23,958 Financial assets at fair value through profit or loss – 65,630 – 65,630 Available-for-sale financial assets 65,630 (65,630) – – 558,196 (195) 4,139 562,140 T otal assets 1,522,113 (2,365) 7,729 1,527,477 102


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 3 CHANGES IN ACCOUNTING POLICIES (CONTINUED) (a) Impact on the financial statements (Continued) Consolidated Balance Sheet (Extract) (Continued) 31 December 2017 (As previously reported) Changes in accounting policy – IFRS/ HKFRS 9 Changes in accounting policy – IFRS/ HKFRS 15 1 January 2018 (As restated) Million Million Million Million Equity and liabilities Liabilities Current liabilities Accrued expenses and other payables 190,866 – (782) 190,084 Deferred revenue 85,282 – (385) 84,897 529,982 – (1,167) 528,815 Total liabilities 533,232 – (1,167) 532,065 Equity Reserves 583,506 (2,365) 8,896 590,037 Total equity 988,881 (2,365) 8,896 995,412 Total equity and liabilities 1,522,113 (2,365) 7,729 1,527,477 (b) IFRS/HKFRS 9 “Financial Instruments” IFRS/HKFRS 9 replaces the provisions of IAS/HKAS 39“Financial Instruments: Recognition and Measurement” that mainly affect the recognition, classification and measurement of financial assets and financial liabilities and impairment of financial assets of the Group. The adoption of IFRS/HKFRS 9 from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts recognized in the financial statements. The new accounting policies are set out in note 2(l) above. In accordance with the transitional provisions, comparative figures have not been restated. 103


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 3 CHANGES IN ACCOUNTING POLICIES (CONTINUED) (Expressed in RMB unless otherwise indicated) (b) IFRS/HKFRS 9 “Financial Instruments” (Continued) Classification and measurement On 1 January 2018 (the date of initial application of IFRS/HKFRS 9), the Group’s management assessed the classification of the financial assets according to their business models and classified its financial instruments into the appropriate IFRS/HKFRS 9 categories. (i) Reclassification of debt investment from available-for-sale financial assets to FVPL In accordance with IFRS/HKFRS 9, the Group assessed and reclassified wealth management products issued by banks (“WMP”) from available-for-sale financial assets to financial assets at FVPL (RMB65,630 million as at 1 January 2018). (ii) Equity investments previously classified as available-for-sale financial assets that are not held for trading For long-term investments, which are not held for trading and not expected to be sold in the short term, the Group elected to present in other comprehensive income for the changes in their fair value. As a result, RMB44 million were reclassified from available-for-sale financial assets to financial assets at FVOCI and accumulated fair value gains of RMB19 million were reclassified from the available-for-sale financial assets reserve to the FVOCI reserve on 1 January 2018, both of which are included in capital reserves. Impairment (i) Accounts receivable and contract assets Upon the adoption of the simplified expected credit loss model, the related retained profits were reduced by RMB165 million and the PRC statutory reserves were reduced by RMB6 million as at 1 January 2018. Please refer to note 4(a) for details of the loss allowances for contract assets on 1 January 2018. (ii) Other financial assets at amortized cost Other financial assets at amortized cost include cash and cash equivalents, bank deposits and other receivables, etc. They are considered to be of low credit risk and thus management considers that the expected credit loss is insignificant. Impact from the adoption of IFRS 9 by investments accounted for using the equity method Shanghai Pudong Development Bank Co., Ltd. (“SPD Bank”), a major associate of the Group has adopted IFRS 9 for the year beginning 1 January 2018 without restating the comparative figures in accordance with the transitional provisions stipulated in IFRS 9. Accordingly, the balance of investment accounted for using the equity method, the retained profits and PRC statutory reserves of the Group as at 1 January 2018 were reduced by RMB2,194 million, RMB2,194 million, and RMB548 million, respectively; while the other comprehensive income of the Group as at the same date was increased by RMB548 million. 104


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 3 CHANGES IN ACCOUNTING POLICIES (CONTINUED) (c) IFRS/HKFRS 15 “Revenue from Contracts with Customers” The adoption of IFRS/HKFRS 15 from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts recognized in the financial statements. The new accounting policies are set out in note 2(r) above. (i) The impact on the Group’s equity Accounting for multiple performance obligations Prior to the adoption of IFRS/HKFRS 15, the consideration received from offerings which include the provision of services and sale of mobile handset, was allocated to each element using the residual method. Upon the adoption of IFRS/HKFRS 15, the total consideration from arrangement with multiple performance obligations, such as mobile services, telecommunication related products (such as handsets), customer point rewards and/or other promotional goods/services, is allocated to each performance obligation based on their relative stand-alone selling prices. In addition, prior to the adoption of IFRS/HKFRS 15, certain subsidies, payable to third party agents in respect of customer contracts obtained and ultimately enjoyed by end customers, were expensed as incurred. Upon the adoption of IFRS/HKFRS 15, such payments via the third party agents are qualified as consideration payable to a customer and accounted for as a reduction of the transaction price. To reflect these changes in policy, as at 1 January 2018, the Group recognized contract assets of RMB5,654 million, net of a related impairment provision amounting to RMB303 million, reduced its contract liabilities and receipts-in-advance by RMB1,167 million, respectively. Accordingly, the impact on the Group’s equity as at the same date were an increase of RMB4,188 million of retained profits, and an increase of RMB1,025 million of the PRC statutory reserves, respectively. Accounting for costs incurred to obtain a contract and to fulfil a contract Upon the adoption of IFRS/HKFRS 15, the Group recognizes contract costs for incremental commission expenses paid to the agents in conjunction with obtaining customer contracts, which were previously expensed as incurred. And such cost is amortized using the straight-line method over the expected life of the customer contract. When the expected amortization period is one year or less, the Group utilizes the practical expedient and expenses the costs as incurred. Upon the adoption of IFRS/HKFRS 15, the Group recognized contract costs incurred to fulfil a contract for the costs directly related to the Group’s telecommunications service contracts and are not within the scope of another accounting standard, which were previously expensed as incurred. Such cost is amortized using the straight-line method over the expected life of the customer contract. To reflect the above changes in policy, as at 1 January 2018, the Group recognized contract costs of RMB4,954 million. Accordingly, the impact on the Group’s equity as at the same date were an increase of RMB2,973 million of retained profits, and an increase of RMB710 million of the PRC statutory reserves, respectively. 105


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 3 CHANGES IN ACCOUNTING POLICIES (CONTINUED) (c) IFRS/HKFRS 15 “Revenue from Contracts with Customers” (Continued) (ii) Summary of effects arising from initial application of IFRS/HKFRS 15 The following table shows the impact from the adoption of IFRS/HKFRS 15 relative to IAS/HKAS 18 “Revenue” on certain impacted financial statement line items in the Group’s consolidated statements of comprehensive income for the year ended 31 December 2018 and consolidated balance sheet as at 31 December 2018. Line items that were not affected by the initial application have not been included. The impacted areas are consistent with those disclosed in note 3(c)(i). Consolidated Statement of Comprehensive Income (Extract) 2018 Amounts without adoption of As reported Adjustments IFRS/HKFRS 15 Million Million Million Operating revenue Revenue from telecommunications services 670,907 10,833 681,740 Revenue from sales of products and others 65,912 (5,821) 60,091 Operating expenses Selling expenses 60,326 6,048 66,374 Cost of products sold 66,231 847 67,078 Other operating expenses 174,229 54 174,283 Consolidated Balance Sheet (Extract) As at 31 December 2018 Balances without adoption of As reported Adjustments IFRS/HKFRS 15 Million Million Million Assets Non-current assets Deferred tax assets 29,654 3,301 32,955 Other non-current assets 8,442 (8,442) – Current assets Contract assets 5,022 (5,022) – Equity and liabilities Liabilities Current liabilities Accrued expenses and other payables 195,572 68 195,640 Deferred revenue 63,185 177 63,362 Equity Reserves 650,275 (10,408) 639,867 106


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 4 OPERATING REVENUE 2018 2017 Million Million Revenue from telecommunications services Voice services 108,083 156,918 Data services 542,083 493,350 Others 20,741 18,083 670,907 668,351 R evenue from sales of products and others 65,912 72,163 736,819 740,514 The majority of the Group’s operating revenue is from contracts with customers, the remaining is not material. Based on the static calculation of customer contracts in 2017, with the adoption of IFRS/HKFRS 15, operating revenue and revenue from telecommunications services in 2017 would have decreased by RMB16,659 million and RMB21,147 million, respectively; and revenue from sales of products and others in 2017 would have increased by RMB4,488 million. (a) Assets related to contracts with customers The Group has recognized the following assets related to contract with customers: As at 31 December 2018 As at 1 January 2018 Note Million Million Contract assets (i) 6,489 5,654 Less: current portion (5,022) (4,139) Non-current portion recorded in other non-current assets 1,467 1,515 Contract costs incurred to obtain a contract recorded in other non-current assets (ii) 6,880 4,924 Contract costs incurred to fulfil a contract recorded in other non-current assets 95 30 O ther non-current assets 8,442 6,469 107


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 4 OPERATING REVENUE (CONTINUED) (Expressed in RMB unless otherwise indicated) (a) Assets related to contracts with customers (Continued) Note: (i) Significant changes in contract assets: Contract assets Gross amount Loss allowance Million Million As at 1 January 2018 5,957 (303) Increase resulting from satisfaction of performance obligation 7,325 – Reclassified to accounts receivable (6,451) – Net impairment loss of contract assets – (39) As at 31 December 2018 6,831 (342) (ii) The capitalized amount of contract costs incurred to obtain contracts was RMB9,620 million for the year ended 31 December 2018. The amount of amortization was RMB7,664 million for contract costs incurred to obtain contracts. As at 31 December 2018, the management performed impairment test for the contract costs incurred to obtain contracts and determined such impairment was not significant. (b) Details of contract liabilities Contract liabilities are presented in deferred revenue in the consolidated balance sheet. As at 31 December 2018, total contract liabilities amounted to RMB62,812 million (as at 1 January 2018: RMB81,147 million). For the year ended 31 December 2018, revenue recognized related to contract liabilities existing at 1 January 2018 amounted to RMB66,370 million. The decrease of contract liabilities is mainly due to the Group’s adjustment in marketing strategy in reaction to the market environment. (c) Unsatisfied long-term contracts The unsatisfied performance obligation of the Group is mainly relating to telecommunications services. The Group generally enters into service contracts with customers monthly or for a fixed term, and bills the customers on monthly basis based on the contract terms for the Group’s unconditional right to consideration. For the contracts that have an original expected duration of one year or less and the performance obligations which are regarded as satisfied as billed, the Group has applied the practical expedient permitted under IFRS/HKFRS 15, therefore, the information about the remaining performance obligations were not disclosed. 5 EMPLOYEE BENEFIT AND RELATED EXPENSES 2018 2017 Million Million Salaries, wages, labor service expenses and other benefits 81,843 74,427 R etirement costs: contributions to defined contribution retirement plans 12,096 11,086 93,939 85,513 108


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 6 OTHER OPERATING EXPENSES 2018 2017 Note Million Million Maintenance 54,569 55,737 Impairment loss of doubtful accounts 4,635 3,392 Write-down of inventories 155 297 Amortization of other intangible assets 1,609 515 Operating lease charges – land and buildings 11,439 11,453 – others (i) 4,663 3,698 Loss on disposal of property, plant and equipment 8 8 Write-off and impairment of property, plant and equipment (note 14) 1,250 12,593 Power and utilities expenses 32,032 30,518 Operation support and research and development expenses (ii) 44,001 38,016 Auditors’ remuneration – audit services (iii) 108 107 – tax services 3 3 – other services 6 12 O thers (iv) 19,751 25,894 174,229 182,243 Note: (i) Other operating lease charges represent the operating lease charges for motor vehicles, computer and other office equipment. (ii) Operation support and research and development expenses mainly include support expenses for new business operation, research and development cost for new technology evolution, amortization of testing equipment, and other related costs. (iii) Audit services include reporting on the Group’s internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of the United States of America with the service fee amount of RMB22 million (2017: RMB22 million). (iv) Others consist of administrative expenses, property management expenses, taxes and surcharges, and other miscellaneous expenses. 7 OTHER GAINS 2018 2017 Million Million Compensation income 1,184 1,118 O thers 1,722 1,271 2,906 2,389 109

China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 8 INTEREST AND OTHER INCOME 2018 2017 Million Million Interest income from bank deposits 11,443 12,884 F air value gains recognized 4,442 2,999 15,885 15,883 9 FINANCE COSTS 2018 2017 Million Million Interest on short-term deposits received (note 34(a)) 142 21 Interest on bonds – 187 O thers 2 2 144 210 10 DIRECTORS’ REMUNERATION Directors’ remuneration during 2018 is as follows: Directors’ fees Salaries, allowances and bonuses Contributions relating to social insurance, housing fund and retirement scheme 2018 Total ’000 ’000 ’000 ’000 Executive directors (Expressed in RMB) YANG Jie* – – – – SHANG Bing** – 867 134 1,001 LI Yue (Chief Executive Officer) – 1,000 163 1,163 SHA Yuejia*** – 745 104 849 DONG Xin – 890 157 1,047 – 3,502 558 4,060 Independent non-executive directors (Expressed in Hong Kong dollar) WONG Kwong Shing, Frank# 177 – – 177 CHENG Mo Chi, Moses 460 – – 460 CHOW Man Yiu, Paul 455 – – 455 YIU Kin Wah, Stephen 417 – – 417 YANG Qiang## – – – – 1,509 – – 1,509 110


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 10 DIRECTORS’ REMUNERATION (CONTINUED) Directors’ remuneration during 2017 is as follows: Directors’ fees Salaries, allowances and bonuses Contributions relating to social insurance, housing fund and retirement scheme 2017 Total ’000 ’000 ’000 ’000 Executive directors (Expressed in RMB) SHANG Bing** – 781 123 904 LI Yue (Chief Executive Officer) – 781 151 932 LIU Aili**** – 592 110 702 SHA Yuejia*** – 702 148 850 DONG Xin – 695 145 840 – 3,551 677 4,228 Independent non-executive directors (Expressed in Hong Kong dollar) WONG Kwong Shing, Frank# 470 – – 470 CHENG Mo Chi, Moses 460 – – 460 CHOW Man Yiu, Paul 455 – – 455 Y IU Kin Wah, Stephen 255 – – 255 1,640 – – 1,640 * Mr. YANG Jie has been appointed as an executive director and the chairman of the Company with effect from 21 March 2019. ** Mr. SHANG Bing has resigned from his positions as an executive director and the chairman of the Company with effect from 4 March 2019. *** Mr. SHA Yuejia resigned from his position as executive director of the Company with effect from 17 May 2018. **** Mr. LIU Aili resigned from his position as executive director of the Company with effect from 29 September 2017. # Mr. Frank WONG Kwong Shing resigned from the role of independent non-executive director of the Company with effect from 17 May 2018. ## Dr. YANG Qiang has been appointed as an independent non-executive director and a member of the audit committee of the Company with effect from 17 May 2018 and he voluntarily waived his director’s fees. In 2018 and 2017, executive directors of the Company voluntarily waived their directors’ fees. The unpaid portion of executive directors’ performance related bonuses for 2018 will be determined based on the evaluation conducted in 2019, and the additional bonuses related to their term of service will be determined based on the evaluation conducted upon the completion of three-year evaluation period. Directors’ remuneration paid during 2018 included directors’ performance related bonuses and additional bonuses related to their term of service for previous years. 111


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 11 INDIVIDUALS WITH HIGHEST EMOLUMENTS The emoluments payable to the five individuals with highest emoluments during 2018 and 2017 are as follows: 2018 2017 ’000 ’000 Salaries, allowances and benefits in kind 6,579 5,259 Performance related bonuses 4,208 4,014 R etirement scheme contributions 156 158 10,943 9,431 The emoluments fell within the following bands: 2018 2017 Number of individuals Number of individuals Emolument bands 1,500,001–2,000,000 – 3 2 ,000,001–2,500,000 5 2 12 TAXATION (a) Taxation in the consolidated statement of comprehensive income represents: 2018 2017 Note Million Million Current tax Provision for the PRC enterprise income tax on the estimated taxable profits for the year (i) 34,395 36,945 Provision for Hong Kong profits tax on the estimated assessable profits for the year (ii) 275 260 34,670 37,205 Deferred tax Origination and reversal of temporary differences, net (note 20) 1,274 (3,482) 35,944 33,723 Note: (i) The provision for the PRC enterprise income tax is based on the statutory tax rate of 25% (2017: 25%) on the estimated taxable profits determined in accordance with the relevant income tax rules and regulations of the PRC for the year ended 31 December 2018. Certain subsidiaries of the Company enjoy the preferential tax rate of 15% (2017: 15%). (ii) The provision for Hong Kong profits tax is calculated at 16.5% (2017: 16.5%) of the estimated assessable profits for the year ended 31 December 2018. (iii) Pursuant to the “Notice regarding Matters on Determination of Tax Residence Status of Chinese-controlled Offshore Incorporated Enterprises under Rules of Effective Management” issued by SAT in 2009 (“2009 Notice”), the Company is qualified as a PRC offshore-registered resident enterprise. Accordingly, the dividend income of the Company from its subsidiaries in the PRC is exempted from PRC enterprise income tax. 112


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 12 TAXATION (CONTINUED) (b) Reconciliation between income tax expense and accounting profit at applicable tax rates: 2018 2017 Million Million P rofit before taxation 153,895 148,137 Notional tax on profit before tax, calculated at the PRC’s statutory tax rate of 25% (Note) 38,474 37,034 Tax effect of non-taxable items – Income from investments accounted for using the equity method (3,465) (2,487) – Interest and other income (131) (41) Tax effect of non-deductible expenses on the PRC operations 604 772 Tax effect of non-deductible expenses on Hong Kong operations 85 70 Rate differential of certain PRC operations (note 12(a)(i)) (1,835) (2,317) Rate differential on Hong Kong operations (note 12(a)(ii)) (189) (182) Tax effect of deductible temporary difference for which no deferred tax asset was recognized 1,414 154 Tax effect of deductible tax loss for which no deferred tax asset was recognized 1,267 818 Others (280) (98) T axation 35,944 33,723 Note: The PRC’s statutory tax rate is adopted as the majority of the Group’s operations are subject to this rate. (c) The tax (charged)/credited relating to components of other comprehensive income is as follows: 2018 2017 Before tax Tax charged After tax Before tax Tax credited After tax Million Million Million Million Million Million Change in value of available-for-sale financial assets – – – (7) 2 (5) Change in value of financial assets at FVOCI (168) – (168) – – – Currency translation differences 1,160 – 1,160 (735) – (735) Share of other comprehensive income/(loss) of investments accounted for using the equity method 1,248 – 1,248 (1,038) – (1,038) Other comprehensive income/(loss) 2,240 – 2,240 (1,780) 2 (1,778) Current tax – – Deferred tax – 2 – 2 13 EARNINGS PER SHARE The calculation of basic earnings per share for the year is based on the profit attributable to equity shareholders of the Company of RMB117,781 million (2017: RMB114,279 million) and the weighted average number of 20,475,482,897 shares (2017: 20,475,482,897 shares) in issue during the year. In 2018 and 2017, there was no dilutive potential ordinary shares of the Company outstanding. Therefore, there was no dilution impact on weighted average number of shares (diluted) of the Company. 113


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 14 PROPERTY, PLANT AND EQUIPMENT Buildings Telecommunications transceivers, switching centers, transmission and other network equipment Office equipment, furniture, fixtures and others Total Million Million Million Million Cost: As at 1 January 2017 136,923 1,286,267 22,991 1,446,181 Transferred from construction in progress 10,577 174,250 833 185,660 Other additions 820 962 1,193 2,975 Disposals (72) (181) (109) (362) Assets written-off (331) (38,971) (1,117) (40,419) Exchange differences (141) (359) (4) (504) As at 31 December 2017 147,776 1,421,968 23,787 1,593,531 As at 1 January 2018 147,776 1,421,968 23,787 1,593,531 Transferred from construction in progress 7,624 160,654 1,616 169,894 Other additions 257 465 1,504 2,226 Disposals (18) (1,304) (118) (1,440) Assets written-off (323) (33,168) (1,490) (34,981) Exchange differences 135 236 2 373 As at 31 December 2018 155,451 1,548,851 25,301 1,729,603 Accumulated depreciation and impairment: As at 1 January 2017 41,502 766,221 16,102 823,825 Charge for the year 5,695 143,026 1,227 149,948 Written back on disposals (58) (45) (105) (208) Assets written-off and impairment loss (299) (26,465) (1,068) (27,832) E xchange differences (20) (208) (3) (231) As at 31 December 2017 46,820 882,529 16,153 945,502 As at 1 January 2018 46,820 882,529 16,153 945,502 Charge for the year 5,625 145,504 1,480 152,609 Written back on disposals (15) (1,297) (116) (1,428) Assets written-off (290) (32,064) (1,372) (33,726) Exchange differences 18 131 1 150 As at 31 December 2018 52,158 994,803 16,146 1,063,107 Net book value: As at 31 December 2018 103,293 554,048 9,155 666,496 As at 31 December 2017 100,956 539,439 7,634 648,029 114


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) For the year ended 31 December 2017, as a result of the optimization of 4G network coverage, the continuing impact of the mobile Internet substitution effect, and particularly, the significant progress of Voice over LTE business services, the usage and utilization of the Group’s 2G network has been decreasing rapidly. Meanwhile, due to the further decline of voice tariff, the revenue from voice services dropped even faster and the management anticipates more pressure on the profitability of 2G wireless and related assets (“2G Network Assets”). Therefore, based on the impairment testing results, management recognized an impairment loss of RMB10,450 million on the 2G Network Assets. No additional impairment was provided in 2018. 15 CONSTRUCTION IN PROGRESS 2018 2017 Million Million As at 1 January 78,112 89,853 Additions 163,962 173,919 T ransferred to property, plant and equipment (169,894) (185,660) As at 31 December 72,180 78,112 As at 31 December 2018, construction in progress primarily comprises expenditure incurred on the network expansion projects but not yet completed. 16 LAND LEASE PREPAYMENTS AND OTHERS For the year ended 31 December 2018, the amortization of land lease prepayments expensed in the profit or loss amounted to approximately RMB467 million (2017: approximately RMB446 million). 17 GOODWILL 2018 2017 Million Million Cost and carrying amount: As at 1 January and 31 December 35,343 35,343 Impairment tests for goodwill As at 31 December 2018, the goodwill of RMB35,300 million is attributable to the cash-generating units in relation to the operation in Mainland China which management currently monitors. The recoverable amount of the cash-generating unit is determined based on the VIU calculations by using the discounted cash flow method. This method considers the pre-tax cash flows of the subsidiaries (cash-generating unit) for the five years ending 31 December 2023 with subsequent transition to perpetuity. For the five years ending 31 December 2023, the average growth rate is assumed 1.5% while for the years beyond 31 December 2023, the assumed continual growth rate to perpetuity is 1%. The present value of cash flows is calculated by discounting the cash flow using pre-tax interest rates of approximately 11%. The management performed impairment test for the goodwill in relation to the operation in Mainland China and determined such goodwill was not impaired. Reasonably possible changes in key assumptions will not lead to the goodwill impairment loss. 115


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 18 SUBSIDIARIES The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of the Group. The class of shares held is ordinary unless otherwise stated. Name of company* Place of incorporation/ establishment and operation Particulars of issued and paid up capital Proportion of ownership interest Principal activity Held by the Company Held by a subsidiary China Mobile Communication (BVI) Limited British Virgin Islands (“BVI”) HK$1 100% – Investment holding company China Mobile Communication Co., Ltd. (“CMC”)** Mainland China RMB1,641,848,326 – 100% Network and business coordination center China Mobile Group Guangdong Co., Ltd. (“Guangdong Mobile”) Mainland China RMB5,594,840,700 – 100% Telecommunications operator China Mobile Group Zhejiang Co., Ltd. Mainland China RMB2,117,790,000 – 100% Telecommunications operator China Mobile Group Jiangsu Co., Ltd. Mainland China RMB2,800,000,000 – 100% Telecommunications operator China Mobile Group Fujian Co., Ltd. Mainland China RMB5,247,480,000 – 100% Telecommunications operator China Mobile Group Henan Co., Ltd. Mainland China RMB4,367,733,641 – 100% Telecommunications operator China Mobile Group Hainan Co., Ltd. Mainland China RMB643,000,000 – 100% Telecommunications operator China Mobile Group Beijing Co., Ltd. Mainland China RMB6,124,696,053 – 100% Telecommunications operator China Mobile Group Shanghai Co., Ltd. Mainland China RMB6,038,667,706 – 100% Telecommunications operator China Mobile Group Tianjin Co., Ltd. Mainland China RMB2,151,035,483 – 100% Telecommunications operator China Mobile Group Hebei Co., Ltd. Mainland China RMB4,314,668,600 – 100% Telecommunications operator China Mobile Group Liaoning Co., Ltd. Mainland China RMB5,140,126,680 – 100% Telecommunications operator China Mobile Group Shandong Co., Ltd. Mainland China RMB6,341,851,146 – 100% Telecommunications operator 116


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 18 SUBSIDIARIES (CONTINUED) Name of company* Place of incorporation/ establishment and operation Particulars of issued and paid up capital Proportion of ownership interest Principal activity Held by the Company Held by a subsidiary China Mobile Group Guangxi Co., Ltd. Mainland China RMB2,340,750,100 – 100% Telecommunications operator China Mobile Group Anhui Co., Ltd. Mainland China RMB4,099,495,494 – 100% Telecommunications operator China Mobile Group Jiangxi Co., Ltd. Mainland China RMB2,932,824,234 – 100% Telecommunications operator China Mobile Group Chongqing Co., Ltd. Mainland China RMB3,029,645,401 – 100% Telecommunications operator China Mobile Group Sichuan Co., Ltd. Mainland China RMB7,483,625,572 – 100% Telecommunications operator China Mobile Group Hubei Co., Ltd. Mainland China RMB3,961,279,556 – 100% Telecommunications operator China Mobile Group Hunan Co., Ltd. Mainland China RMB4,015,668,593 – 100% Telecommunications operator China Mobile Group Shaanxi Co., Ltd. Mainland China RMB3,171,267,431 – 100% Telecommunications operator China Mobile Group Shanxi Co., Ltd. Mainland China RMB2,773,448,313 – 100% Telecommunications operator China Mobile Group Neimenggu Co., Ltd. Mainland China RMB2,862,621,870 – 100% Telecommunications operator China Mobile Group Jilin Co., Ltd. Mainland China RMB3,277,579,314 – 100% Telecommunications operator China Mobile Group Heilongjiang Co., Ltd. Mainland China RMB4,500,508,035 – 100% Telecommunications operator China Mobile Group Guizhou Co., Ltd. Mainland China RMB2,541,981,749 – 100% Telecommunications operator China Mobile Group Yunnan Co., Ltd. Mainland China RMB4,137,130,733 – 100% Telecommunications operator China Mobile Group Xizang Co., Ltd. Mainland China RMB848,643,686 – 100% Telecommunications operator China Mobile Group Gansu Co., Ltd. Mainland China RMB1,702,599,589 – 100% Telecommunications operator117


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 18 SUBSIDIARIES (CONTINUED) Name of company* Place of incorporation/ establishment and operation Particulars of issued and paid up capital Proportion of ownership interest Principal activity Held by the Company Held by a subsidiary China Mobile Group Qinghai Co., Ltd. Mainland China RMB902,564,911 – 100% Telecommunications operator China Mobile Group Ningxia Co., Ltd. Mainland China RMB740,447,232 – 100% Telecommunications operator China Mobile Group Xinjiang Co., Ltd. Mainland China RMB2,581,599,600 – 100% Telecommunications operator China Mobile Group Design Institute Co., Ltd. Mainland China RMB160,232,500 – 100% Provision of telecommunications network planning design and consulting services China Mobile Holding Company Limited** Mainland China US$30,000,000 100% – Investment holding company China Mobile Information Technology Co., Ltd.** Mainland China US$7,633,000 – 100% Provision of roaming clearance, IT system operation, technology support services Aspire Holdings Limited Cayman Islands HK$93,964,583 66.41% – Investment holding company Aspire (BVI) Limited# BVI US$1,000 – 100% Investment holding company Aspire Technologies (Shenzhen) Limited**# Mainland China US$10,000,000 – 100% Technology platform development and maintenance Aspire Information Network (Shenzhen) Limited**# Mainland China US$5,000,000 – 100% Provision of mobile data solutions, system integration and development Aspire Information Technologies (Beijing) Limited**# Mainland China US$5,000,000 – 100% Technology platform development and maintenance Fujian FUNO Mobile Communication Technology Company Limited*** Mainland China US$3,800,000 – 51% Network construction and maintenance, network planning and optimizing, training and communication services Advanced Roaming & Clearing House Limited BVI US$2 100% – Provision of roaming clearance services 118


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 18 SUBSIDIARIES (CONTINUED) Name of company* Place of incorporation/ establishment and operation Particulars of issued and paid up capital Proportion of ownership interest Principal activity Held by the Company Held by a subsidiary Fit Best Limited BVI US$1 100% – Investment holding company China Mobile Hong Kong Company Limited Hong Kong HK$951,046,930 – 100% Provision of telecommunications and related services China Mobile International Holdings Limited Hong Kong HK$18,195,670,000 100% – Investment holding company China Mobile International Limited Hong Kong HK$6,400,000,000 – 100% Provision of voice and roaming clearance services, Internet services and value-added services China Mobile Group Device Co., Ltd. Mainland China RMB6,200,000,000 – 99.97% Provision of electronic communication products design and sale of related products China Mobile Group Finance Co., Ltd. (“China Mobile Finance”) Mainland China RMB11,627,783,669 – 92% Provision of non-banking financial services China Mobile IoT Company Limited Mainland China RMB2,500,000,000 – 100% Provision of network services China Mobile (Suzhou) Software Technology Co., Ltd. Mainland China RMB980,000,000 – 100% Provision of computer hardware and software research and development services China Mobile (Hangzhou) Information Technology Co., Ltd. Mainland China RMB1,250,000,000 – 100% Provision of computer hardware and software research and development services China Mobile Online Services Co., Ltd. Mainland China RMB50,000,000 – 100% Provision of call center services MIGU Company Limited Mainland China RMB7,000,000,000 – 100% Provision of Mobile Internet digital content services China Mobile TieTong Company Limited Mainland China RMB31,880,000,000 – 100% Provision of telecommunications services 119



China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 18 SUBSIDIARIES (CONTINUED) Name of company* Place of incorporation/ establishment and operation Particulars of issued and paid up capital Proportion of ownership interest Principal activity Held by the Company Held by a subsidiary China Mobile Internet Company Limited Mainland China RMB2,700,000,000 – 100% Provision of value added telecommunications services China Mobile Investment Holdings Company Limited Mainland China RMB590,000,000 – 100% Investment holding company China Mobile Quantong System Integration Co., Ltd. Mainland China RMB550,000,000 – 100% Provision of computer system integration, construction, maintenance and related technology development services China Mobile (Chengdu) ICT Co., Ltd. Mainland China RMB200,000,000 – 100% Provision of Information technology products and technology research and development services China Mobile (Shanghai) ICT Co., Ltd. Mainland China RMB200,000,000 – 100% Provision of Information technology products and technology research and development services China Mobile Financial Technology Co., Ltd. Mainland China RMB500,000,000 – 100% Provision of e-payment, e-commerce and Internet finance services The nature of all the legal entities established in the Mainland China is limited liability company. Companies registered as wholly owned foreign enterprises in the Mainland China. Company registered as a sino-foreign equity joint venture in the Mainland China. # Effective interest held by the Group is 66.41%. 120

Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 19 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD The amounts recognized in the consolidated balance sheet are as follows: As at 31 December 2018 As at 1 January 2018 (As restated) (Note 3) As at 31 December 2017 (As previously reported) Million Million Million Associates 144,059 129,442 131,636 J oint ventures 1,266 863 863 145,325 130,305 132,499 Details of principal associates are as follows: Name of associate Notes Place of incorporation/ establishment and operation Proportion of ownership interest held by the Company or its subsidiary Principal activity Listed company SPD Bank (a) PRC 18% Provision of banking services China Tower Corporation Limited (“China Tower”) (b) PRC 28% Construction, maintenance and operation of telecommunications towers IFLYTEK Co., Ltd. (“IFLYTEK”) (a) PRC 13% Provision of Chinese speech and language technology products and services True Corporation Public Company Limited (“True Corporation”) Thailand 18% Provision of telecommunications services Notes: (a) Up to the approval date of these financial statements, SPD Bank and IFLYTEK have not yet announced their audited annual results for the year ended 31 December 2018, therefore, the Group has recognized its share of SPD Bank and IFLYTEK’s comprehensive income for the year 2018 based on the unaudited financial information which was released and publicly disclosed by SPD Bank and IFLYTEK respectively, with some information such as total liabilities and total equity not provided. (b) On 8 August 2018, China Tower successfully listed on the Main Board of The Stock Exchange of Hong Kong Limited and made an offering of 46,663,856,000 new ordinary shares (including both Hong Kong and International offerings with over-allotment option exercised) at a price of HK$1.26 per share. The Group’s shareholding in China Tower has been diluted from 38% to 28% and the gain as a result of equity interest dilution following the initial public offering of China Tower amounted to approximately RMB2,271 million was recorded in income from investments accounted for using the equity method. 121


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 19 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED) (i) Summary financial information on principal associates: SPD Bank As at 31 December 2018 2017 Million Million Total assets 6,286,837 6,137,240 Total liabilities – 5,706,255 Total equity – 430,985 Total equity attributable to ordinary equity shareholders 441,679 395,484 Percentage of ownership of the Group 18% 18% Total equity attributable to the Group 80,297 71,896 The impact of fair value adjustments at the time of acquisition and goodwill 6,654 6,663 I nterest in associates 86,951 78,559 China Tower IFLYTEK True Corporation As at 31 December As at 31 December As at 31 December 2018 2017 2018 2017 2018 2017 Million Million Million Million Million Million Total current assets 31,799 30,517 – 7,329 26,309 23,566 Total non-current assets 283,565 292,126 – 6,151 78,251 69,511 Total current liabilities 114,759 150,041 – 4,428 43,097 39,589 Total non-current liabilities 20,103 45,107 – 1,042 33,215 26,643 T otal equity 180,502 127,495 – 8,010 28,248 26,845 Total equity attributable to equity shareholders 180,502 127,495 7,949 7,759 28,123 26,711 Percentage of ownership of the Group 28% 38% 13% 13% 18% 18% Total equity attributable to the Group 50,414 48,448 1,072 1,047 5,062 4,808 The impact of fair value adjustments at the time of acquisition, goodwill and others – – 815 805 2,851 2,664 Elimination of unrealized profits resulting from the transfer of Tower Assets and its realization (3,115) (4,856) – – – – I nterest in associates 47,299 43,592 1,887 1,852 7,913 7,472 122


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 19 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED) (i) Summary financial information on principal associates (Continued): SPD Bank China Tower 2018 2017 2018 2017 Million Million Million Million Revenue 171,542 168,619 71,819 68,665 Profit before taxation 65,284 69,828 3,475 2,685 Profit attributable to ordinary equity shareholders for the year 54,189 52,533 2,650 1,943 Other comprehensive income/(loss) 6,979 (5,568) – – Total comprehensive income 61,168 46,965 2,650 1,943 Dividends received from associates 533 821 – – IFLYTEK True Corporation 2018 2017 2018 2017 Million Million Million Million Revenue 8,067 5,458 33,214 28,262 Profit before taxation 641 584 2,662 726 Profit attributable to ordinary equity shareholders for the year 529 428 1,444 465 Other comprehensive (loss)/income – – (46) 32 Total comprehensive income 529 428 1,398 497 Dividends received from associates 18 18 39 – (ii) The fair values of the interests in listed associates are based on quoted market prices (level 1: quoted price (unadjusted) in active markets) at the balance sheet date without any deduction for transaction costs and disclosed as follows: As at 31 December 2018 As at 31 December 2017 Carrying amount Fair value Carrying amount Fair value Million Million Million Million SPD Bank 86,951 52,282 78,559 67,166 China Tower 47,299 63,738 43,592 N/A IFLYTEK 1,887 6,623 1,852 10,598 True Corporation 7,913 6,589 7,472 7,450 123


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 19 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED) (iii) The Group assesses at the end of each reporting period whether there is objective evidence that interest in associates are impaired. As at 31 December 2018, the fair value of investment in SPD Bank was assessed to be RMB52,282 million (as at 31 December 2017: RMB67,166 million), which was below its carrying amount by approximately 39.9% (as at 31 December 2017: approximately 14.5%). Management of the Group performed an impairment test and determined the respective recoverable amount of the investment by the adoption of the VIU method. The calculation has considered pre-tax cash flow projections of SPD Bank for the five years ending 31 December 2023 with an extrapolation made to perpetuity. The discount rate used to discount the cash flows to their respective net present values was based on cost of capital used to evaluate investments of similar nature in Mainland China. Management judgement is required in estimating the future cash flows of SPD Bank. The key assumptions are determined with reference to external sources of information. Based on the management’s assessment results and sensitivity analysis performed, there was no impairment of the investment as at 31 December 2018. As at 31 December 2018, the fair value of investment in True Corporation was assessed to be RMB6,589 million (as at 31 December 2017: RMB7,450 million), which was below its carrying amount by approximately 16.7% (as at 31 December 2017: approximately 0.3%). Management of the Group performed an impairment test and determined its recoverable amount as the higher of its fair value less costs of disposal and VIU. Based on the management’s assessment results, there was no impairment of the investment as at 31 December 2018. Other than above, the management has determined that there was no impairment indicator of the Group’s interests in other associates as at 31 December 2018 and 2017. Details of a major joint venture are as follows: In 2015, CMC, a wholly-owned subsidiary of the Company, together with State Development & Investment Corporation and China Mobile State Development & Investment Management Company Limited (45% of its registered capital is owned by CMCC), established China Mobile Innovative Business Fund (Shenzhen) Partnership (Limited Partnership) (the “Fund”). The Group recognized the investment as interest in a joint venture. CMC committed to invest RMB1,500 million in cash, which represents 50% of the equity interest of the Fund. As at 31 December 2018, CMC had contributed RMB1,134 million (as at 31 December 2017: RMB759 million) to the Fund with an outstanding commitment to further invest RMB366 million (as at 31 December 2017: RMB741 million) to the Fund upon a request lodged by the Fund. There were no contingent liabilities relating to the Group’s interest in this joint venture as at 31 December 2018. 124


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 20 DEFERRED TAX ASSETS AND LIABILITIES The analysis of deferred tax assets and liabilities are as follows: As at 31 December 2018 As at 31 December 2017 Million Million Deferred tax assets: – Deferred tax asset to be recovered after 12 months 2,982 8,236 – Deferred tax asset to be recovered within 12 months 26,672 25,107 29,654 33,343 Deferred tax liabilities: – Deferred tax liabilities to be settled after 12 months (598) (258) – Deferred tax liabilities to be settled within 12 months (224) (104) (822) (362) Deferred tax assets and liabilities recognized and the movements during 2018 As at 31 December 2017 (As previously reported) Changes in accounting policies (Note 3) As at 1 January 2018 (As restated) (Charged)/ credited to profit or loss Charged to other comprehensive income Exchange differences As at 31 December 2018 Million Million Million Million Million Million Million Deferred tax assets arising from: Write-down for obsolete inventories 120 – 120 (45) – – 75 Write-off and impairment of certain network equipment and related assets 7,082 – 7,082 (1,793) – – 5,289 Accrued operating expenses 18,934 – 18,934 (1,219) – – 17,715 Deferred revenue from Reward Program 5,943 – 5,943 (159) – – 5,784 Impairment loss of doubtful accounts 1,270 24 1,294 164 – – 1,458 Change in value of available-for-sale financial assets (6) 6 – – – – – Change in value of financial assets at FVOCI – (6) (6) – – – (6) Contract asset, contract liability and contract cost relating to customer contract – (2,87 9) (2,87 9) 2,21 8 – – (66 1) 33,34 3 (2,85 5) 30,48 8 (83 4) – – 29,65 4 Deferred tax liabilities arising from: Depreciation allowance in excess of related depreciation (362) – (362) (736) – (19) (1,117) Others – – – 29 6 – ( 1) 29 5 (36 2) – (36 2) (44 0) – (2 0) (82 2) Total 32,98 1 (2,85 5) 30,12 6 (1,27 4) – (2 0) 28,832 125


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 20 DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED) Deferred tax assets and liabilities recognized and the movements during 2017 As at 1 January 2017 (Charged)/ credited to profit or loss Credited to other comprehensive income Exchange differences As at 31 December 2017 Million Million Million Million Million Deferred tax assets arising from: Write-down for obsolete inventories 175 (55) – – 120 Write-off and impairment of certain network equipment and related assets 4,538 2,544 – – 7,082 Accrued operating expenses 17,969 965 – – 18,934 Deferred revenue from Reward Program 5,796 147 – – 5,943 Impairment loss for doubtful accounts 1,297 (27) – – 1,270 Change in value of available-for-sale financial assets (8) – 2 – (6) 29,767 3,574 2 – 33,343 Deferred tax liabilities arising from: Depreciation allowance in excess of related depreciation (292) (92) – 22 (362) Total 29,475 3,482 2 22 32,981 Deferred tax assets are recognized for deductible temporary differences and tax losses carry-forwards only to the extent that the realization of the related tax benefit through future taxable profits is probable. Certain subsidiaries of the Group did not recognize deferred tax assets of RMB3,130 million (2017: RMB1,716 million) and RMB3,346 million (2017: RMB2,079 million) in respect of deductible temporary differences and tax losses amounting to RMB12,536 million (2017: RMB6,885 million) and RMB16,490 million (2017: RMB8,713 million) respectively that can be carried forward against future taxable income as at 31 December 2018. The deductible tax losses are allowed to be carried forward in next five years against the future taxable profits. 126


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 21 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS Available-for-sale financial assets Equity investments WMP FVOCI FVPL Million Million Million Million As at 31 December 2017 (As previously reported) 44 65,630 – – C hanges in accounting policy-IFRS/HKFRS 9 (44) (65,630) 44 65,630 As at 1 January 2018 (As restated) – Current portion – – – 65,630 – Non-current portion – – 44 – Addition – – 711 116,941 Maturity – – – (110,087) Fair value gains recognized in profit or loss – – – 4,442 Fair value gains recognized in other comprehensive income, before tax – – (168) – As at 31 December 2018 – – 587 76,926 L ess: Current portion – – – (76,425) N on-current portion – – 587 501 Note: (i) The category of FVOCI is primarily the equity investments in listed companies that are not held for trading. The equity investments represent the Group’s investments in other companies at fair values (mainly level 1: quoted price (unadjusted) in active markets) through other comprehensive income as at 31 December 2018 and 1 January 2018 (ii) The category of FVPL mainly comprises WMPs. All the WMPs will mature within one year with variable return rates indexed to the performance of underlying assets. As at 31 December 2018 and 1 January 2018, they were measured at the fair value as level 3 of fair value hierarchy. The fair values were determined based on cash flow discounted assuming the expected return will be obtained upon maturity. There were no transfers between the levels of fair value hierarchy for the year ended 31 December 2018. 127


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 22 RESTRICTED BANK DEPOSITS As at 31 December 2018 As at 31 December 2017 Non-current assets Current assets Total Non-current assets Current assets Total Million Million Million Million Million Million Restricted bank deposits – Statutory deposit reserves (Note) 4,486 – 4,486 3,453 – 3,453 – Deposited customer reserves (Note) 7,882 – 7,882 3,047 – 3,047 – Pledged bank deposits 1 9 10 4 691 695 12,369 9 12,378 6,504 691 7,195 Note: The statutory deposit reserves and the deposited customer reserves are deposited by the subsidiaries of the Company, China Mobile Finance and China Mobile E-Commerce Co., Ltd., respectively, in accordance with relevant requirements of the People’s Bank of China (“PBOC”), which are not available for use in the Group’s daily operations. 23 INVENTORIES As at 31 December 2018 As at 31 December 2017 Million Million SIM cards, handsets and other terminals 6,939 8,357 O ther consumables 1,918 1,865 8,857 10,222 24 ACCOUNTS RECEIVABLE (a) Aging analysis Aging analysis of accounts receivable, net of loss allowance is as follows: As at 31 December 2018 As at 31 December 2017 Million Million Within 30 days 11,160 13,711 31–60 days 3,680 3,002 61–90 days 2,358 1,798 O ver 90 days 9,342 5,642 26,540 24,153 Accounts receivable primarily comprise receivables from customers and telecommunications operators. Customers with balances that are overdue or have exceeded credit limits are required to settle all outstanding balances before any further telecommunications services can be provided. The increase of accounts receivable is mainly due to the increase in revenue from corporate markets. Customers from corporate markets normally enjoy longer credit term and have better creditability. Accounts receivable are expected to be recovered within one year. 128


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 24 ACCOUNTS RECEIVABLE (CONTINUED) (b) Impairment of accounts receivable The following table summarizes the changes in loss allowance of accounts receivable: 2018 2017 Million Million As at 1 January (As previously reported) 5,668 5,762 Changes in accounting policy-IFRS/HKFRS 9 195 – As at 1 January (As restated) 5,863 5,762 Impairment loss recognized 4,480 3,415 Accounts receivable written off (3,074) (3,509) A s at 31 December 7,269 5,668 25 OTHER RECEIVABLES, PREPAYMENTS AND OTHER CURRENT ASSETS Other receivables are expected to be recovered within one year. They primarily include interest receivable from banks, utilities deposits and rental deposits etc., short-term loans granted to China Tower of RMB11,000 million (as at 31 December 2017: RMB8,050 million) and other short-term loans granted to banks and other financial institutions as well as short-term debt investments purchased of RMB13,260 million (as at 31 December 2017: RMB5,600 million) through China Mobile Finance. The interest rates of short-term loans are mutually agreed among the parties with reference to the market interest rates. Prepayments and other current assets primarily consist of rental prepayments, maintenance prepayments, input VAT to be deducted. As at 31 December 2018 and 2017, there were no significant overdue amounts for other receivables. 26 AMOUNTS DUE FROM/TO ULTIMATE HOLDING COMPANY Amount due from ultimate holding company is unsecured, interest free, repayable on demand and arising in the ordinary course of business. As at 31 December 2018, amount due to ultimate holding company comprises the short-term deposits of CMCC and its subsidiaries (“CMCC Group”) in China Mobile Finance amounting to RMB10,873 million (as at 31 December 2017: RMB8,611 million) and the corresponding interest payable arising from the deposits. The deposits are unsecured and carry interest at prevailing market rate. 27 BANK DEPOSITS Bank deposits represent term deposits with banks with original maturity exceeding three months. The applicable interest rate is determined in accordance with the benchmark interest rate published by PBOC or with reference to the market interest rate. 129


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 28 CASH AND CASH EQUIVALENTS As at 31 December 2018 As at 31 December 2017 Million Million Bank deposits with original maturity within three months 3,470 5,907 C ash at banks and on hand 53,832 114,729 57,302 120,636 29 ACCOUNTS PAYABLE Accounts payable primarily include payables for expenditure of network expansion, maintenance and interconnection expenses. The aging analysis of accounts payable is as follows: As at 31 December 2018 As at 31 December 2017 Million Million Payable in the periods below: Within 1 month or on demand 164,081 201,429 After 1 month but within 3 months 8,902 13,086 After 3 months but within 6 months 7,349 7,660 After 6 months but within 9 months 3,411 2,761 A fter 9 months but within 12 months 7,104 8,233 190,847 233,169 All of the accounts payable are expected to be settled within one year or are repayable on demand. 130



Annual Report 2018Notes to the Consolidated Financial Statements (Continued)(Expressed in RMB unless otherwise indicated)Notes to the Consolidated Financial Statements (Continued)30 DEFERRED REVENUEDeferred revenue primarily includes prepaid service fees received from customers and unredeemed pointrewards.2018 2017Million MillionAs at 1 January (As previously reported) 88,170 86,464C hanges in accounting policy – IFRS/HKFRS 15 (385) –As at 1 January (As restated)– Current portion 84,897 84,289– Non-current portion 2,888 2,175Additions during the year 299,383 352,011R ecognized in the consolidated statement of comprehensive income (319,102) (350,305)As at 31 December 68,066 88,170L ess: Current portion (63,185) (85,282)N on-current portion 4,881 2,88831 ACCRUED EXPENSES AND OTHER PAYABLESAs at31 December2018As at31 December2017Million MillionReceipts-in-advance 69,629 73,583Other payables 31,990 26,643Accrued salaries, wages, labor service expenses and other benefits 6,950 6,535A ccrued expenses 87,003 84,105195,572 190,866 131

China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 32 CAPITAL, RESERVES AND DIVIDENDS (a) Share capital Ordinary shares, issued and fully paid: Number of shares HK$ Million Equivalent RMB Million As at 1 January and 31 December 2018 and 2017 20,475,482,89 7 382,26 3 402,13 0 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets. (b) Dividends (i) Dividends attributable to the year: 2018 2017 Million Million Ordinary interim dividend declared and paid of HK$1.826 (equivalent to approximately RMB1.540) (2017: HK$1.623 (equivalent to approximately RMB1.409)) per share 32,870 28,211 Special dividend declared and paid of HK$3.200 (equivalent to approximately RMB2.777) per share in 2017 – 55,621 Ordinary final dividend proposed after the balance sheet date of HK$1.391 (equivalent to approximately RMB1.219) (2017: HK$1.582 (equivalent to approximately RMB1.322)) per share 24,955 27,077 57,825 110,909 The proposed ordinary final dividend, which is declared in Hong Kong dollar is translated into RMB with reference to the rate HK$1 = RMB0.8762, being the rate announced by the State Administration of Foreign Exchange in the PRC on 28 December 2018. As the ordinary final dividend was declared after the balance sheet date, such dividend is not recognized as liability as at 31 December 2018. In accordance with the 2009 Notice and the PRC enterprise income tax law, the Company is required to withhold enterprise income tax equal to 10% of any dividend, when it is distributed to non-resident enterprise shareholders whose names appeared on the Company’s register of members, as at the record date for such dividend, and who were not individuals. (ii) Dividends attributable to the previous financial year, approved and paid during the year: 2018 2017 Million Million Ordinary final dividend in respect of the previous financial year, approved and paid during the year, of HK$1.582 (equivalent to approximately RMB1.322) (2017: HK$1.243 (equivalent to approximately RMB1.112)) per share 27,060 22,204 132


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 32 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED) (c) Movements in components of equity The reconciliation between the opening and closing balances of each component of the Group’s consolidated equity is set out in the consolidated statement of changes in equity. Details of the changes in the Company’s individual components of equity between the beginning and the end of the year are set out below: Share capital General reserve Retained profits Total Million Million Million Million As at 1 January 2017 402,130 72 81,817 484,019 Changes in equity for 2017: Profit for the year – – 111,333 111,333 Total comprehensive income for the year – – 111,333 111,333 Dividends approved in respect of previous year (note 32(b)(ii)) – – (22,204) (22,204) Dividends declared in respect of current year (note 32(b)(i)) – – (83,832) (83,832) A s at 31 December 2017 402,130 72 87,114 489,316 As at 1 January 2018 402,130 72 87,114 489,316 Changes in equity for 2018: Profit for the year – – 60,268 60,268 Total comprehensive income for the year – – 60,268 60,268 Dividends approved in respect of previous year (note 32(b)(ii)) – – (27,060) (27,060) Dividends declared in respect of current year (note 32(b)(i)) – – (32,870) (32,870) As at 31 December 2018 402,130 72 87,452 489,654 (d) Nature and purpose of reserves (i) Capital reserve The capital reserve mainly comprises the following: – RMB295,665 million debit balance brought forward as a result of the elimination of goodwill arising on the acquisition of subsidiaries before 1 January 2001 against the capital reserve; – Share of other comprehensive income/(loss) of investments accounted for using the equity method; – The changes in fair value of financial assets at FVOCI, net of tax, until the financial assets are derecognized; and 133


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 32 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED) (d) Nature and purpose of reserves (Continued) (i) Capital reserve (Continued) – The difference between the consideration and the aggregate carrying amounts of certain assets, businesses and related liabilities as well as its related employees in relation to the fixed-line telecommunications operations acquired from the controlling party under business combinations under common control. (ii) PRC statutory reserves PRC statutory reserves mainly include statutory surplus reserve and discretionary surplus reserve. In accordance with the Company Law of the PRC, domestic enterprises in Mainland China are required to transfer 10% of their profit after taxation, as determined under accounting principles generally accepted in the PRC (“PRC GAAP”), to the statutory surplus reserve until such reserve balance reaches 50% of the registered capital of relevant Mainland subsidiaries. Moreover, upon a resolution made by the shareholders, a certain percentage of domestic enterprises’ profit after taxation, as determined under PRC GAAP, is transferred to the discretionary surplus reserve. During the year, appropriations were made by such subsidiaries to the statutory surplus reserves and discretionary surplus reserves accordingly. The statutory and discretionary surplus reserves can be used to reduce previous years’ losses, if any, and may be converted into paid-up capital, provided that the statutory reserve after such conversion is not less than 25% of the registered capital of relevant subsidiaries. In accordance with relevant regulations issued by the Ministry of Finance of the PRC, a subsidiary of the Company, China Mobile Finance, is required to set aside a reserve through appropriations of profit after tax according to a certain ratio of the ending balance of its gross risk-bearing assets to cover potential losses against such assets. (iii) Exchange reserve The exchange reserve comprises all currency translation differences arising from the translation of the financial statements of overseas entities. The reserve is dealt with in accordance with the accounting policies set out in note 2(x). (e) Capital management The Group’s primary objectives of capital management are to maintain a reasonable capital structure and to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders. The Group actively and regularly reviews and manages its capital structure to stabilize the capital position and prevent operation risk. Meanwhile, the Group will maximize the shareholders’ return when having high level of borrowings and will make adjustment on the capital structure in accordance with the changes in economic conditions. The Group monitors capital on the basis of total debt-to-book capitalization ratio. This ratio is calculated as total borrowings divided by book capitalization (equal to the total equity attributable to equity shareholders of the Company as shown in the consolidated balance sheet and total borrowings). As at 31 December 2018 and 2017, the Group’s total debt-to-book capitalization ratio was nil. Except China Mobile Finance is subject to certain capital requirements imposed by China Banking and Insurance Regulatory Commission, the Company and its subsidiaries are not subject to externally imposed capital requirements. 134


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 33 BALANCE SHEET OF THE COMPANY As at 31 December 2018 As at 31 December 2017 Note Million Million Assets Non-current assets Investments in subsidiaries 491,748 490,256 491,748 490,256 Current assets Amounts due from subsidiaries 1,346 1,346 Other receivables 5 7 Bank deposits 1,018 811 Cash and cash equivalents 245 554 2,614 2,718 T otal assets 494,362 492,974 Equity and liabilities Liabilities Current liabilities Amount due to a subsidiary 4,610 3,628 Accrued expenses and other payables 98 16 Current taxation – 14 4,708 3,658 T otal liabilities 4,708 3,658 Equity Share capital 32(a) 402,130 402,130 Reserves 32(c) 87,524 87,186 T otal equity 489,654 489,316 T otal equity and liabilities 494,362 492,974 The balance sheet of the Company was approved by the Board of Directors on 21 March 2019 and was signed on its behalf. Li Yue Name of Director Dong Xin Name of Director 135


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 34 RELATED PARTY TRANSACTIONS (a) Transactions with CMCC Group The following is a summary of principal related party transactions entered into by the Group with CMCC Group for the years ended 31 December 2018 and 2017. The majority of these transactions also constitute continuing connected transactions as defined under Chapter 14A of Listing Rules. Further details of these continuing connected transactions are disclosed under the paragraph “Connected Transactions” in the Report of Directors. 2018 2017 Note Million Million Telecommunications services revenue (i) 71 47 Property leasing and management services revenue (ii) 226 188 Property leasing and management services charges (ii) 1,009 999 Network assets leasing charges (iii) 2,308 2,494 Network capacity leasing charges (iii) 402 1,047 Short-term bank deposits received (iv) 10,873 8,611 Short-term bank deposits repaid (iv) 8,611 5,552 Interest expenses (iv) 142 21 Note: (i) The amounts represent telecommunications services settlement received/receivable from CMCC Group for the telecommunications project planning, design and construction services, telecommunications line and pipeline construction services, and telecommunications line maintenance services. (ii) The amount represents the rental and property management fees received/receivable from or paid/payable to CMCC Group in respect of offices, retail outlets and warehouses. (iii) The amounts represent the network assets leasing settlement paid/payable to CMCC Group, and the TD-SCDMA network capacity charges paid/payable to CMCC Group pursuant to the network capacity leasing agreement with CMCC Group for the provision of TD-SCDMA related services. Based on the lease classification assessments, the Group does not substantially bear the risks and reward incidental to the ownership of the leased network assets, and accordingly the Group accounts for the network assets leasing and the network capacity leasing as operating leases. (iv) The amounts represent the deposits received from or repaid to CMCC Group and interest expenses paid/payable to CMCC Group in respect of the deposits. (b) Amounts due from/to CMCC Group Amounts due from/to CMCC Group, other than amount due from/to ultimate holding company, are included in the following accounts captions summarized as follows: As at 31 December 2018 As at 31 December 2017 Million Million Accounts receivable 282 301 Other receivables 145 116 Prepayments and other current assets 5 – Accounts payable 5,825 4,580 Accrued expenses and other payables 80 131 The amounts are unsecured, interest-free, repayable on demand/on contract terms and arise in the ordinary course of business. 136


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 34 RELATED PARTY TRANSACTIONS (CONTINUED) (c) Significant transactions with associates and joint venture of the Group and of CMCC Group The Group has entered into transactions with associates and joint venture of the Group or CMCC Group. The major transactions entered into by the Group and these companies and amounts due from/to these companies are as follows: As at 31 December 2018 As at 31 December 2017 Note Million Million Accounts receivable (i) 240 313 Interest receivable (ii) 829 997 Other receivables (iii) 12,518 12,565 Prepayments and other current assets 160 51 Available-for-sale financial assets (iii) – 31,778 Financial assets at FVPL (iii) 41,128 – Bank deposits (iii) 44,955 62,969 Accounts payable (iv) 3,252 4,479 Accrued expenses and other payables (iv) 7,301 5,429 2018 2017 Note Million Million Telecommunications services revenue (i) 604 828 Property leasing and management services revenue (v) 40 99 Charges for use of tower assets (iv) 37,837 36,335 Interest and other income (ii) 4,083 4,807 Dividend income 691 847 Note: (i) The amounts represent the telecommunications services revenue received/receivable from the Group’s associates. (ii) The amounts primarily represent interest received/receivable from deposits placed with SPD Bank, short-term loans granted to China Tower and placements with SPD Bank by China Mobile Finance; and represent the income from WMP purchased from SPD Bank. The interest rate of deposits placed with SPD Bank is determined in accordance with the benchmark interest rate published by PBOC. (iii) Other receivables primarily represent the short-term loans granted to China Tower and placements with SPD Bank by China Mobile Finance, which will mature by or before December 2019 and withholding power and utilities expenses and lease charges payable on behalf of China Tower, etc. Available-for-sale financial assets as at 31 December 2017 or financial assets at FVPL as at 31 December 2018 represent the WMP purchased from SPD Bank and bank deposits represent the deposits placed with SPD Bank. (iv) The amounts primarily represent the charges paid/payable to China Tower for the use of telecommunications towers and related assets and the services (“Leased Tower”). On 8 July 2016, CMC and China Tower finalized the leasing and pricing arrangement in relation to the lease of Leased Tower, and entered into an agreement (the “Lease Agreement”). Accordingly, the respective provincial companies of CMC and China Tower entered into provincial company service agreements for the leasing of individual Leased Tower based on their actual service requirements. Pursuant to the management’s assessment, the 5 years lease terms of the Lease Agreement does not account for the major part of the economic lives of the Leased Tower and the present value of the minimum lease payments is not considered substantial comparing to the fair value of the corresponding Leased Tower. At the end of the lease term, there is no purchase option granted to the Group to purchase the Leased Tower. The Group also does not bear any gains or losses in the fluctuation in the fair value of the Leased Tower at the end of the lease terms. As a result, the Group does not substantially bear the risks and reward incidental to the ownership of the Leased Tower, and hence the Group accounts for the Leased Tower leasing as operating leases. On 31 January 2018, CMC and China Tower unanimously agreed on supplementary provisions to the Lease Agreement (“Supplementary Agreement”). The Supplementary Agreement mainly included: the adjustments to the pricing of tower products, the term of the agreement shall be 5 years, effective from 1 January 2018 and expiring on 31 December 2022. The Supplementary Agreement did not affect the Group’s judgement on operating lease aforementioned. (v) The amount represents the property leasing revenue received/receivable from SPD Bank and China Tower. 137


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) 34 RELATED PARTY TRANSACTIONS (CONTINUED) (d) Transactions with other government-related entities in the PRC The Group is a government-related enterprise and operates in an economic regime currently dominated by entities directly or indirectly controlled by the PRC government through government authorities, agencies, affiliations and other organization (collectively referred to as “government-related entities”). Apart from transactions with CMCC Group (notes 26 and 34(a)), associates and joint venture (note 34(c)) and the transaction to increase contribution to the Fund (note 19), the Group has collectively, but not individually, significant transactions with other government-related entities which include but not limited to the following: – rendering and receiving telecommunications services, including interconnection revenue/charges – purchasing of goods, including use of public utilities – placing of bank deposits These transactions are conducted during the ordinary course of the Group’s business based on terms comparable to the terms of transactions enacted with other entities that are not government-related. The Group prices its telecommunications services and products based on commercial negotiations with reference to rules and regulations stipulated by related authorities of the PRC Government, where applicable. The Group has also established its procurement policies and approval processes for purchases of products and services, which do not depend on whether the counterparties are government-related entities or not. (e) For key management personnel remuneration, please refer to note 10. 35 FINANCIAL RISK MANAGEMENT AND FAIR VALUES Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the Group’s business. The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below: (a) Credit risk and concentration risk The Group’s credit risk is primarily attributable to the financial assets in the balance sheet, which mainly include deposits with banks, WMP (recorded in FVPL), accounts receivable and other FVPL receivables. The maximum exposure to credit risk is represented by the carrying amount of the financial assets. (i) Risk management Substantially all the Group’s cash at banks and bank deposits are deposited in financial institutions in Mainland China and Hong Kong. The credit risk on liquid funds is limited as the majority of counterparties are financial institutions with high credit ratings assigned by international credit-rating agencies and large state-controlled financial institutions. WMPs are issued by major domestic banks investing in low risk underlying assets, which mainly consist of bank deposits, treasury bond, central bank bill, local government debt, corporate bond or debt with high credit ratings, and the related credit risks are low. 138


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 35 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED) (a) Credit risk and concentration risk (Continued) (i) Risk management (Continued) The accounts receivable of the Group is primarily comprised of receivables due from customers and other telecommunications operators. Accounts receivable from individual customers are spread among an extensive number of customers and the majority of the receivables from customers are due for payment within one month from the date of billing. For corporate customers, the credit period granted by the Group is based on the service contract terms, normally not exceeding 1 year. Other receivables primarily comprise interest receivable from banks, utilities deposits, rental deposits and short-term loans granted to other companies through China Mobile Finance. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis, taking into account the counter parties’ financial position, the Group’s past experience and other factors. Meanwhile, concentrations of credit risk with respect to accounts receivable are limited due to the Group’s customer base being large and unrelated. As such, management considers the aggregate risks arising from the possibility of credit losses is limited and to be acceptable. (ii) Impairment of financial assets The Group has 3 types of financial assets that are subject to IFRS/HKFRS 9’s expected credit loss model:• Accounts receivable • Contract assets • Other financial assets at amortized cost Accounts receivable The Group applies the IFRS/HKFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all accounts receivable and contract assets. To measure the expected credit losses, accounts receivable have been grouped by amounts due from individual customers, corporate customers, and other miscellaneous customer groups based on similar credit risk characteristics and ages. The expected loss rate as at 31 December and 1 January 2018 was determined as follows for each customers group of accounts receivable due from individual customers and corporate customers, respectively: Within 30 days 31 days to 90 days 91 days to 1 year Over 1 year Individual customers Expected loss rate 2% 20% 80% 100% Within 180 days 181 days to 1 year 1 year to 2 years 2 years to 3 years Over 139 3 years Corporate customers Expected loss rate 2% 20% 60% 80% 100% Receivables from other customers are of lower risk, and the expected credit loss is insignificant.139


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 35 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED) (a) Credit risk and concentration risk (Continued) (ii) Impairment of financial assets (Continued) Accounts receivable (Continued) Impairment losses on accounts receivable and contract assets are presented as impairment losses of doubtful accounts within other operating expenses. Subsequent recoveries of amounts previously written off are credited against the same line item. In the prior year, the impairment of accounts receivable was assessed based on the incurred loss model of IAS/HKAS 39. Individual receivables which were known to be uncollectible were written off by reducing the carrying amount directly. The loss allowances increased by a further RMB1,406 million to RMB7,269 million for accounts receivable in 2018 determined under IFRS/HKFRS 9 and the amounts are not materially different from the amounts which would otherwise been determined under the incurred loss model of IAS/ HKAS 39. Other financial assets at amortized cost Other financial assets at amortized cost include cash and cash equivalents, bank deposits, other receivables and amounts due from ultimate holding company etc. They are considered to be of low credit risk and thus the impairment provision recognized is limited to 12 months. Management considers that the expected credit loss is insignificant. (b) Liquidity risk Liquidity risk refers to the risk that funds will not be available to meet liabilities as they fall due, and results from timing and amount mismatches of cash inflow and outflow. The Group manages liquidity risk by maintaining sufficient cash balances and bank deposits (which are readily convertible to known amounts of cash) to meet its funding needs, including working capital, principal and interest payments on debts, dividend payments and capital expenditures. The following table sets out the remaining contractual maturities at the balance sheet date of the Group’s financial liabilities, which are based on the undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on prevailing rates at the balance sheet date) and the earliest date the Group would be required to repay: As at 31 December 2018 As at 31 December 2017 Carrying amount Carrying amount Million Million Accounts payable 190,847 233,169 Bills payable 3,221 3,303 Accrued expenses and other payables 195,572 190,866 Amount due to ultimate holding company 11,02 0 8,64 6 400,66 0 435,98 4 The contractual undiscounted cash flow of the above items as at 31 December 2018 and 31 December 2017 were equal to their respective carrying amounts and all of which are expected to be settled within one year or repayable on demand. 140


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 35 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED) (c) Interest rate risk The Group consistently monitors the current and potential fluctuation of interest rates in managing the interest rate risk on a reasonable level. As at 31 December 2018, the Group did not have any interestbearing borrowings at variable rates, but had RMB10,873 million of short-term bank deposits placed by CMCC (2017: RMB8,611 million), which was at fixed rate and expose the Group to fair value interest rate risk. The Group determines the amount of its fixed rate borrowings depending on the prevailing market condition. Management does not expect fair value interest rate risk to be high as the interest involved will not be significant. As at 31 December 2018, total cash and bank balances of the Group amounted to RMB361,567 million (2017: RMB407,202 million), interest-bearing receivables amounted to RMB24,260 million (2017: RMB13,650 million), and WMPs amounted to RMB76,425 million (2017: RMB65,630 million). The interest and other income for 2018 was RMB15,885 million (2017: RMB15,883 million) and the average interest rate was 3.33% (2017: 3.13%). Assuming the total cash and bank balances, interest-bearing receivables and WMPs are stable in the coming year and interest rate increases/decreases by 100 basis points, the profit for the year and total equity would approximately increase/decrease by RMB3,480 million (2017: RMB3,182 million). (d) Foreign currency risk The Group has foreign currency risk as certain cash and deposits with banks are denominated in foreign currencies, principally US dollars and Hong Kong dollars. As the amount of the Group’s foreign currency cash and deposits with banks represented 3.3% (2017: 2.5%) of the total cash and deposits with banks and predominantly all of the business operations of the Group are transacted in RMB, the Group does not expect the appreciation or depreciation of the RMB against foreign currency will materially affect the Group’s financial position and result of operations. (e) Fair values The carrying amount of the financial instruments carried at amortized cost are not materially different from their respective fair values at the balance sheet dates due to the short-terms or repayable on demand nature. 36 COMMITMENTS (a) Capital commitments The Group’s capital expenditure contracted for as at 31 December but not provided in the consolidated financial statements were as follows: 2018 2017 Million Million Land and buildings 9,327 10,950 Telecommunications equipment 44,174 32,112 53,501 43,062 141


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 36 COMMITMENTS (CONTINUED) (b) Operating lease commitments The total future minimum lease payments under non-cancellable operating leases as at 31 December are as follows: Land and buildings Leased lines and network assets Others Total Million Million Million Million As at 31 December 2018 Within one year 10,067 44,867 1,402 56,336 After one year but within five years 24,843 123,088 1,324 149,255 After five years 11,165 3,464 81 14,710 46,075 171,419 2,807 220,301 As at 31 December 2017 Within one year 10,344 46,730 1,023 58,097 After one year but within five years 20,372 112,465 961 133,798 A fter five years 4,831 1,183 58 6,072 35,547 160,378 2,042 197,967 The Group leases certain land and buildings, leased lines and network assets, motor vehicles, computer and other office equipment under operating leases. (c) Investment commitments The Group has an investment commitment to a joint venture (see note 19).37 POST BALANCE SHEET EVENT After the balance sheet date, the Board of Directors proposed a final dividend for the year ended 31 December 2018. Further details are disclosed in note 32(b)(i). 38 ACCOUNTING ESTIMATES AND JUDGEMENTS Key sources of estimation uncertainty Note 17 contains information about the assumptions relating to goodwill impairment, and note 34 contains information about the judgements on the lease classification of leasing of TD-SCDMA network capacity and Leased Tower. Other key sources of estimation uncertainty are as follows: Impairment of accounts receivable The loss allowance for accounts receivable is based on assumptions about risk of default and expected loss rates. The Group assesses these assumptions and selects the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at each balance sheet date.142


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 38 ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) Amortization of contract cost As disclosed in note 3(c), certain costs incurred to obtain contracts are deferred and recognized as assets on the Group’s consolidated balance sheet. Such assets should be amortized on a systematic basis consistent with the pattern of the transfer of the goods or services to which the asset relates. The Group determines the amortization periods for these assets as the expected life of the customer contract, which is consistent with the recognition of revenue from the products and services to which the assets relate. Such costs are amortized using the straight-line method. The amortization period is updated if there is a significant change in the Group’s expected life of the customer contract. Depreciation Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives. The Group reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives and residual values are determined based on the Group’s historical experience with similar assets and take into account anticipated technological changes. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates. Taxation The Group is subject to income taxes mainly in Mainland China and Hong Kong. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. For temporary differences which give rise to deferred tax assets, the Group assesses the likelihood that the deferred tax assets could be recovered. Deferred tax assets are recognized based on the Group’s estimates and assumptions that they will be recovered from taxable income arising from continuing operations in the foreseeable future. Impairment of property, plant and equipment, goodwill, other intangible assets and investments accounted for using the equity method The Group’s property, plant and equipment comprise a significant portion of the Group’s total assets. Changes in technology or industry conditions may cause the estimated period of use or the value of these assets to change. Property, plant and equipment, other intangible assets subject to amortization and investments accounted for using the equity method, are reviewed at least annually to determine whether there is any indication of impairment. The recoverable amount is estimated whenever events or changes in circumstances have indicated that their carrying amounts may not be recoverable. In addition, for goodwill and other intangible assets with indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment. The recoverable amount of an asset is the greater of its fair value less costs of disposal and VIU. In assessing VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset, which requires significant judgement relating to level of revenue and amount of operating costs. The Group uses all readily available information in determining an amount that is a reasonable estimation of the recoverable amount, including estimates based on reasonable and supportable assumptions and projections of revenue and operating costs. Changes in these estimates could have a significant impact on the carrying value of the assets and could result in further impairment charge or reversal of impairment in future periods. Additional information for the impairment assessment of property, plant and equipment, goodwill and investments accounted for using the equity method is disclosed in notes 14, 17 and 19, respectively. 143


China Mobile Limited Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) 38 ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) Classification of leases The Group has a number of lease arrangements. The Group follows the guidance of IAS/HKAS 17 “Leases” to determine the classification of leases as operating leases versus finance leases. Significant judgements and assumptions are required in the assessment of the classification. The determination of classification depends on whether the lease transfers substantially all the risks and rewards of the assets to the Group. In particular, during the assessment, the management estimates (i) economic lives of lease assets, (ii) the discount rate used in the calculation of present value of minimum lease payments, and (iii) the fair value of the leased assets. Any future changes to these judgements or assumptions will affect the classification and hence the results of operation and financial position of the Group. 39 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS, INTERPRETATIONS AND DISCLOSURES ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31 DECEMBER 2018 Up to the date of issue of these financial statements, the IASB/HKICPA has issued a number of amendments and new standards and interpretations which are not yet effective for the year ended 31 December 2018 and which have not been adopted in these financial statements. Of these developments, the following relate to matters that may be relevant to the Group’s operations and financial statements: Effective for accounting periods beginning on or after IFRS/HKFRS 16 1 January 2019 IFRIC/HK(IFRIC) – Int 23 1 January 2019 Amendments to IAS/HKAS 28 1 January 2019 Annual Improvements to IFRS/HKFRS Standards 2015-2017 Cycle 1 January 2019 Amendments to IAS/HKAS 19 1 January 2019 Amendment to IFRS 3 1 January 2020 Amendments to IFRS/HKFRS 10 and IAS/HKAS 28 NA* * In December the IASB decided to defer the application date of this amendment until such time as the IASB has finalised its research project on the equity method. 144


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB unless otherwise indicated) Notes to the Consolidated Financial Statements (Continued) 39 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS, INTERPRETATIONS AND DISCLOSURES ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31 DECEMBER 2018 (CONTINUED) IFRS/HKFRS 16 “Leases” IFRS/HKFRS 16 was issued in January 2016. For lessee, it will result in almost all leases being recognized on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term and low value leases. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under IAS/HKAS 17. The accounting for lessors will not significantly change. In accordance with IFRS/HKFRS 16, the lessee will recognize right-of-use assets and lease liabilities for almost all leases in the balance sheet, and record depreciation and finance cost accordingly. The adoption of IFRS/HKFRS 16 has a material impact on the Group’s consolidated financial statements to certain extent as the Group expects a corresponding increase in its assets and liabilities. In addition, related operating lease expenses will be reclassified as depreciation and finance costs. The Group has completed the evaluation of the lease portfolio, system optimization and system support upgrade, and applied the standard from its mandatory adoption date of 1 January 2019. The Group has applied the simplified transition approach and not restated comparative amounts for the year prior to first adoption, with the cumulative effect of initial adoption recognized as an adjustment to the opening balance of retained earnings. Right-of-use assets are measured on transition as if the new rules have had always been applied. And lease liability are measured at the present value of the remaining lease payments, discounted using the Group’s incremental borrowing rate at the date of initial application. As a lessee, the Group’s operating lease commitments were RMB220,301 million as at 31 December 2018 (Note 36(b)). The Group will further separate services from leases in 2019. For short-term leases and low value leases, they will be recognized as expenses on a straight-line basis in profit or loss. For variable lease payments that do not depend on an index or a rate, they will be recognized in profit or loss as incurred. For the remaining lease commitments, the Group expects to recognize right-of-use assets and lease liabilities as at 1 January 2019 which results in liabilities to assets ratio increasing by approximately 3.5%. 145


China Mobile Limited Financial SummaryNotes to the Consolidated Financial Statements (Continued) (Expressed in RMB) RESULTS 2018 2017 2016 2015 2014 Million Million Million Million Million Operating revenue Revenue from telecommunications services 670,907 668,351 623,422 584,089 591,602 Revenue from sales of products and others 65,912 72,163 84,999 84,246 59,907 736,819 740,514 708,421 668,335 651,509 Operating expenses Leased lines and network assets 47,470 46,336 39,083 20,668 15,843 Interconnection 20,692 21,762 21,779 21,668 23,502 Depreciation 152,545 149,780 138,090 136,832 122,805 Employee benefit and related expenses 93,939 85,513 79,463 74,805 70,385 Selling expenses 60,326 61,086 57,493 59,850 75,655 Cost of products sold 66,231 73,668 87,352 89,297 74,495 Other operating expenses 174,229 182,243 167,073 162,293 151,504 615,432 620,388 590,333 565,413 534,189 Profit from operations 121,387 120,126 118,088 102,922 117,320 Gain on the transfer of Tower Assets – – – 15,525 – Other gains 2,906 2,389 1,968 1,800 1,171 Interest and other income 15,885 15,883 16,005 15,852 16,270 Finance costs (144) (210) (235) (455) (487) Income from investments accounted for using the equity method 13,861 9,949 8,636 8,090 8,248 Profit before taxation 153,895 148,137 144,462 143,734 142,522 Taxation (35,944) (33,723) (35,623) (35,079) (33,179) PROFIT FOR THE YEAR 117,951 114,414 108,839 108,655 109,343 146


Annual Report 2018Notes to the Consolidated Financial Statements (Continued) (Expressed in RMB) Financial Summary RESULTS (CONTINUED) 2018 2017 2016 2015 2014 Million Million Million Million Million Other comprehensive income/(loss) for the year, net of tax: Items that will not be subsequently reclassified to profit or loss Changes in the fair value of equity investments at fair value through other comprehensive income (168) – – – – Share of other comprehensive income/ (loss) of investments accounted for using the equity method 60 – (16) – – Items that may be subsequently reclassified to profit or loss Change in value of available-for-sale financial assets – (5) 24 – – Currency translation differences 1,160 (735) 774 603 (169) Share of other comprehensive income/ (loss) of investments accounted for using the equity method 1,188 (1,038) (1,043) 901 1,224 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 120,191 112,636 108,578 110,159 110,398 Profit attributable to: Equity shareholders of the Company 117,781 114,279 108,741 108,539 109,218 Non-controlling interests 170 135 98 116 125PROFIT FOR THE YEAR 117,951 114,414 108,839 108,655 109,343 Total comprehensive income attributable to: Equity shareholders of the Company 120,021 112,501 108,480 110,043 110,273 Non-controlling interests 170 135 98 116 125 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 120,191 112,636 108,578 110,159 110,398 147


China Mobile Limited Financial Summary (Expressed in RMB) ASSETS AND LIABILITIES As at 31 December 2018 As at 31 December 2017 As at 31 December 2016 As at 31 December 2015As at31 December 2014 Million Million Million Million Million Property, plant and equipment 666,496 648,029 622,356 585,631 605,023 Construction in progress 72,180 78,112 89,853 88,012 95,110 Land lease prepayments and others 27,778 28,322 26,720 26,773 24,883 Goodwill 35,343 35,343 35,343 35,343 35,343 Other intangible assets 2,620 1,721 1,708 768 787Investments accounted for using the equity method 145,325 132,499 124,039 115,933 70,451 Deferred tax assets 29,654 33,343 29,767 25,423 20,654 Financial assets at fair value through other comprehensive income 587 – – – – Available-for-sale financial assets – 44 35 3 128 Proceeds receivable for the transfer of Tower Assets – – – 56,737 – Restricted bank deposits 12,369 6,504 4,528 4,575 8,731 Other non-current assets 8,442 – – – – Current assets 535,116 558,196 586,645 488,697 486,925 T otal assets 1,535,910 1,522,113 1,520,994 1,427,895 1,348,035 Current liabilities 474,398 529,982 536,389 501,038 452,492 Interest-bearing borrowings – non-current – – – 4,995 4,992 Deferred revenue – non-current 4,881 2,888 2,175 1,291 1,470 Deferred tax liabilities 822 362 292 203 98 T otal liabilities 480,101 533,232 538,856 507,527 459,052 T otal equity 1,055,809 988,881 982,138 920,368 888,983 148


China Mobile Limited 60/F., The Center, 99 Queen’s Road Central, Hong Kong Tel : (852) 3121 8888 Fax : (852) 3121 8809 Website : www.chinamobileltd.com Welcome to China Mobile Limited’s website This annual report is printed on environmentally friendly paper

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Webplus: CHL/20190412/6-K/3_EX-99.2/000.htm SEC Original: chl-ex992_7.htm
CONNECT TO THE FUTURE 2018 Sustainability Report China Mobile Limited CONTENTS Chairman’s Statement……………………………………………………………………..02 About China Mobile…………………………………………………………………………04 Sustainability Strategy and Management…………………………………………05 A Beautiful Life Created Together…………………………………………………….07 Building Quality Networks and Sharing Digital Benefits…………………………………………08 Providing Satisfactory Services and Seeking Trusted Communication…………………………13 Enabling a Digital Society and Unlocking Innovative Possibilities………………………………18 Promoting Poverty Alleviation and Boosting Rural Revitalization……………………………….25 Supporting Public Welfare and Helping Community



s:235323:" EX-99.2 3 chl-ex992_7.htm EXHIBIT 99.2

Exhibit 99.2

CONNECT TO THE FUTURE 2018 Sustainability Report China Mobile Limited


CONTENTS Chairman’s Statement................................................................................02 About China Mobile....................................................................................04 Sustainability Strategy and Management................................................05 A Beautiful Life Created Together.............................................................07 Building Quality Networks and Sharing Digital Benefits................................................08 Providing Satisfactory Services and Seeking Trusted Communication..............................13 Enabling a Digital Society and Unlocking Innovative Possibilities....................................18 Promoting Poverty Alleviation and Boosting Rural Revitalization.....................................25 Supporting Public Welfare and Helping Community Thrive ...........................................30 A Digital Future Achieved Together..........................................................35 Cementing Leadership in Innovation and Accelerating Transformation and Development......36 Committing to Green Development and Environmental Protection...................................43 Facilitating Employee Growth and Fostering Innovative Talents .....................................48 Stakeholder Engagement and Materiality Analysis................................54 Independent Assurance Report................................................................56 About this Report.......................................................................................58 Report Disclosure Indexes........................................................................59 Feedback.....................................................................................................64


Chairman’s Statement Embrace the 5G Era and Create a Future of Intelligent Connectivity Together The year 2018 marks the 40th anniversary of China’s reform and opening up. Over the years, China’s information and communications technology (ICT) sector has made massive strides to establish itself as one of the industrial leaders worldwide. China Mobile continues to enhance economic and social well-being through ICT and acts as a key driver in the historic transformation of China’s ICT sector that has undergone different phases: blankness in 1G, falling behind in 2G, making breakthroughs in 3G, keeping pace in 4G, and leading in 5G. To capture the opportunities associated with 5G, in 2018, China Mobile strove constantly to build stronger connectivity capabilities, joined hands with other industry players to accelerate digital innovation, and actively fulfilled its social responsibilities, thereby playing an active role in building China’s strengths in cyberspace and digital technology. Yang Jie Chairman China Mobile Limited


Provide high-quality connections and consolidate digital infrastructure. We continued to expand the depth and width of our network coverage to deliver unimpeded, high-quality and high-speed connectivity capabilities. As of the end of 2018, we had 2.41 million 4G base stations and had served 713 million 4G customers and 157 million wireline broadband customers and launched our international data roaming services in 23 countries/regions. We had rolled out NB-IoT in 346 citie , and achieved continuous coverage at township level and above. The number of our IoT smart connections grew by 322 million to 551 million. At the same time, we actively harnessed new technologies such as artificial intelligence to boost cloud computing and data center infrastructure upgrades with a view to building new world-class information infrastructure. Pioneer technological innovations and create an intelligent, beautiful life. We continued to promote research on key technologies and applications, taking the lead in developing international standards for 5G infrastructure and actively engaging in 5G network scale experimentation and business use case demonstration. We launched the “5G Device Forerunner Initiative” and built global open laboratories and 5G industry alliances based on our 5G Joint Innovation Center to promote the maturity of the end-to-end industry chain. As part of our R&D deployment expansion efforts, we established three new industry research institutes in Xiong’an New Area, Chengdu and Shanghai in 2018. We incubated 5G demonstrative applications across key verticals of the economy including industry, agriculture, healthcare, education, transportation, finance and smart cities to drive the in-depth integration between digital economy and real economy and the construction of an intelligent society. Deepen industry cooperation and create a prosperous digital ecosystem. We continued to implement the 139 Cooperation Plan with three major specific measures, namely upscaling digital industry cooperation, strengthening digital home cooperation, and deepening pan-intelligent terminal cooperation, to provide industry partners with an open platform for achieving win-win cooperation. In 2018, our communications capability sharing platform was selected as a Sharing Economy Demonstration Platform by the National Development and Reform Commission of China, serving more than 305,000 enterprises; our mobile authentication platform processed an average of 670 million accreditations per day; and our One NET IoT platform brought together 9,396 enterprises and empowered nearly 100,000 developers. We were actively engaged in building a national-level mass entrepreneurship and innovation demonstration base and made an all-out effort to inspire entrepreneurship and innovation, both internal and external, through a series of initiatives, including the And-Creation Space, independent development competitions as well as employee entrepreneurship and innovation activities, and to support and empower SMEs and individual entrepreneurs. We stepped up strategic cooperation with our industry peers on all fronts in emerging technology areas such as 5G, Internet of Vehicles and artificial intelligence to jointly explore new opportunities in digital services. Fulfill responsibilities in all respects and share sustainable value. We further implemented measures of speed upgrade and tariff reduction to bring affordable information access to our customers. We continued putting in more efforts to combat telecommunications frauds and regulate harmful information and devising new methods to safeguard information security for our customers. We actively implemented special initiatives including the Telecommunications Universal Service Project, cumulatively delivering broadband access to 417,000 administrative villages and bringing 4G coverage to 97.8% of all administrative villages, thereby further narrowing the urban-rural digital divide. We deepened our partner assistance and targeted poverty alleviation efforts in eight counties of five provinces, expanded the scope of our Targeted Poverty Alleviation System and poverty-alleviation preferential tariffs, and launched projects in livelihood enhancement, industry support, education improvement, healthcare and many other aspects to do our part in supporting rural revitalization and fighting poverty. Our Blue Dream Educational Aid Plan and Heart Caring Campaign continued in 2018, through which we cumulatively trained 115,782 rural primary and secondary school principals in central and western China and sponsored the surgeries of 5,358 impoverished children with congenital heart disease. We carried out the “Green Action Plan” for the 12th consecutive year and contributed to the realization of UN Sustainable Development Goals through measures such as continuously improving energy conservation and emission reduction management and developing low-carbon environmentally friendly applications. At the dawn of the 5G era, China Mobile is intent on continuing to pioneer technological innovations powered by 5G, big data and artificial intelligence and uniting with other industry players, in order to drive the digital and intelligent transformation of our economic and social life and jointly shape a new future of intelligent connectivity that is to the benefit of everyone. March 2019 China Mobile Limited 2018 Sustainability Report Chairman’s Statement 3


About China Mobile Company Profile As the largest telecommunications service provider in Mainland China, China Mobile Limited (“China Mobile”, “the Company” or “we”) serves the world’s largest number of mobile customers and operates the world’s largest mobile network, maintaining a leading position in the telecommunications market in Mainland China. Incorporation 3 September 1997 in Hong Kong, China. Operation Regions All 31 provinces, autonomous regions and directly administrated municipalities in Mainland China, and the Hong Kong Special Administrative Region. Credit Rating Currently, the Company’s corporate credit ratings continue to be equivalent to China’s sovereign credit ratings from Standard & Poor’s and Moody’s. Shareholding Structure The Company’s ultimate controlling shareholder is China Mobile Communications Group Co., Ltd. (“the parent company”), which indirectly held approximately 72.72% of the total number of issued shares of the Company as of 31 December 2018. The remaining approximately 27.28% was held by public investors. The Company owns 100% interest in the following major subsidiaries: China Mobile Communication Company Limited, China Mobile Guangdong Company Limited, China Mobile Group Zhejiang Company Limited, China Mobile Group Jiangsu Company Limited, China Mobile Group Fujian Company Limited, China Mobile Group Henan Company Limited, China Mobile Group Hainan Company Limited, China Mobile Group Beijing Company Limited, China Mobile Group Shanghai Company Limited, China Mobile Group Tianjin Company Limited, China Mobile Group Hebei Company Limited, China Mobile Group Liaoning Company Limited, China Mobile Group Shandong Company Limited, China Mobile Group Guangxi Company Limited, China Mobile Group Anhui Company Limited, China Mobile Group Jiangxi Company Limited, China Mobile Group Chongqing Company Limited, China Mobile Group Sichuan Company Limited, China Mobile Group Hubei Company Limited, China Mobile Group Hunan Company Limited, China Mobile Group Shaanxi Company Limited, China Mobile Group Shanxi Company Limited, China Mobile Group Neimenggu Company Limited, China Mobile Group Jilin Company Limited, China Mobile Group Heilongjiang Company Limited, China Mobile Group Guizhou Company Limited, China Mobile Group Yunnan Company Limited, China Mobile Group Xizang Company Limited, China Mobile Group Gansu Company Limited, China Mobile Group Qinghai Company Limited, China Mobile Group Ningxia Company Limited, China Mobile Group Xinjiang Company Limited, China Mobile Group Design Institute Company Limited, China Mobile Hong Kong Company Limited, China Mobile International Limited, China Mobile IoT Company Limited, China Mobile Information Technology Limited, China Mobile Online Services Company Limited, China Mobile (Suzhou) Software Technology Company Limited, China Mobile (Hangzhou) Information Technology Company Limited, MIGU Company Limited, China Mobile Internet Company Limited, China Mobile Tietong Company Limited, China Mobile Investment Holdings Company Limited, China Mobile Quantong System Integration Co., Ltd., China Mobile Financial Technology Co., Ltd., China Mobile (Chengdu) ICT Co., Ltd., and China Mobile (Shanghai) ICT Co., Ltd.. In addition, the Company owns a 99.97% equity interest in China Mobile Group Device Company Limited, a 92% equity interest in China Mobile Group Finance Company, and a 66.41% equity interest in Aspire Holdings Limited. Ranked the 25th in the “2018 Forbes Global 2000 List”; Listed in the “BrandZ™ Top 100 Most Valuable Global Brands 2018” published by Kantar Millward Brown and Financial Times for the 13th consecutive year, ranking 21st globally; Continued to be the first and only company from Mainland China listed in CDP’s Climate A List for the third consecutive year, and was acclaimed as a Sustainability Leadership Enterprise Model by CDP China for our work to tackle climate change for the fifth consecutive year; Received “The Asset Platinum Award” from The Asset; Ranked 1st in the “Social Responsibility Development Index of Chinese Enterprises Top 300 2009-2018”, and won the “10 Years of Responsibility; Top 10 State-owned Enterprises” award; Won the “Exemplary Enterprise Award for Sustainable Competitiveness” presented by Outstanding Chinese Enterprises with Sustainable Competitiveness 2018.Organizational Structure Honors and Recognitions 4


China Mobile Limited 2018 Sustainability Report Following the corporate core value of “Responsibility Makes Perfection”, China Mobile strives to bring out the best in people and things, and make a continued effort to pursue coordinated development in the economy, society, and the environment. We adhere to the new development concept of “innovation, harmony, green, open and sharing” and incorporate the UN Sustainable Development Goals (SDGs) into our sustainability strategy, thereby responding to stakeholder expectations through responsible operations, and co-creating and sharing the value of sustainable development. Wider Connections Inclusion Better Value Creation Stronger Capabilities Transformation Building Quality Networks and Sharing Digital Benefits Continuously expanding the scope of connections, implementing speed upgrade and tariff reduction measures, enhancing network quality and emergency response capabilities, and striving to build ubiquitous, high-speed and intelligent first-class infrastructure. Providing Satisfactory Services and Seeking Trusted Communication Adopting a customer-centric approach to comprehensively optimizing customer services, reinforcing network and user information security protection, responding promptly to customer concerns, and ensuring delivery of more convenient, intelligent and considerate customer services. Enabling a Digital Society and Unlocking Innovative Possibilities Accelerating capability opening-up and cooperative innovations, leading the construction of a new digital service industry ecosystem, innovating individual and industry intelligent applications, facilitating supply-side reform and digital transformation and upgrading of the industry, and building a digital society together with stakeholders. Facilitating Employee Growth and Fostering Innovative Talents Boosting employees’ innovativeness through continuous improvements to our innovation incentive mechanism, respecting and protecting employees’ legitimate rights, and implementing more comprehensive healthcare and safety measures to help our employees achieve work-life balance. Promoting Poverty Alleviation and Boosting Rural Revitalization Fully deepening poverty alleviation efforts, utilizing technological and platform advantages to encourage and empower people to lift themselves out of poverty, contributing to targeted poverty elimination, and providing information- based and intelligent solutions for rural revitalization. Committing to Green Development and Environmental Protection Continuing to implement the Green Action Plan and improve our environmental management system, rallying all employees, industry chain partners and the general public around energy reservation and emission reduction efforts, and contributing to the development of ecological civilization. Supporting Public Welfare and Helping Community Thrive Continuing to develop branded public welfare programs consistent with our business expertise and society’s needs, enhancing the scope and effectiveness of these programs, and striving to offer genuine assistance to underprivileged groups through more professional volunteer service philosophy and capabilities and including them in community development. Cementing Leadership in Innovation and Accelerating Transformation and Development Improving R&D deployment, comprehensively enhancing independent innovation capabilities, joining hands with industry peers to drive 5G technological and application innovations, accelerating digital transformation, and strengthening sustainable development capabilities. Sustainability Strategy and Management Sustainability Strategy and Management The ICT Model for China Mobile Sustainability Focal areas of sustainable development Core targets of sustainable development CTT 5


The strategic corporate social responsibility (CSR) management at China Mobile began in 2006 and is closely related to our corporate strategies and operations. Building on this, we have constructed a strategic CSR management system over the years comprising four modules, namely strategy, implementation, performance and communication. Best CSR Practices Selection We received 72 applications from 41 units at the 11th Best CSR Practices Selection in 2018. Through case collection, qualification examination, preliminary assessment, online voting and expert review, we presented 14 outstanding CSR practices with the following awards: Top 10 CSR Practices of the Year, CSR Originality Award, Outstanding Employee Engagement Award, Best Public Welfare Organization Award, and Netizens’ Choice Award, and recognized three employees as the “Philanthropy Stars of China Mobile”. In 2018, we launched an online voting in the CSR section of our website, while also enabling voting via WeChat and Weibo. The online voting lasted for two weeks with over 640,000 valid votes cast, receiving considerable public attention. Scan the QR code for more information on the sustainable development of China Mobile. In light of the latest trends and requirements of sustainable development, the Company launched the new China Mobile ICT Sustainable Development Model in the new era in 2018. Based on clearly identified key sustainability issues and implementation priorities over the year, we carried out our social responsibility work using a top-down approach. We continuously conducted sustainabiltiy benchmarking, measuring our performance against sustainability indices such as DJSI, MSCI, Sustainalytics and Hong Kong Business Sustainability Index to further improve the management and disclosure of key issues and maintain sound sustainability performance. The Company regularly hosted internal training and awareness-building activities on CSR, with a participation of 447,006 person-times in 2018. We organized the Best CSR Practices Selection for the 11th consecutive year in 2018, inviting experts from governmental departments, NGOs, academic organizations and authoritative media as well as from inside the Company to sit on the review panel. Over 11 years, more than 750 cases have been submitted in total, with 184 of them winning an award, effectively inspiring innovative CSR practices at all levels of the Company. In 2018, the Company released its 12th sustainability report, fully complying with ESG information disclosure requirements and specifically optimizing methods of communicating with readers, with relevant new media coverage reaching 12.23 million person-times. The Company actively engages with industry peers at experience-sharing events to promote better CSR management and practices across the whole industry. 38 key communication events were held in 2018. Culture Organization System Process CSR Communication Management CSR Strategy Management CSR Implementation Management CSR Performance Management Sustainability philosophy and vision setting CSR strategy and work plan development CSR promotion and training CSR issue benchmarking CSR information collection and tracking Integration of sustainability into performance management Best CSR practices Selection Sustainability reporting and communication Stakeholder engagement Responsible Operations & Sustainable Development 6


A Beautiful Life Building Quality Networks and Sharing Digital Benefits Providing Satisfactory Services and Seeking Trusted Communication Enabling a Digital Society and Unlocking Innovative Possibilities Promoting Poverty Alleviation and Boosting Rural Revitalization Supporting Public Welfare and Helping Community Thrive 08 13 18 25 30 Created Together 7


Fujian Province is surrounded by mountains on three sides and by the sea on one side. This caused difficulties in broadband construction in remote areas, in particular on coastal islands, such as significant signal loss and proneness to interference. China Mobile introduced a domestic cross-sea communications expert team and state-of-the-art big-broadband telecommunications equipments and formed 20 technical teams. They worked around the clock conducting investigations and developing construction plans and effectively overcame the obstacles of building cross-sea networks. On May 12, 2018, the Company took the initiative to launch 100Mbps fiber-optic broadband on 23 coastal islands, not only providing the citizens on islands with access to high-speed broadband services but also greatly enhancing the development of local tourism and fishery sectors. Strengthening Foundation for Connectivity Aligning its efforts with the development requirements of the new era, China Mobile further implements the “Big Connectivity” strategy and commits itself to building quality networks and bridging the digital divide. In doing so, we strive to meet the public’s ever-growing demand for digital consumption and lay the “connectivity” foundation for economic and social transformation and development. We try constantly to extend broadband coverage in remote villages and islands to further narrow the digital divide. By the end of 2018, through the Telecommunication Universal Service Project, we had cumulatively delivered broadband services to 38,352 administrative villages and our wireline broadband services covered 417,000 administrative villages. Narrowing Digital Divide 01 Building Quality Networks and Sharing Digital Benefits As of the end of 2018 Fujian: Tackling Challenges in Building Island Broadband Connectivity Future Mobile Customers 925 Million Wireline Broadband Customers 157 Million IoT Smart Connections Million 551 8


Nantong city of the Jiangsu Province has a coastline of 206 kilometers. To effectively resolving the issue of delivering offshore mobile signal coverage to meet the communication needs of maritime workers such as fishermen, harbor workers and wind turbine operators, China Mobile collaborated with coastal wind power companies in building high-power base stations utilizing offshore boosting stations and offshore wind turbines. At present, the Company has started four offshore base stations on Nantong and Yancheng waters in Jiangsu, providing seamless mobile network coverage within 70 kilometers of the coastline in the respective areas. Broadening International Connections China Mobile continues to grow its capacity for international connections through strategic measures such as optimizing roaming services, developing overseas service channels and strengthening mutually beneficial cooperation with its global telecommunications counterparts. As at the end of 2018, China Mobile continued to lead the world with its 4G international roaming services extending to 181 countries/regions around the globe, achieving a 61.2% year-on-year growth in its international data roaming users. To persist in complying with the principle of achieving shared growth through discussions and collaboration, China Mobile continued to optimize the multi-dimensional high-speed information channels encompassing Information Highway (transmission resources), the Information Station (POPs), and the Information Island (data centers) to expand its capabilities for overseas communications infrastructure construction and deployment. In 2018, we achieved positive development in serving the needs of Chinese enterprises for “going out” and the needs of transnational companies for pursuing information-based development through the provision of reliable dedicated cross-border communications connections, international data center services, and holistic ICT solutions. Speed Upgrade and Tariff Reduction At present, high-speed Internet experience has become the new norm of the day, where people have ubiquitous access to HD movies, intriguing videos and live broadcasts, can enjoy installation- free online gaming experience with no lag, and can instantly transmit huge files. The list goes on. While continuing to improve our 4G network speed, we placed a dedicated focus on comprehensive speed upgrades for our home broadband services in 2018 to fully accommodate people’s demand for high-speed Internet. In an effort to ensure both quality and affordability, we made our services more accessible to consumers in 2018 through a range of measures to reduce tariffs for our voice, data and other services. By doing so, we managed to stimulate customers’ consumption demands and nurture their habits of digital living, while fueling the digital transformation of SMEs. Average 4G network downloading rate on urban roads reached 42.6Mbps Achieved comprehensive home broadband speed upgrades, with the broadband connection speed of the whole network exceeding 100Mbps; rolled out 1000Mbps demonstration communities in every city across the country, taking a lead in the provision of 1000Mb networks Completely eliminated charges for long-distance calls, roaming calls, and data roaming Introduced measures such as big-volume data plan, sponsored data tariff, and data assurance services Lowered charges for home broadband, business broadband, and dedicated Internet access China Mobile earnestly implements network speed upgrades and tariff reductions, laying the requisite foundation for a thriving digital economy. Our speed upgrade and tariff reduction measures cumulatively benefited 4.7 billion person-times as at the end of 2018. Jiangsu: Collaboration in Developing Offshore Base Stations 9 China Mobile Limited 2018 Sustainability Report Building Quality Networks and Sharing Digital Benefits 9


Improving Network Quality In light of the growth of the scale of connections, the complexity and difficulty in maintaining the networks has continued to grow. It thus becomes the Company’s top priority to maintain robust network quality and user experience. In 2018, China Mobile continued to improve its network quality management system, robustly upgrade network maintenance and emergency communication support, so as to ensure a smooth and premium network experience in all kinds of scenarios. In 2018, we created the innovative Network Experience Index (NEI) to further refine our network quality evaluation management. Based on accurate user experience analysis and timely response, we strive to overcome the difficulties in network maintenance to provide better connections. In the meantime, big-volume data services have created new requirements and challenges for developing the necessary network capabilities. We proactively adapted ourselves by introducing new technologies and building new platforms dedicated to addressing issues such as high-load communities and network interferences, thus improving our network operations capabilities. Reinforcing Network Quality Management In 2018, China Mobile launched the Network Experience Index (NEI) in collaboration with our partners. For the first time, the index theory and genetic engineering models were introduced into the mobile communication network, which, together with four innovation technologies including artificial intelligence algorithm and big data, served as the pillars of the experience-based digital evaluation system of the telecommunications industry. The system enables digital representation of network experience, quantitative correlation of customer perception, and rapid quality benchmarking against international operators, thereby more accurately pinpointing key contributing factors to network capabilities and providing direction for network quality improvement. With the “Four-aspect & Ten-dimension” quality evaluation system, China Mobile defines perception indicators across 10 vertically refined dimensions under the four aspects of macroscopic scale, microscopic scale, network foundation, and major events and measures the daily network experience of its individual, household, government and enterprise customers, and new business users in a comprehensive and multi-dimensional manner. Major scenic spots across the country witness a sharp rise in the number of tourists during public holidays. People use their mobile phones to search for food to enjoy and beautiful places to visit, upload photos and videos, interact real-time with their friends and relatives, etc. Such exploding demands for mobile data often lead to short-term, regional ultra-high network load, which significantly undermines network quality or even leads to network jams. To satisfy the high network traffic demand in these situations, China Mobile Zhejiang Company established the new Capacity Smart Operations System in 2018, with “resources operations”, “capability operations” and “efficiency operations” as its guarantee guidelines. With intelligent analysis and judgment, automatic evaluation, and automatic execution enabled by its network maintenance support platform, the system provides solid support for meeting customers’ data demands in a timely and effective manner. Improving Emergency Response Capability We continued to improve our critical event network supporting system characterized by 4 “Rs”, namely “clear Responsibility, readily available Resources, manageable Risk, and timely Response”. Meanwhile, we further strengthened our long-standing critical event supporting mechanism, which involved unified efforts between the Group and provincial subsidiaries as well as cross-departmental and interdisciplinary collaboration, to improve our overall capability in providing emergency support. In 2018, we successfully provided communications and network security support for major events including Boao Forum for Asia, Shanghai Cooperation Organization (SCO) Qingdao Summit, Forum on China-Africa Cooperation (FOCAC) and China International Import Expo (CIIE) as well as providing communications quality and network security support for natural disaster relief, and achieved our service goals of “zero major network failures, zero major network security incidents, and zero complaints from key customers”. Network Experience Index “Four-aspect & Ten-dimension” Quality Evaluation System New Capacity Smart Operations System 8,986 4,899 times 36,596settimes 314,427persontimes times Provided emergency communications support Activated support personnel Dispatched support vehicles Deployed support equipment 2018


From the afternoon of August 18th to the early morning of August 20th, the No.18 Typhoon “Wambia” brought widespread torrential rain to Shandong Province, leaving Weifang severely ravaged by the biggest flood in decades. On the eve of the disaster, China Mobile launched the emergency communications response plan and prepared support resources in advance. In the aftermath of the disaster, we rapidly deployed and set up the centralized command and control center for flood control and disaster relief. Using the “Zhiduoxing” command and control system and a range of new emergency response devices such as drones, satellite communications vehicles, satellite phones, and Gigabit microwave, we effectively addressed issues of dangerous scenarios and serious network damages and rapidly restored Internet access in disaster-stricken areas. Moreover, we sent out 900,000 charitable text messages in support of disaster relief and provided affected people with free access to phones, as well as phone charging, consultation, and other services. Communications Support for SCO Qingdao Summit From June 9th to 10th, 2018, the 18th Meeting of the Council of Heads of Member States of The Shanghai Cooperation Organization was held in Qingdao, Shandong Province. Bringing together its group of experts, China Mobile undertook comprehensive safety tests and loophole rectification for 687 systems/mobile apps and developed the innovative “Haina” multilayer network emergency communications vehicles. Together with the newly developed one-button disaster recovery system that realized safety protection at important sites at the press of one button, all these efforts helped ensure secure and smooth Internet access during the summit. Combating Typhoon “Wambia” On April 8th, 2018, the 17th Boao Forum for Asia Annual Conference was held in Hainan Province. Using its independently developed technological applications such as the “And Cloud Speed” device and “AR Network Map” mobile app, China Mobile conducted Internet speed test at important sites and surrounding roads as well as base station monitoring, providing successful communications support for the Forum. Communications Support for Boao Forum for Asia From November 5th to 10th, 2018, the first China International Import Expo (CIIE) was held in Shanghai. To ensure a sound communication service experience for guests from all over the world, China Mobile had initiated a “carpet-style international business test” for global network operators in advance. The Company actively engaged over 300 operators from 165 countries in tests on the interconnectivity between international roaming cards and international Internet. During the Expo, the “breathing network” was adopted for the first time to ensure on-site communication, whereby intelligent adjustments were made consistent with the real-time people flow and network use inside the exhibition hall to cater to the communication needs when there was heavy passenger flow. Meanwhile, we managed to solve the problem of communication interference caused by densely located base stations using innovative technologies, increasing the wireless communication capability inside the hall by around 6.5 times to accommodate the communication needs of up to 500,000 people simultaneously. Communications Support for CIIE Post-disaster communication equipment repair Service team at the SCO Qingdao Summit Emergency communication drill at the CIIE 11 China Mobile Limited 2018 Sustainability Report Building Quality Networks and Sharing Digital Benefits


Our Achievements in 2018 Cumulatively set up 2.41 million 4G base stations, and served 925 million mobile customers and 157 million wireline broadband customers Improved broadband network coverage in remote rural areas and island regions, and cumulatively delivered broadband services to 38,352 administrative villages through the Telecommunications Universal Service Project Comprehensively improved emergency response capabilities, performing 4,899 emergency support tasks and realized the service goals of “zero major network failures, zero major network security incidents, and zero complaints from key customers” China Mobile and SDGs Our Sustainable Development Rationale Like roads, water supply, power supply, and other types of infrastructure, information and communication networks and services have become an integral part of economic development and our social and personal lives. The size and quality of information infrastructure will impact our quality of life and social productivity in profound ways. As a provider of connection services, China Mobile recognizes providing extensive, quality, and reliable connections as its top priority for contributing to the SDGs. To this end, we commit ourselves to expanding 4G and broadband network coverage, accelerating the development of IoT, offering premium networks, and delivering continuous improvements in our universal services and emergency communications support capabilities. Through the provision of quality information and communication services, China Mobile is on track to contribute to an inclusive digital economy and information society that is to the benefit of everyone. Indicators 2016 2017 2018 Connection scale Number of mobile customers (million) 849 887 925 Number of 4G customers (million) 535 650 713 Number of wireline broadband customers (million) 78 113 157 Number of IoT smart connections (million) 103 229 551 Roaming services Number of countries and regions with 4G international roaming service 143 172 181 Number of countries and regions covered by our data roaming services 218 229 239 Network capability Number of 4G base stations (10,000) 151 187 241 Average 4G network downloading rate on urban roads (Mbps) 40 42 42.6 International transmission bandwidth (G) 12,942 23,750 39,000 Network quality guarantee Number of emergency communication support tasks 4,128 4,476 4,899 Significant political/ economic event support 3,748 4,253 4,597 Significant natural disaster support 347 190 266 Significant accident or catastrophic event support 25 23 16 Public health incident support 2 0 1 Social safety incident support 6 10 19 Number of emergency support vehicles deployed 15,425 7,362 8,986 Number of emergency support equipment deployed (set-times) 56,625 30,642 36,596 Number of emergency communication support personnel activated (persontimes) 386,214 201,250 314,427 Key Performance Indicators Achieve a net increase of 45 million 4G customers, 25 million household broadband customers, and 300 million IoT smart connections. Build a network quality assessment system that covers all networks, systems, platforms, and applications, and extend the scope of assessment from 31 provincial subsidiaries to also include all specialized organizations Our Goals for 2019 12


Optimizing Customer Experience As our business evolves along with the technological advancements, the scope and boundary of telecommunications services have been significantly expanded. The increasingly complex service portfolio presents an ever-greater challenge for ensuring premium customer experience. China Mobile firmly adopts the Customer-centric and Service-oriented approach and strives for an all-round service management system that leads to services satisfactory to customers, whose personalized service demands are responded to and met in a timely and effective fashion. We set up the Customer Service Department in 2018 to further reinforce the management responsibilities and implemented a series of measures to improve our service management system and customer service work mechanism. Improving Service Management System Set up the Customer Service Department to assume overall customer satisfaction management responsibilities, strengthened service quality regulation, and accelerated implementation of the customer service responsibility system. Strengthened cross-departmental collaboration and established the cross-departmental joint work mechanism to enable timely communication and handling of customer service issues. Improved the customer service personnel arrangement and service quality supervision, and strengthened customer service responsibility and service awareness to improve capability to provide professional services on all fronts. Revised the China Mobile Management Measures on Customer Complaints to raise time-limit standards for tiered and classified complaint handling and clarify requirements for each stage of the complaint handling process. Set up the National Upgraded Complaint Center to handle all sorts of upgraded complaints in an omnichannel, all-round manner, thus enabling more efficient complaint handling. Set up the Voice of Customers platform, and established company-wide mechanisms to collect customers’ true thoughts. Intensified communication with governmental departments and organizations like the Consumers’ Association, paid close attention to customer demands, and actively resolved service-related disputes. Conducted customer satisfaction and Net Promoter Score (NPS) surveys targeting key business areas including 4G, household broadband, and international roaming services to deliver 360-degree monitoring of the key elements of customer perception. Planned to construct a centralized overall customer satisfaction evaluation system to further improve the efficiency and accuracy of the surveys and inform improvements in customer service capabilities. Our 4G customer satisfaction rate reached 78.5% in 2018, maintaining a leading position. Enhancing management responsibilities Optimizing complaint management measures Improving customer satisfaction surveys 02 Providing Satisfactory Services and Seeking Trusted Communication 13 China Mobile Limited 2018 Sustainability Report Providing Satisfactory Services and Seeking Trusted Communication


Risk identification Determine key risk control points at each stage of customer service from the three dimensions of monitoring, intervention and remediation before, during and after an event respectively; create a closedloop complaint handling mechanism that involves unified efforts between the headquarters and provincial subsidiaries. Establish a dedicated reminder line to set up a green channel between the communication and resolution of complaints; create a proactive care mechanism dedicated to frequent complainants, set up an alert platform, and respond to customer demands in a timely manner through the provision of proactive services. Conduct in-depth analysis regarding issues that lead to customer complaints, and urge concerned departments to resolve such issues through effective measures. Ensure that upgraded customer complaints are properly received, resolved and followed up by setting up the service supervision hotline 4001110086. In 2018, we conducted joint analysis among the various departments, implemented powerful measures, and ensured timely response and resolution to issues about which our customers have complained intensively according to their feedback, thereby trying our best to improve customer experience. Top customer concerns & China Mobile solutions Unauthorized service orders and data tariffs Regulatory guarantee: We formulated a number of policies including the China Mobile Management Measures on Unauthorized Service Orders (Trial), Notice on Further Regulating “Unlimited Data” Plan Offering, and Notice on Further Standardizing Customer Agreement Orders to further regulate our related management practices. Improving Customer Complaint Handling Procedures Specific measures Making our service tariffs public at all contact points such as China Mobile sales channels, website and mobile apps, and moving the tariff section on the Company website to the featured section on the front page to give users easier access. Regulating outbound marketing and improving transparent consumption practices such as “0000 unified inquiry and unsubscription”, “double check”, and “payment notifications” to ensure correct billing. Improving the “daily report, weekly analysis, monthly review” customer complaint collection and reporting mechanism and incorporating unauthorized service order complaints into the KPI appraisal of relevant subsidiaries to strengthen management accountability. Improving data reminder service to help avoid high data costs and recommending targeted data plans based on user behavior to protect customer interests. Specific measures: Explicitly forbidding such non-conforming behaviors as limiting customers’ rights to subscribe to or change services and forcing bundle sales; adjusting unreasonable restrictions on subscription conditions; removing unreasonable requirements regarding scope of services for subscription; resolving the issue of differential treatment for old and new customers. Introducing the DIY plan priced between RMB8 and RMB38, which allows customers to freely pick and combine data and voice services as they need, satisfying customers’ demands for lower range offers. Customers’ rights of choice Regulatory guarantee: We published the Notice on Further Guaranteeing Customers’ Right of Choice to fully guarantee customers’ proper rights when choosing services to subscribe or accept. Timely response Problem analysis and resolution Service supervision and follow-up Responding to and Resolving Key Issues 14


We fully embrace the transformation towards providing “integrated services, Internet-based services, big data-driven services, and intelligent services” to deliver a brand-new customer experience that is efficient, convenient, intelligent and interactive. In 2018, we continued to improve our 10086 Internet service system to establish a full-service, all-contact-point service platform. Meanwhile, 24/7 access to 10086 hotline was guaranteed to improve the efficiency and quality of our online services. We delivered continuous innovations in our service contents and improvements in our service offerings and functions based on the new mobile Internet platform. Using more everyday language, we strengthened interactions with our customers and created communication channels that were more flexible, direct, and effective. At the Chinese Enterprises New Media Annual Meeting 2018, China Mobile 10086 Weibo account and China Mobile 10086 WeChat account were awarded the “Most Impactful Central Enterprise New Media Second-tier Account of 2018”. Moreover, we improved our intelligent customer service system by introducing new technologies such as AI and big data, and strove to build our integrated online-to-offline intelligent customer service capabilities by introducing fully self-service machines. Creating New Service Platforms A prosperous digital economy is dependent on a secure and reliable information consumption environment. China Mobile embraces customer-centricity and makes an all-out effort to reinforce the protection of customer privacy and information security and prevent customer rights violations resulting from telecommunications frauds and harmful information, thereby ensuring worry-free consumption by customers. In 2018, we continued to intensify customer information security protection, with zero major customer information leakage event recorded during the year. While making people’s lives a lot more convenient, the popularity of the Internet and smartphones has also increased the risk of personal information leakage. In response, China Mobile launched the And Multiple Numbers and Intermediate Numbers, with a view to providing privacy protection for individual and corporate numbers. The And Multiple Numbers are for individual use and enable the addition of 1-3 secondary numbers without having to insert another SIM card. Those secondary numbers can be used for registration or contact purposes. Corporate users are provided with “Intermediate Numbers”, which are ad hoc virtual numbers assigned to transacting parties, thereby “double-encrypting” the numbers of both the vendor and the customer. The total number of our Intermediate Number services exceeded 1.1 billion in 2018, providing over 2.2 billion person-times with temporary transaction communication safety guarantee services. Intensifying Customer Privacy Protection We formulated 14 regulations including the China Mobile Regulations on Customer Information Protection according to numerous relevant laws and regulations including the Cybersecurity Law, the Law on the Protection of Consumer Rights and Interests, and the Provisions on Protecting the Personal Information of Telecommunications and Internet Users, establishing a long-standing customer information protection system and incorporating customer information protection in employees’ performance appraisal. We implemented the customer information protection Vault Mode, where all high-risk operations involving sensitive customer information on key system platforms were placed under vault management, and sensitive customer information was obscured to prevent leakage. We intensified customer information security checks and actively undertook third-party monitoring to reinforce supervision both during and after the occurrence of customer information security incidents. Privacy Protection Solutions: And Multiple Numbers and Intermediate Numbers Intelligent All-In-Ones Regulation formulation Implementation Methods Monitoring and inspection In 2018, China Mobile launched unguarded self-service intelligent AIOs to facilitate the construction of intelligent sales channels. At present, we had deployed over 70,000 intelligent AIOs in 30 provinces, offering our users convenient access to real-name authentication, account opening, card reissue, broadband, business inquiry and processing, and a range of other services. Ensuring Worry-free Consumption 15 China Mobile Limited 2018 Sustainability Report Providing Satisfactory Services and Seeking Trusted Communication


With a close eye on the new forms of telecommunication frauds, China Mobile continues to improve its overall capabilities in telecommunication fraud prevention and crackdown to provide maximum protection of customer interests. The “Big Data-based, Scenario-oriented Communications Information Fraud Prevention and Crackdown Technology” of China Mobile is based on its massive user database. The Company has set up high-risk number identification models and fraud incident analysis models based on the various fraud scenarios and established a telecommunications fraud prevention platform that enables accurate and effective discovery and timely interference and prevention. In 2018, the Company identified 11.896 million fraud incidents, sent out alerts against 435,000 high-risk fraud numbers, and dissuaded 1.23 million person-times of potential deceived users. The technology was presented with the Black Technology Award and New Technology Award by China International Big Data Industry Expo. We make a continuous effort to intensify harmful information management with the aim of creating a secure and clear consumption environment and cyberspace for our users. In 2018, we formulated the China Mobile Work Plan for “Campaign on Comprehensive Regulation of telephone harassment” to enforce targeted management measures against telephone harassment for commercial marketing, malicious and criminal purposes. We provided our customers with a range of relevant services including emergency protection against “SMS bombs”, high-frequency harassment phone numbers interception, and mobile phone safety protection. We strictly followed regulatory requirements to adopt a “zero tolerance” attitude towards information with pornographic content, implementing “network-wide one-click blocking” of noncompliant websites. Intensifying Harmful Information Management As more and more parents equip their children with a smartphone, issues such as malicious online information and phone addiction have seriously affected the physical and mental health of minors, giving rise to an urgent need for parents to effectively manage and properly supervise their children’s use of smartphones. The Sunshine Protection platform is an integrated solution developed by China Mobile Beijing Company to ensure the healthy use of Internet by minors. The platform allows parents to activate safety protection features to block pornographic, violent and virus-infected websites, thereby creating a green and safe online environment for their children. Functions like screen time limit can be set up to encourage children to develop good habits for using the Internet. We set up Network Safety Leading Groups at both the Group and provincial subsidiaries; we formulated the China Mobile Implementation Plan for Deepening ICT Fraud Prevention and Crackdown Measures and China Mobile Accountability Management Measures for ICT Fraud Prevention and Crackdown, further improving the evaluation and accountability system. We have realized systematic identification, monitoring and quick handling of roaming numbers from places where frauds frequently originated from as well as numbers indicated in fraud messages, through the use of innovative, integrated data analysis-based measures; we provided users with fraud number alert service free of charge via our And Color Printing service. Big Data-Based Telecommunication Fraud Prevention and Crackdown Technology Building Sunshine Internet Screen to Safeguard Healthy Childhoods 260,000 557,000 390 Handled “Call you to death” and other harassment phone numbers over over types million Monitored and intercepted malware Intercepted spam messages per month on average 2018 Improving management system Innovating regulation measures Strengthening source control and treatment Preventing Telecommunication Frauds We fully implemented real-name phone number registration and intensified rectification and regulation over key businesses; we took measures to shut down pseudo base stations and deal with mobile malware, “Call you to death” numbers, “Ring once” numbers, and phishing sites; we provided a variety of reporting channels and established a normalized verification mechanism. 16


Sustainable development goals Indicators 2016 2017 2018 Customer rights protection Number of complaints per million customers (person-times) 46.2 35.4 32.1 Number of reported spam messages handled (10,000) 149 128 133 Number of fraud numbers dealt with 136,000 50,700 19,600 Our Sustainable Development Rationale As information consumption finds its way into every corner of our social and personal lives, people are exposed to an increasing number of negative events such as telecommunications frauds and information leakages, which has become a major risk to be guarded against for building a digital society. It is China Mobile’s top priority to deliver quality products and reliable services and ensure solid protection on top of greater convenience for information consumption. We actively practice sustainable operations and responsible production strategies by improving our customer service management system, optimizing customer experience and intensifying crackdown measures on illegal actions such as telecommunications frauds, continuously championing and contributing to a sustainable information consumption environment. Key Performance Indicators China Mobile and SDGs Our Achievements in 2018 Set up the Department of Customer Services, further improved customer service management procedures, responded to and addressed key issues, and drove improvements in customer service quality Enhanced capacity for customer information security protection on all fronts by means of institutional improvements, technologies, supervision and control, and identified 11.896 million fraud incidents and dissuaded 1.23 million person-times of potential deceived users through the telecommunications fraud prevention platform based on big data Our Goals for 2019 Fully strive for high-quality development, construct a customer-oriented service management system, and improve closed-loop service management which covers the whole process of formulation and implementation of service standards, service quality assessment and customer complaint management to improve customer satisfaction Focus on where we fall short in customer perception and improve the quality of our networks, products, business, support, and service on all fronts by intelligent means Fully utilize new technologies such as big data and artificial intelligence to further strengthen the protection of customers’ privacy and enhance network safety standards 17 China Mobile Limited 2018 Sustainability Report Providing Satisfactory Services and Seeking Trusted Communication


In the era of intelligent connectivity, cross-industrial collaboration and win-win development have become the inevitable choice for realizing integrated industrial innovation. China Mobile strives to make good use of its connectivity expertise and role as an industry leader to actively contribute to building a new digital service ecosystem. The Company makes a concerted effort with its partners to deliver innovations in frontier fields such as 5G, AI, and IoT, providing new possibilities to satisfy people’s growing need for a better life. Consistent with the “Value co-creation, mutual benefit, and win-win” cooperation philosophy, in 2018, China Mobile entered into strategic cooperation agreement with 15 partners including large Internet companies, leaders of vertical industries, and important organizations to explore cooperation in new infrastructure areas such as cloud computing, big data, AI, IoT, and key vertical industries. In terms of international communication and cooperation, in 2018, we took an active part in major events hosted by industrial organizations such as the GTI (Global TD-LTE Initiative) and ITU (International Telecommunication Union), and continued to scale up our Hand-in-Hand Program. We actively boosted business cooperation in voice and data services as well as the “going out” of self-owned brands, technologies and services to enhance the platform’s capabilities in providing services worldwide. As a Gold Member of OPENSTACK and Priemer Member of the CEPH open source community, we are actively involved in directing the development of international cloud computing and cloud storage technologies. We seek to engage in deeper communication and cooperation with industry leaders via the open source community to foster the healthy development of the industry ecosystem. 03 By the end of 2018 134 176 25 2.9 60% Handin- Hand Program GTI Enabling a Digital Society and Unlocking Innovative Possibilities Embracing Openness and Cooperation Building Industry Ecosystem The number of operator members attracted The number of partners attracted The number of industrial leading partners attracted billion Approximate proportion Served mobile users of global users 18


9 3 We have completed NB-IoT network deployment in 346 cities across the country and built the world’s largest NB-loT network. We offer nine key capabilities applications, of which the Mobile Authentication Platform processes an average of 670 million accreditations per day. We published the White Paper on China Mobile Capability Openness 3.0, which lists our core capabilities and solutions. The China Mobile Digital Home Alliance has 165 official members encompassing a wide range of industry sectors including chips, modules, and smart hardware, etc.. The China Mobile IoT Alliance has 675 official members and it gives them a variety of rights including standard setting and mobile empowerment; the OneNET platform brings together nearly 100,000 developers. The China Mobile 5G Innovation Center initiated five major industry alliances in multimedia, autopilot, smart cities, Internet of Flying Things and Internet of Energy, with 260 cooperation partners. With capability openness and win-win development at its core, we upgraded our “139” Cooperation Plan on all fronts in 2018 so as to seize the broad range of opportunities associated with 5G development. By doing so, we further improved the capability sharing system of China Mobile and enabled closer connections, interactions and cooperation among enterprises in the upper and lower end of the industry chain to jointly create a bright digital future. 1 Expanding boundaries of cooperation Breakthrough in cooperation Upgrading content of cooperation Connections Connections + Applications Hardware Commodity trade Expanding industrial digitalization cooperation Strengthening household digital cooperation Deepening pan-intelligent terminal cooperation Initiating the formation of the Industry Digitalization Alliance, offering partners products like dedicated Internet access, cloud, IDC, and IoT at preferential rates and integrating ICT capabilities into their products and solutions to help realize upgrading; developing open platform structures while advocating “full integration” of customers, products and channels, helping companies use cloud services; providing companies with strategic subsidies and 5G fund. Creating intelligent hardware ecosystem, launching the Andlink Platform Plan that can be accessed by hardware partners for free, thus realizing lightweight development of applications. Creating content and application ecosystem, and providing partners with over 200 million big- and small-screen resources to realize accurate recommendation with big data. Deepening terminal customization with an investment of RMB10 billion in subsidies. Implementing the 5G Device Forerunner Initiative, providing test environment and technological support for chip and terminal partners. The Achievements of “139” Cooperation Plan in 2018 Launching the Upgraded Version of “139” Cooperation Plan Upgrading “139” Cooperation Plan NB-IoT Network Capabilities and Applications Industrial Alliances Pan-intelligent terminal joint operation Adding value to customers and partners 19 China Mobile Limited 2018 Sustainability Report Enabling a Digital Society and Unlocking Innovative Possibilities


Small- and medium-sized enterprises (SMEs) are important driving force behind China’s economic and social development. Through its communications capability open platform, China Mobile enables the information-oriented transformation of SMEs and inspires innovation and entrepreneurship. We have established the “1 (business broadband) + 1 (converged business gateway) + N (value-added services)” service system to provide SMEs with customized broadband, standardized products and industry solutions that are stable and cost-effective. By including partners from a wide spectrum of backgrounds such as software, hardware and services, in jointly building the service alliance, we provide a full-service platform dedicated to SMEs where all their needs for information-based services can be satisfied. We have continuously fostered the organizational, all-member, and open innovations. Leveraging our capacity openness platform online and the series activities offline, we built a cross-industrial and multi-dimensional capability sharing system to promote the aggregation, openness, and sharing of premium resources along the industry chain. We thus sought to enhance the dynamics of internal and external entrepreneurship and innovation and actively explore the mass entrepreneurship and innovation model where large enterprises can engage SMEs in integrated development. In 2018, we actively explored the innovative path of “unified production and research” and fostered the construction of the Entrepreneurship and Innovation Demonstration Base. The Base has been listed by Ministry of Industry and Information Technology of China in the entrepreneurship and innovation platform pilot and demonstration projects for the manufacturing sector and by the National Development and Reform Commission of China in the sharing economy demonstration platforms and included in the China Sharing Economy Development Report. “Longyu”, an intelligent device designed by Nuobaiai specifically to allow people with hearing impairment to make phone calls, won the first prize at the 2018 China Mobile Digital Home Makers’ Marathon Contest. “Longyu” features the Bluetooth peripheral box + app solution. When people with hearing impairment get phone calls, the voice messages are translated into texts and displayed on the app. They can reply the messages by typing texts, which are then processed by a speech synthesis system before being clearly played out as voice messages. The device thus enables hearing-impaired people to easily engage in barrier-free communication in situations where phone calls are required such as food delivery ordering, parcel collection, and job interview. During the contest, China Mobile provided the team with funding and an interview opportunity for being prioritized for entering China Mobile Digital Home product portfolio and securing marketing channel and strategic investment. “The contest provides a platform for us to showcase our company and our products. From the experience, I felt the enthusiasm of China Mobile and its dedication to helping special groups and engaging in social causes. This also allows the makers to quickly and freely fit in as part of the big family and has enormously benefited startups like us.” —Du Bowei, Team Member Nuobaiai (Hangzhou) Technology Co., Ltd. Established united laboratories with university demonstration bases including Tsinghua University and key enterprises along the industry chain to pursue collaborative breakthroughs in core areas such as Internet of Vehicles and Internet of Things Set up innovation incubation bases with local governments and universities in line with regional features to promote local economic transformation and development Founded the AND-HOME Innovation and Entrepreneurship Incubation Base with business partners focused on hi-tech areas such as smart hardware and artificial intelligence to jointly innovate and incubate relevant products and capabilities We established three And-Creation Spaces in 2018, namely “intelligent hardware”, “cloud computing and big data”, and “artificial intelligence and smart cities”, and signed And-Creation Spaces incubation agreements with ten external mass entrepreneurship and innovation teams. Meanwhile, we have expanded the scope of our Makers’ Marathon series competitions to cover the six major areas of the Internet, 5G innovative applications, digital home, MIGU culture, Internet of Things and digital industry to further stimulate the creativity of the wider society. “Longyu”: Making Phone Calls Possible for the Hearing Impaired 2,918 1,855 109 156,000 Entrepreneurship and Innovation platform hosted users The number of projects created through Entrepreneurship and Innovation activities The number of teams engaged in innovation and entrepreneurship projects The number of teams worked at the And-Creation Space 2018 Supporting SME Development Building Entrepreneurship and Innovation Demonstration Base 20


Enjoying a Digital Life Leveraging its strengths in business offerings, technologies, networks, and economies of scale, China Mobile constantly fosters the integration between technological applications and industry scenarios through the provision of customized solutions across various verticals of the economy, thereby accelerating the digital transformation and upgrading of industries and providing people with a rich spectrum of opportunities for enjoying a more intelligent digital life. And Baby And Campus And Faculty Medical Cloud Platform Telemedicine Smart Hospitals And Connected Vehicles And Yixing And Easy Traffic And Media And Interconnection And Agriculture And Tourism And Finance And Intelligent Manufacturing Regional Healthcare Health Management Healthcare Big Data China Mobile developed the And Education cloud platform to provide an integrated solution combining “teaching, learning, and education” to drive the information-based development of pre-school education, K12 primary and secondary school education and vocational education. And Education: Supporting Information-based Education Layout of Vertical Industry Products Education Rural commerce Healthcare Finance Internet Transportation Industry and energy “Shared ParkingSpaces” Solving Parking Problems in an Innovative Way Provides a great wealth of premium content, applications, smart hardware and offline resources for parents and kindergartens, facilitating child growth, helping parents in child raising, and alleviating teachers’ burden. Provides secondary and primary schools throughout China with four functions, namely home-school interaction, information, resources and application, as well as nearly 70 premium applications. Provides online training, resource building, knowledge community and exam certification services for government, enterprises, and middle and higher vocational technical colleges. As the standard of living is getting higher, there is an increasing mismatch between the growing number of private vehicles and limited public parking spaces. Given that Lanzhou city featured a compatible mixture of commercial and residential areas, China Mobile developed China’s first private parking space sharing solution here based on the concept of sharing economy. The solution utilizes the intelligent linkage between the parking lot entry/exit management system and parking space locks and realizes time-based space rental using IoT technology. Parking space owners can publish real-time space sharing information by themselves via the mobile App or WeChat official account. Car owners in need of a parking space can select and pay for an idle space online to make a reservation. The relevant parking lot entry/exit management system would automatically recognize those cars and let them through. Not only does the service bring profits to space owners but it has also put idle parking spaces to efficient use. As at the end of 2018, the number of monthly parking space sharing reached 586 and the parking spaces enjoyed an average daily use rate of 89% through sharing, effectively relieving people’s “anxiety” for parking. Education And Baby And Campus And Faculty 21 China Mobile Limited 2018 Sustainability Report Enabling a Digital Society and Unlocking Innovative Possibilities


Due to the lack of effective tracing system and technologies, the West Lake Longjing Tea is plagued by a large volume of counterfeit products in the market. China Mobile worked with a number of partners and developed the first NB-IoT + Blockchain Tracing System in China. This system enables information collection and transmission in rural areas based on intelligent IoT sensors and networks and utilizes blockchain for data storage and management, producing traceable data that are safe from manual manipulation. The data is more accurate and credible thanks to real-time monitoring and direct uploading. In 2018, China Mobile launched the platform with the Tianzhu Tea Garden in West Lake Longjing Tea Grade 1 Production Area of Zhejiang as the demonstration base, reducing the tracing time for tea’s vital information from several days to merely 2.2 seconds and increasing the sales volume by 50%. Thanks to the promotion by China (Shanghai) International Tea Expo, the Company has signed a letter of intent for cooperation with 52 companies across the country. We independently developed the Leisurely Tourism Big Data Platform for tourism management agencies, scenic spots, tourism companies and tourists. With customer privacy protection and data masking as prerequisites, the platform supports a range of functions including accurate and real-time monitoring of tourist flow, tourist attributes and transportation analysis, and travel itinerary analysis by various means such as cloud service, API, and WeChat Official Account. At present, the Platform has been put to commercial use at the tourism departments and scenic spots in Jiangsu, Henan, Yunnan, Shanxi and other provinces, effectively fostering the development of intelligent tourism. In 2018, the Leisurely Tourism Big Data Platform was elected as an outstanding case of big data product and solution by the Ministry of Industry and Information Technology of China. Satisfying the various marketing needs of clients Providing flexible and varied data integration capabilities and open capabilities Realizing whole-sample user data identification and analysis capabilities “Internet of Teas” Making Teas Reliably Traceable Leisurely Tourism Big Data Platform Enabling Intelligent Tourism To solve the problems with health management at community hospitals in Beijing, China Mobile proactively seeks to build the Mobile Community Healthcare Platform, to help create a hierarchical diagnosis and treatment system that is institutionalized, personalized, and archived. Currently, the Mobile Community Healthcare Platform has signed on over 50,000 family doctors, benefiting more than 70,000 residents at the initial stage. “Aged people living in Dongcheng District are fortunate. Doctors can bring a Portable Medical Box to my home and my daughter can view the results on her phone. I can also get prescriptions from experts in 3A hospitals. I am feeling better now.” — A senior patient in Dongcheng District, Beijing Health Display Cloud Platform for Hospitals Multi-functional Portable Medical Box for Doctors Mobile App for Patients The Hospital Information System (HIS) at hospitals is opened up based on mobile virtual private dialup network (VPDN) technology to enable the cloud platform to receive examination measurements and display health data. The variety of portable devices contained in the medical box comes with built-in wireless transmission modules so that after performing health checks with these devices, data will be automatically uploaded to the server to be synchronized with personal health records. The “Home Doctor Dongcheng” app allows patients to read and upload health data by themselves using the NFC function of their mobile phone; other features of the app include enquiring for information of doctors and receiving hospital notifications. Mobile Community Healthcare Platform: Facilitating the Life of In-home Elderly Contact point based operations Integrated data Intelligent technique Intelligent sensors at the tea garden conducting real-time monitoring of tea data 22


Actively aligning with the guidance and opportunities of the national regional development strategies, China Mobile takes Xiong’an New Area, Guangdong-Hong Kong-Macau Greater Bay Area and the Hainan Pilot Free-trade Zone as the demonstration areas for pioneering digital innovations. China Mobile plans and builds the next generation of telecommunications infrastructure in accordance with the highest international standards. It also provides innovative digital solutions in association with the respective regional characteristics and development needs, establishing itself as a benchmark in supporting innovation-driven development while serving and implementing national strategies. Supporting Construction of Hainan Pilot Free-trade Zone In 2018, China Mobile signed a strategic cooperation agreement with Hainan Province government to improve its information infrastructure and support the construction of the pilot free-trade zone and free-trade port with Chinese characteristics in the Hainan Special Economic Zone. With an aim of being first class of its kind in the world, we formulated the Hainan International Undersea Cable Hub Construction Framework and Planning to support the digital development in Hainan. Actively Participating in Developing Xiong’an New Area In 2018, China Mobile entered into a strategic cooperation agreement with the government of Xiong’an New Area, established the “Xiong’an New Area Office” and implemented a series of measures to support the intelligent city development of the area. In 2018, with the vision of “becoming the best digital life partner of customers in Guangdong-Hong Kong-Macau Greater Bay Area”, China Mobile worked to promote the construction and integrated development of the Area through the provision of improved telecommunications infrastructure and integrated digitalized solutions. Infrastructure construction Innovation capability development Achieved full coverage of NB-IoT and regional coverage of 5G demonstration networks in key areas. Initially established access capability of “Gigabit in households and 10 Gigabit in businesses” for key areas. Trial deployed and successfully demonstrated the super intelligent system providing feasible intelligent city solutions for Xiong’an in areas such as city governance and environment monitoring. Organized a series of 5G intelligent city forums, engaged in intelligent city general working group in standard setting, and participated in partnerships with industry peers on Xiong’an intelligent town planning. Established the China Mobile (Xiong’an) Industry Research Institute, and announced the Urban Superbrain Action Plan. Actively involved in network coverage construction for key connectivity projects in the Greater Bay Area such as the Hong Kong-Zhuhai-Macau Bridge and Guangzhou-Shenzhen-Hong Kong Express Rail Link to provide high-quality network services. Expanded the local network capacity in Hong Kong, accelerated 5G and NB-IoT technological evolution, and completed end-to-end 5G laboratory testing, laying the foundation for providing users with high-quality and fast network services. Launched Greater Bay Area service plans, providing visitors to the Greater Bay Area with quality communications services. Provided Hong Kong enterprises with high-quality ICT solutions including fixed-line voice service, dedicated line service and mobile office service, fulfilling their needs for digital development. Launched the IoT-based “Guangdong and Hong Kong Card” and focused on exploring cross-border operations such as connected vehicles, shipping and personal consumption intelligent hardware. Deployed a local IoT platform of OneNET in Hong Kong, and launched NB-IoT-based intelligent parking solutions which have been put to commercial use as a pilot project. Constructing high-speed information channels connecting the Greater Bay Area Creating an interconnected net of information Providing cutting-edge digital solutions Serving for the Regional Development To Become the Best Digital Life Partner of Customers in Guangdong-Hong Kong-Macau Greater Bay Area 23 China Mobile Limited 2018 Sustainability Report Enabling a Digital Society and Unlocking Innovative Possibilities


The digital economy is becoming a new driver of economic growth in China and enables new possibilities for the sustainable development of cities and communities. The technological and application innovation in the digital area requires a concerted effort by multiple parties and the formation of a new industry ecosystem that features shared resources, complementary capabilities, co-created value, openness and inclusion. To this end, China Mobile leverages its strengths and its role as a platform and incubator of digital innovations and implemented the following measures: further cooperating with industry chain players by pushing forward the 139 Cooperation Plan and establishing a multi-dimensional online/offline capability sharing platform; providing all-round support for mass entrepreneurship and innovation to empower SMEs and individual entrepreneurs; developing and delivering innovative solutions tailored to the basic needs and key issues relating to the sustainable development of cities and communities to facilitate the realization of relevant SDGs. Our Sustainable Development Rationale Indicators 2016 2017 2018 R&D and Innovation Investment in entrepreneurship and innovation support (RMB10,000) 400 7,955 8,359 Number of developers on OneNET over 30,000 56,728 99,963 Number of connected devices on OneNET (10,000) over 700 3,154.31 7,987.85 Number of applications on OneNET 12,000 27,897 57,667 Key Performance Indicators Advanced the construction of Mass Entrepreneurship and Innovation Demonstration Base to further inspire innovative initiative and invested RMB83.59 million in support of mass entrepreneurship and innovation Our communications capability open platform served over 150,000 enterprises and our OneNET platform attracted 9,396 enterprises Actively delivered innovative applications based on our own platform strengths and industry scenarios to pioneer a richer selection of intelligent digital life applications Made forward-looking deployment in key development areas such as Xiong’an New Area, Guangdong- Hong Kong-Macau Greater Bay Area and the Hainan Pilot Free-trade Zone with high standards, building first-class information infrastructure and laying an important foundation for demonstration areas of the next generation digital services. Further advance the “139 Cooperation Plan”; work with stakeholders to build a digitalized industry ecosystem that is more integrated and dynamic to capture the new opportunities associated with 5G Explore the various industry verticals in collaboration with partners to continuously innovate digital platforms and products and boost the digital transformation of industry verticals Accelerate new explorations into intelligent cities to provide relevant regions with all-round, high-quality platform and application services and foster the integration between information technology and city governance and industry development Our Goals for 2019 Our Achievements in 2018 China Mobile and SDGs 24


Committed to Targeted Poverty Alleviation To help realize the goal of eliminating poverty for rural residents living below the current poverty line in China by 2020, in 2018, China Mobile aligned efforts with the parent company and undertook partner assistance and targeted poverty alleviation in eight counties of five provinces, namely Xizang, Qinghai, Heilongjiang, Xinjiang and Hainan. The Company endeavored to help realize empowerment-based poverty alleviation and steady poverty eradication through measures such as optimizing the poverty alleviation management mechanism, prioritizing key projects, conducting education and training as well as providing information networks, platforms and technologies. Formed the poverty alleviation leading group led by the Chairman of the Board, with a subordinate task force that coordinates work of relevant units as well as dedicated departments and personnel at the headquarters and all 31 provincial subsidiaries. Reinforced selection and management of poverty alleviation cadres and assigned temporary poverty alleviation cadres and village-stationed first secretaries to counties chosen for partner assistance and targeted poverty alleviation. Improved the three-tiered management mechanism whereby the Group made overall plans, provincial subsidiaries played a management role, and city-level companies and temporary poverty alleviation cadres were in charge of implementation. By the end of 2018, the Company had cumulatively invested RMB530 million into partner assistance and targeted poverty alleviation in the eight counties of five provinces, and implemented 30 poverty alleviation programs concerning livelihood improvement, industry development, education support, healthcare, etc. Launched programs in Maqin County of Qinghai such as information training as well as college employment and entrepreneurship training, and helped introduce remote medical programs such as “4G Village Doctors” and “4G Cloud Medical Care” to local hospitals. Rolled out Mandarin popularization and poverty alleviation initiatives nationwide together with the Ministry of Education of China to help impoverished people in remote areas overcome language barriers to poverty alleviation. Built 768 4G base stations in counties chosen for partner assistance and targeted poverty alleviation with additional 66,500 households covered by household wireline broadband, and realized a broadband network coverage of 98% among registered and archived impoverished villages in counties chosen for targeted poverty alleviation. Developed smartphones customized for poverty alleviation and provided purchase subsidies for impoverished households in the eight counties of five provinces to allow more impoverished people to benefit from information technology. Provided poverty alleviation preferential tariff plans for registered and archived impoverished people nationwide, with extra data and voice volume offered. Strengthening organizational guarantee Implementing poverty elimination programs Building bridges of information 04 Promoting Poverty Alleviation and Boosting Rural Revitalization 25 China Mobile Limited 2018 Sustainability Report Promoting Poverty Alleviation and Boosting Rural Revitalization


As at the end of 2018, the Targeted Poverty Alleviation System independently developed by China Mobile had been implemented in 71 cities/counties of 14 provinces across the country, covering 8.11 million impoverished people and 740,000 frontline poverty alleviation cadres. Qian Yajun is the First Secretary stationed in the Yanglou Village, Fan County, Henan Province. Before the application of our Targeted Poverty Alleviation System, work on dozens of indicators related with targeted poverty alleviation of all the impoverished households in the village, including field investigation, record keeping and written summaries, had to be done manually by Qian Yajun. It was cumbersome, prone to inaccuracies and quite inefficient. Now, with the help of the Targeted Poverty Alleviation System, all Qian Yajun has to do is input the latest figures and poverty alleviation process records into the mobile app wherever he goes, and a work report is smartly and conveniently generated for him. The Targeted Poverty Alleviation System has even greater significance for Li Daokai, an impoverished farmer from the Libaiqiu Village, Puyang County, Henan Province. In April 2017, Li Daokai had a sudden heart attack that had to be treated as soon as possible, but the high surgery fee was unaffordable for his family. After learning about his situation, the staff from the Targeted Poverty Alleviation System managed to raise over RMB90,000 in donations on the platform in just a week, enough for him to receive the treatment. After the surgery, Li Daokai’s family started to engage in rex rabbit ranching under the online guidance of experts on the platform, thus alleviating his plight of poverty. In addition, China Mobile live-streaming team visited the lotus root farming and production base in Yanglou Village and utilized the e-commerce platform on the system to live-broadcast the sales of lotus root and Fan County rice, helping the villagers to make an income of more than RMB1,500 that day while making Fan County organic food known to more consumers. “All our poverty alleviation work used to be done manually. Now with the help of the China Mobile Targeted Poverty Alleviation System, a mobile phone is all we need to conduct surveys and investigations at impoverished households.” —Qian Yajun, First Secretary of Yanglou Village, Fan County, Puyang City, Henan Province The five-legged pig was originated in Wuzhishan, Hainan Province. It wanders in the wild, using its nose to dig for food in the ground. It walks with its mouth on the ground, which looks like a fifth foot from behind. That is how it gets the nickname of “five-legged pig”. Today the pig has been given a new nickname by villagers in Baisha Li Autonomous County, Hainan – the “poverty alleviation pig”. China Mobile launched the “cooperative societies – impoverished people – poverty alleviation industry program” model in the local region, uniting with local government and impoverished households in developing the five-legged pig ranching industry. We have also made project-specific poverty alleviation investments in building pig ranching infrastructure in strict compliance with relevant standards, including sow pens, nursery pens, pork pig pens, and porkers’ pens to fodder fermentation rooms, sick pig isolation rooms, national-standard biogas digesters and offices. Every day at noon, the Athletes’ March begins to play at the Baisha Heyou Planting and Raising Specialized Cooperative Society that has been jointly funded by China Mobile and the Rongbang Township Government of Baisha County. For the five-legged pigs in the Cooperative Society, the song is the call for lunch, at the sound of which they all rush out of the yard to the pen to enjoy the meal. The villagers have been gradually lifted out of poverty since they began to work at the pig farm. So far, an agriculture-based circular income growth model has been established in the five-legged pig ranching demonstration base in Lingwei Village, where government and companies work together to provide funding and self-regulation and operations are implemented by the villagers. The base has pulled in over RMB170,000 of income since its pig ranching industry developed in 2017, with a total of RMB94,900 dividend distributed in November 2017, February 2018 and January 2019 to 33 impoverished households, on average RMB2,876 to each household. Thanks to the base, a total of 154 people from 38 households have been steadily lifted out of poverty. Those five-legged pigs are really “poverty alleviation pigs” to the villagers. Promoting Targeted Poverty Alleviation System Five-legged Pig Ranching Helping Lingwei Out of Poverty Rallying donations of study supplies through the Targeted Poverty Alleviation System Villagers receiving dividends for five-legged pig ranching 26


Located in the northwestern region of Xizang, Gaize County is one of the largest purely animal husbandry-based counties in Ali. Duan Yuping, a Xizang-aiding cadre of China Mobile, came here in 2016 and has committed himself to boosting local livelihoods and economic development by introducing an array of resources. Growing Leafy Vegetables on the Snowy Plateau With an average altitude of over 4,700 meters, Gaize County experiences eight-month long winter every year. The harsh natural environment makes it almost a luxury to get leafy vegetables in winter. Seizing the opportunity, China Mobile invested RMB13.85 million of Xizang-aiding fund in building eight vegetable greenhouses. Thanks to the active efforts led by Duan Yuping, a variety of greenhouse-grown vegetables, such as pakchoi, coriander, spinach and garland chrysanthemum gradually appeared on the dinner tables of villagers in Gaize County in the winter of 2018, addressing their difficulty in getting vegetables in winter. Supporting Tourism in Line with Local Conditions As Temporary Deputy Head of Gaize County, Duan Yuping proposed the idea of boosting local economic development through tourism based on an in-depth research and investigation. With support from local government, Duan Yuping helped to set up the Gaize County Tourism Company. The Company undertook market-oriented development of local tourism resources, launching scenic spots and cultural tourism routes such as the Xianqian County Tourism Base and country tours in Dongcuo County and Quedeng County. Featured prod- Enrooted in Xizang to Help Pastoral Regions Out of Poverty ucts stores have also been set up to showcase and sell featured local products such as locally-manufactured woolen sweaters, scarves and Xizang incense, yielding a monthly turnover up to over RMB300,000. The tourism industry in Gaize County has been on fast track since then. Actively supporting Poverty Alleviation through Education It is important to help people increase ability and confidence in their own ability to help themselves out of poverty. Poverty has been a cause of school dropouts in Gaize County. To address the issue, Duan Yuping mobilized people around him to engage in paired assistance for students from impoverished families in Gaize County. A dozen units including China Mobile Jiangsu Company rallied behind efforts to call on more people to donate goods and materials for the students including clothes, dictionaries, sports equipment, stationery, and more. Donations from companies were used to set up scholarships in local secondary schools, alleviating the difficulty in getting education and the shortage of education resources. For the archived poor in Gaize County, we provide them with skills training in catering, loader and excavator operations, etc.. The trainings are systematically designed according to relevant national occupational standards and training syllabus and combine teaching with practice. Apprentices who pass the exams are presented with a certification of compliance or profession qualification certificate. So far, 30 apprentices have received the profession qualification certificates, with 20 of them already earning a steady income. Some apprentices started their own businesses after graduation and now make an income of up to RMB10,000 a month. Xizang farmer working in a vegetable greenhouse 27 China Mobile Limited 2018 Sustainability Report Promoting Poverty Alleviation and Boosting Rural Revitalization


Constructing Digital Countryside China Mobile accelerates the comprehensive and thorough integration of modern information technologies such as IoT, big data and cloud computing with rural production and life. The Company contributes to the development of modern agriculture and diversified industries to transform villages with more robust agriculture, a more beautiful countryside, and better-off farmers by providing digitalized products and innovative solutions and advancing the application of information technology in rural areas. The Saihu Farm in Ruichang, Jiangxi Province is a state-level modern agricultural park featuring comprehensive agricultural development, with 98% of its farmers owning a mobile phone. Closely in line with the requirement of delivering “intelligent agricultural production, e-commerce-based agricultural operations, efficient agricultural management, and convenient agricultural services” at Saihu Farm, China Mobile developed the smartphone-oriented “four farm tools on smartphones” based on agricultural IoT technologies to provide all-round services for agricultural development. By providing backbone farmers and technical personnel at the Farm with training on IT applications, the farmers become good at utilizing the smartphone. Since the inception of the project, grain yields have increased by 1.05 million kg and the farmers have made a total net income of RMB5 million, while the fine breed coverage rate has reached 98% and the rate of soil test and fertilizer recommendation reached 100%. The Maqin County of Golog Zang Autonomous Prefecture is located in southeastern Qinghai Province with harsh natural conditions and a relatively underdeveloped economy. In 2018, China Mobile Qinghai Company initiated a pilot “Internet+” program in Maqin County. The program provides information-based system upgrades for Maqin County Hospital and deploys systems such as 4G Cloud Medical Care and Cloud Doctors’ Alliance and relevant equipments, realizing intra- and inter-hospital information exchange and driving improvement in local medical conditions. To facilitate environmental protection and sustainable local economic development, China Mobile helped Maqin County Government develop the Maqin County Tourist Attraction Signs Information System with a series of core functions such as Travel Guide, electronic maps and accommodation and transportation guidance, giving a significant boost to local traditional cultural heritage preservation, county-wide tourism economy development, and delivery of self-reliant, sustainable economic development. Pest Prevention and Control Agricultural Material Quality Tracing Soil Testing and Fertilizer Recommendation E-commerce Platform Set up the Intelligent Pest Risk Monitoring Station that allows farmers to keep an eye on insect pest on their phones in real time and eliminate it using drones or other tools enabled by cloud computing analysis and remote control technologies. Set up the Agricultural Material Quality Tracing Platform which allows farmers to look up the quality of production materials on their phones, thus enabling “safety alerts, traceable sources and trackable information”. Set up the Intelligent Soil Testing and Fertilizer Recommendation System to intelligently collect soil data; based on shared locations, a Soil Testing and Fertilizer Recommendation card is generated, which truly delivers “approaches tailored to specific pieces of land”. Worked with the biggest agricultural product e-commerce platform “Jiangxi Selected (Gan Po Youpin)” in Jiangxi province to explore the new “cooperative societies + farmers + industries + e-commerce + training” integrated model of agricultural e-commerce. Smartphones Becoming Farmers’ “New Farm Tools” “Internet+” Program Launched in Maqin County, Qinghai The four farm tools on smartphones In 2018, China Mobile actively helped the farmers adopt new sales channels based on featured e-commerce services such as Caiyun Youpin and Sales Manager so as to help enhance their sales and popularity. In Yunnan, the number of sales of Suijiang Banbianhong plums exceeded 1,000 cases in just 5 days; in Anhui, the timely release of the picking and sales information of Dangshan nectarines brought hope and happiness to the local farmers. Anhui Company employees teaching farmers how to publish information for picking and sales 28


Indicators 2016 2017 2018 Narrowing digital divide Number of sales channels in township-level areas1 (10,000) 55.0 46.2 41.0 Number of Rural Information Service users (10,000) 6,487 7,480 8,924 Key Performance Indicators Cumulatively launched the self-developed Targeted Poverty Alleviation System in 71 cities/counties in 14 provinces across the country, covering 8.11 million impoverished people and 740,000 frontline poverty alleviation cadres Undertook partner assistance and targeted poverty alleviation in eight counties of five provinces together with the parent company, investing over RMB100 million in assist fund, implemented 30 focused poverty alleviation projects, and improved infrastructure conditions and economic development levels in impoverished areas Further enhanced information technology application in rural areas and formed a number of unique rural information-based application demonstration projects, thereby providing new ideas and new means for rural development Strengthen the organization of and resource assurance for poverty alleviation, enhance the effectiveness of poverty alleviation projects, and help impoverished regions establish normalized mechanism for poverty eradication and help impoverished people develop capacity for sustainable development Continue to amplify efforts in network-based poverty alleviation and serve as a more effective platform to drive effective integration between social forces for poverty alleviation and the needs of impoverished regions, and provide technological and platform support for realizing poverty alleviation targets Further combine the resource endowments and development needs of villages in different regions, provide tailor-made village information applications, promote demonstration programs, and help villages enjoy information benefits and realize leapfrog development Our Achievements in 2018 Our Goals for 2019 Against the backdrop of global attention to poverty eradication and efforts to help everyone secure equal opportunities for development, China Mobile actively plays to its business strengths to contribute to the realization of China’s 2020 poverty alleviation goal. Overcoming numerous challenges along the way, we have built 4G networks in remote, impoverished areas comparable to those in developed regions and made an all-out effort to implement the Telecommunication Universal Service Project, thereby providing broadband access to impoverished families and serving as the lifeline for local economic development and community growth. On this basis, we invested funds and manpower and conducted programs in livelihood improvement, industry development, education support, healthcare, etc. in partner assistance and targeted poverty alleviation areas to realize empowerment-based poverty alleviation, thereby helping impoverished people increase production and income and lead a better life. We also integrated new technologies and applications such as 4G, IoT and cloud computing closely with the practical needs of rural development, harnessed local characteristics to help realize new types of rural economy such as intelligent agriculture, intelligent animal husbandry and intelligent tourism, and built modernized “new villages”. Our Sustainable Development Rationale Note: 1. With the development of the Internet, the number of customers, volume of business and market share have all increased rapidly in our online store, mobile store and other electronic channels. This has been accompanied by a corresponding decline in the scale of offline channels including village channels. In the future, we will further enhance the business capacity of our electronic channels to provide rural customers with convenient services that can be enjoyed at home. China Mobile and SDGs  China Mobile Limited 2018 Sustainability Report Promoting Poverty Alleviation and Boosting Rural Revitalization 29


05 Promoting Social Welfare China Mobile fulfills its part as a corporate citizen by being actively involved in supporting social welfare. Since founding the China Mobile Charity Foundation in 2009, we have constantly improved the construction and management of our public welfare platforms. We have continually launched a range of brand programs such as the Blue Dream program and the Heart Caring program, utilizing information technology to improve children’s education and medical aid conditions in remote rural areas, resolving the “last kilometer” problem of public welfare. Supporting Public Welfare and Helping Community Thrive In 2018, we thoroughly implemented the MIGU Running initiative. We continued to optimize the user experience of our online platform and expand the scope of our offline activities. Combining the Blue Dream and Heart Caring programs, we matched user running mileages with company donations to further increase social participation and gather the power of public welfare. At present, 4.5 million people have cumulatively participated in our MIGU Running public welfare activities. In November, 2018, the program was brought to the She County of Hebei Province. A 12-year-old boy named Zhao Zhiwei was the oldest of all the children screened for the disease and also had the latest diagnosis, rendering the disease life-threatening. When learning that Zhiwei was qualified for assistance from the Heart Caring program, his grandma cried with joy. Our staff learned that Zhiwei’s grandma had adopted him in 2008 and since been raising him with her every effort. Through the kind gesture of adoption, she had saved Zhiwei’s life years ago, and now China Mobile is passing on that love with its Heart Caring program. China Mobile started the Heart Caring program in 2011 to provide free screening and treatment for children diagnosed with congenital heart disease. By the end of 2018, the program had covered nine provinces including Neimenggu, Liaoning, Henan, Shanxi, Qinghai, Guangxi, Ningxia, Hebei and Guizhou, cumulatively donating RMB160.8 million and providing free screening for 45,648 impoverished children, with 5,358 diagnosed children receiving free surgery. Heart Caring Program Passing on Love In the national social organization assessment led by China Ministry of Civil Affairs in 2018, China Mobile Charity Foundation was promoted to Level 4A. The Blue Dream program won the third CSR China Education Award Special Award for Targeted Poverty Alleviation in 2018. The Heart Caring program won the Charitable Program Award at the 10th China Charity Award.30


“These kids deserve better music education,” said volunteer teacher Sha Nanjie. As a Yi ethnic singer from Daliang Mountains, Sha Nanjie still clearly recalls the first time he visited the school in impoverished areas of his hometown, when he was truly amazed by the children’s passion for music there. “Every classroom was packed with 50-60 children. The music lessons were part-time covered by other subject teachers. Due to the lack of hardware facilities, music classes were taught by the following to sing with the teachers repeatedly. However, I was surprised to find that the children could choreograph by themselves and would give performances in class now and then, clearly very eager for opportunities to perform.” In June 2018, Sha Nanjie arrived at Sanchahe Township Primary School and Jiefang Township Primary School in Zhaojue County with our MIGU Music Classroom program. Drawing on his own specialties, he gave a singing and vocal class to the children. Through easily understandable beats combined with improvisational composition rooted in everyday life, he brought a brand new music experience to the children and inspired their imagination about musical forms. Since its launch in November 2017, the MIGU Music Classroom program has joined forces with music experts, professional singers, employee volunteers, and other parties to bring music lessons to six schools in Zhaojue County of Liangshan Yi Autonomous Prefecture and Kaili County of Qiandongnan Miao and Dong Autonomous Prefecture. Over 3,000 children have been benefited from our music lessons on basic musical knowledge, musical instruments and singing, as well as mate- Scan the QR code to listen to Ceiba, the public welfare album rials including stationery, musical instruments and books, etc., which have satisfied the student’s needs for learning music and improved local learning conditions. Asemalimu, a 14-year-old girl of the Yi ethnicity from Bi’er County Central Primary School, Zhaojue County, Liangshan Prefecture, contributed a pristinely-rendered song to the public welfare album Ceiba (“Mumian”) under the professional guidance of MIGU volunteer music teachers. The album has been released on MIGU Music and is intended to use music to bring more people’s attention to remote and mountainous areas and ethnic minorities, delivering positive message through music. Since 2006, the China Mobile Blue Dream Education Aid Plan has been dedicated to improving the balanced development of school education and teaching facilities in central and western China for 13 years. In 2018, based on the continual and integrated adoption of shadow training and long-distance training, the China Mobile Principal Training program newly launched the Diagnostic training model, where programs such as principal visits to the Mobile Information-based Exhibition Hall are included in the training to expand the training model and content, improving the effectiveness of training. In the meantime, we visited Sichuan, the Three Regions Three Cities at the Shanxi Provinces as well as areas of extreme poverty where we donated 272 multimedia classrooms equipped with multimedia long-distance teaching facilities and our And Education products to the local secondary and primary schools. By the end of 2018, the Company has invested over RMB156.8 million in the Blue Dream program, training 115,782 rural school principals and donating 2,310 China Mobile libraries and 2,302 China Mobile multimedia classrooms. “The training allowed me to learn firsthand better ways of school management. When I return to school, I will engage teachers from different schools in Simao District in sharing and research sessions to deliver higher-quality and more specialized school education.” — Xiao Weishu, Principal of Simao No.7 Primary School, Pu’er City “Blue Dream” Education Aid Plan Music Classrooms Filled with Love Children having class in the China Mobile multimedia room Yi ethnic singer Sha Nanjie and primary school students from Daliang Mountains  China Mobile Limited 2018 Sustainability Report Supporting Public Welfare and Helping Community Thrive 31


Bijie City is a remotely located city in Guizhou Province, and nearly 180,000 residents work outside the city as migrant workers, leading to a huge number of left-behind children. The life and education of those children have become an issue of wide public concern. Child safety accidents frequently occur in Bijie City. In response, China Mobile launched the Sunshine Children Safety Monitoring Program in cooperation with local government and social security departments, sending out 65,088 safety intelligent phone watches to left-behind children in 7 counties/districts of Bijie. Equipped with features such as family calls, emergency calls, location tracking, trail playback, etc., those watches build a bridge of safety between those children and their guardians. Championing Volunteer Services We encourage employee volunteerism and continue to improve the volunteer service implementation and guarantee mechanisms to make our volunteer work more effectively delivered and richer in content. We are concerned about the needs of under- privileged groups and actively implement a rich variety of employee volunteer service programs for impoverished households, left-behind children, outdoor workers, the elderly, the disabled, and other groups, providing them with comfort and assistance. In 2018, we formulated the Guideline on Further Promoting China Mobile Volunteer Work to make our employee volunteer management more standardized, program-oriented, systemized and normalized, thereby improving the management effectiveness and impact of voluntary management programs. 135,900 employees had registered as volunteers, collectively contributing 567,600 hours of volunteer work. With You is a China Mobile volunteer brand dedicated to implementing “one-on-one” donation and assistance initiatives aimed at poverty alleviation and education improvement in the Company’s targeted poverty alleviation regions. With Seedlings is a With You sub-brand designed to provide volunteer teaching in impoverished areas to drive education- based poverty alleviation and broaden students’ horizons and knowledge base. We also recruited the children of our employees to be “little volunteers”. They have participated in gatherings with donations (like stationery) for left-behind children, passing on the kindness of heart. In 2018, our With You volunteer activities inspired active employee participation and donations. Through 6,301 activities, we raised a total of RMB9.1816 million in donations. Meanwhile, our With Seedlings platform sent 10 volunteer teachers to Ningxia Province and donated 105 sets of new desks and chairs and RMB25,000 worth of books to Xingjing County Hui People No.1 Elementary School in Yinchuan City to provide better learning conditions for the children. Sunshine Children Safety Monitoring Poverty Alleviation Program With You – With Seedlings Campaign The watch enables the left-behind children to talk with their parents, thus ensuring better care and guardianship, helping them to develop more intimate communications and relationship with their parents, getting rid of the “shadow” of loneliness. All the left-behind children wearing the intelligent watches are included in the And Campus platform, where, utilizing the “Internet + Education” approach, targeted quality educational resources designed by renowned schools/teachers are provided based on the students’ records of academic scores and evaluations to help improve their academic performance. We developed the left-behind children safety supervision platform, which has been incorporated into the public security system to show the children’s real-time location and historical movement and send timely notifications when they are near dangerous spots; in case of emergency, nearby equipment can be maneuvered for quick response to reduce the time for resolutions. Making children no longer lonely Making education more reassuring Making supervision more convenient Shaanxi Company employees celebrating birthday for left-behind children 32


Outdoor workers are “guardians of the city”. Regardless of the weather conditions, they always spare no efforts in contributing to the betterment of the city and the citizens’ lives. However, they are always in lack of a roof to protect them from the rainstorms and harsh weather conditions. In 2018, China Mobile Shanghai Company set aside a special section and established the Outdoor Workers’ Care Stations in the numerous China Mobile stores throughout the city. Over time, a service model that incorporates “space, sign, personnel, services, facilities and guarantee” has been established, with a focus on addressing the workers’ practical needs for drinking water, shade from the sun and shelter from the cold, food warming, phone charging, bathroom breaks, etc. Drawing on our own business features, we also provide them with free 300Mb or 500Mb domestic data and free tryout of our mobile information services. At present, the Company solidifies construction of the care stations by setting up a dedicated workgroup tasked with formu- “I am so happy about these Care Stations. In the past, when I needed to use the bathroom, I would feel too awkward to ask the shoppers in case it would cause them any inconvenience. There was no proper place for lunch or taking a rest, so I would just sit under the shade of a tree. Now these Care Stations have made my job much more enjoyable. It is a wonderful service, and we all love it.” — Aunt Zhang, Cleaner Zeng Huiling: Participator in charitable causes and spreader of love Zeng Huiling is an account manager at the Tengzhou Branch of China Mobile Shandong Company. While taking good care of her own child, she has also long been dedicating her time and energy to caring for elderly empty nesters, left-behind children and special children in the community as a volunteer. To spend time with deaf-mute children, she has even mastered the sign language. For over ten years, she has influenced people around her with concrete actions and inspired more people to participate in social welfare through her unwavering commitment to charitable work. Zheng Yaru: Rose-giving hand has a lingering fragrance Zheng Yaru is an employee of the Zhongshan Branch of China Mobile Guangdong Company. Her responsibility is to oversee work implementation of the Company’s chief youth volunteer squad. She believes that outstanding and refined charitable work lies in a continuous effort to innovate and give character to past experience. With a focus on caring for migrant workers and providing premium service, Zheng Yaru has actively explored the way and managed to deliver a perfect blend of commercial activities and social good as well as diversified forms of charitable events and services. Lin Wanlv: Applying knowledge to practice to innovate poverty alleviation Lin Wanlv is the Chief Operator of the Network Management Center Monitoring Room of China Mobile Yunnan Company. Since May 2018, he has volunteered to participate in poverty alleviation in Huangping Village, Suijiang County, Zhaotong City. Drawing on his technological expertise to overcome numerous difficulties, Lin Wanlv set up an innovative impoverished household information display platform and FTP information storage platform. The platform helped the work team solve chronic problems such as difficulty in locating specific people, information asymmetry, and difficulty of finding required resources, enhancing the efficiency of poverty alleviation work. Having You Under Our Roof – The Outdoor Workers’ Care Station Philanthropy Stars of the Year lating Outdoor Workers’ Care Station operations and management regulations and conducting regular on-site inspections on the supplies and service quality. By the end of 2018, the Outdoor Workers’ Care Station had been set up in 119 China Mobile outlets throughout Shanghai, collectively serving over 3,500 outdoor workers in all kinds of professions such as sanitation workers, assistant traffic police, messengers and deliverymen. Staff from our business store in Shanghai offering hot water to outdoor workers 33 China Mobile Limited 2018 Sustainability Report Supporting Public Welfare and Helping Community Thrive


Key Performance Indicators Information and communications technologies have unique advantages in helping to narrow down development divide, alleviate and eradicate poverty, balance educational and medical resources, unite forces for public welfare and other aspects. China Mobile leverages its business strengths and Internet thinking and strives to deliver “last kilometer” solutions for providing public welfare assistance. From Blue Dream and Heart Caring to the platform dedicated to caring for left-behind children, and from the music classroom to MIGU Running Initiative, the Company gives play to its public welfare resources and featured platforms to connect groups in need with public welfare endeavors, enhancing the effectiveness of public welfare assistance and building and sharing prosperous communities with relevant stakeholders. Indicators 2016 2017 2018 Public Welfare Total number of registered employee volunteers (10,000 persons) 13.10 11.10 13.59 Total amount of employee volunteer service time (10,000 hours) 50.20 56.80 56.76 Cumulative number of impoverished children to receive free congenital heart disease screenings 33,417 39,488 45,648 Cumulative number of impoverished children diagnosed with congenital heart disease assisted and treated 3,633 4,498 5,358 Cumulative number of China Mobile Libraries built 2,310 2,310 2,310 Cumulative number of multimedia classrooms built 1,760 2,030 2,302 Cumulative number of rural primary and secondary school principals trained 92,532 103,828 115,782 Cumulative donation made by China Mobile Charity Foundation (RMB10,000) 23,395 27,225 31,055 Our Achievements in 2018 Improved the construction and regulatory management of our public welfare platforms and promoted China Mobile Charity Foundation as a Class 4A foundation 115,782 principals from rural primary and secondary schools in central and western China trained through our Blue Dream Educational Aid Plan and 5,358 impoverished children diagnosed with congenital heart disease treated through our Heart Caring Campaign Continued to improve our volunteer service management and guarantee mechanism to enhance the volunteer service abilities of our employees and extend the coverage of our volunteer services, providing 567,600 hours of voluntary service this year Train 11,120 principals from rural primary and secondary schools in central and western China and build 538 multimedia classrooms through the Blue Dream plan Provide treatment for around 600 impoverished children diagnosed with congenital heart disease through the Heart Caring Campaign Fully implement and improve the effectiveness of poverty alleviation volunteer work Our Goals for 2019 Our Sustainable Development Rationale China Mobile and SDGs 34


Cementing Leadership in Innovation and Accelerating Transformation and Development Committing to Green Development and Environmental Protection Facilitating Employee Growth and Fostering Innovative Talents 36 43 48 A Digital Future Achieved Together 35


Leading 5G Innovations As 5G technologies continue to mature, the 5G era, an era of intelligent Internet of Everything, is just around the corner. China Mobile continues to drive up 5G technology R&D, explore the forms of 5G products, and extend 5G application scenarios to areas such as smart factory, new media and smart transportation. The Company joins forces with business partners to boost the Internet-based, digital and intelligent development of all sectors and jointly deliver a beautiful 5G lifestyle. In 2019, the Spring Festival Gala was successfully live-streamed over 5G networks in 4K ultra high-definition through a concerted effort among China Mobile, China Media Group and relevant partners, the first time since the program debuted. The broadcast is not only a 5G application demonstration that has received the largest viewership in history but also an integration between the traditional Chinese New Year and state-of-the-art 5G technologies. With the support of China Mobile’s 5G networks, 4K ultra high-definition footages of the Spring Festival Gala Shenzhen parallel session were transmitted to the China Media Group Studio in Beijing in real time without lag and presented to the audience. This is a perfect demonstration of the characteristics of 5G such as high speed and low latency and lays the foundation for the largescale application of ultra-high-definition video technologies in the era of 5G. 06 In January 2019, China Mobile completed the first 5G-based multi-scenario smart power plant end-to-end business verification exercise in China at Jiangxi Photovoltaic Power Plant in collaboration with industry partners. Based on China Mobile’s 5G networks, the power plant successfully materialized a number of smart energy application scenarios, delivering significant breakthroughs in the application of 5G technologies in the smart energy sector. Successfully Building the First 5G Smart Power Plant Helping China Media Group Deliver Its First “5G+4K” Spring Festival Gala Live Broadcast Drone patrol inspection and robot patrol inspection scenario: Based on the platform, the Centralized Control Center in Nanchang remotely controls drones and robots at the Gongqing Photovoltaic Power Plant to perform patrol inspections. The HD inspection footages are then transmitted back to the control center in Nanchang in real time, realizing the transition of the mode of equipment control from local to remote. Intelligent security protection scenario: Realizing real-time monitoring and integrated environmental surveillance at the power plant through panoramic HD cameras. Personnel operations scenario: Audio & video and location functions enabled by intelligent wearables allow experts in Nanchang to provide remote guidance for on-site maintenance and repair personnel at the power plant. Cementing Leadership in Innovation and Accelerating Transformation and Development 36


In 2018, we comprehensively advanced the maturity of 5G technologies with a view to realizing 5G pre-commercial use in 2019 and large-scale 5G commercial use in 2020. Deepening Industry Transformation Drawing on its continuously improving independent R&D capabilities, China Mobile actively explores the new “Internet + digital content” operating model and delivers new experiences and new scenarios made possible by technological innovations, thereby actively preparing itself for the new competitive landscape. Enhancing Independent Innovation Capabilities The Company continues to strengthen its R&D organizational system to improve its R&D capabilities in frontier technologies. In 2018, we set up second-tier R&D institutes in 10 specialized services companies and directly affiliated units. We also established an intelligent hardware innovation center to undertake all work related to the Company’s proprietary branded intelligent hardware such as frontier technology research, product design and R&D as well as manufacturing and supply chain management. The center equips us with the core capability to independently develop full-lifecycle intelligent hardware and develop an intelligent hardware ecosystem, thus propelling the large-scale and innovative development of intelligent hardware in China. The Company works to improve its core capabilities for R&D on proprietary branded products on all fronts by comprehensively sorting out its technological capabilities, constructing its R&D capability map and deepening its R&D mechanism reform. In 2018, we completed the first phase of the construction of scientific and technological achievements sharing platform and hosted nine “Scientific and Technological Achievements Day” events, facilitating the promotion of scientific and technological achievements that takes various forms, spans different points in time, and covers multiple fields. In terms of proprietary intellectual property rights, the Company actively fosters a culture where independent innovations are valued and protected. In 2018, we filed 2,222 patent applications and 1,040 patents were newly granted. We also held week-long proprietary property awareness activities, improved our mass entrepreneurship and innovation IP management, and continued to explore IP operations. Actively applying new technologies Building the Wuxi Internet of Vehicles City-level Demonstration Application Project The Wuxi Internet of Vehicles City-level Demonstration Application Project led by China Mobile is a joint effort between China Mobile and nearly 30 partners and currently the world’s largest city-level Internet of Vehicles. The project opens up over 40 traffic control data items, materializing more than 30 application scenarios including push notifications for traffic light information as well as warnings for vehicle front collisions and pedestrians crossing the street. The project has played an effective role in improving the public’s mobility experience and enhanced the smart traffic management of cities. Led the setting of 5G network framework international standards and played a primary role in advancing 5G terminal testing and certification standards at the 3GPP (3rd Generation Partnership Project) and GCF (Global Certification Forum). Launched the 5G Terminal Pioneers Plan and rolled out large-scale 5G pilot network construction in full. Core thesis on large-scale 5G antenna won the Fred W. Ellersick Prize 2018 Best Paper Award presented by IEEE (Institute of Electrical and Electronics Engineers), the first time the prize has been independently received by a Chinese industry sector/ R&D organization. Announced plans for the first batch of 5G terminal products in collaboration with industry players, introduced China Mobile’s first selfowned brand 5G terminal, and published the White Book on 5G Universal Modules showcasing its achievements. Set up industry research institutes in Xiong’an New Area, Chengdu and Shanghai, and incubated realizable and scalable 5G demonstration applications with a focus on industry, agriculture, healthcare, education, transportation, finance, smart cities and other verticals to promote the integration between digital economy and real economy. Initiated the O-RAN Alliance for wireless network architecture geared to building “open”, “opensource” and “intelligent” wireless networks with high flexibility and low cost. Reinforced communication and cooperation with international telecommunications enterprises in new technology R&D, new application expansion, new model exploration and other areas to push towards coordinated innovation and shared growth in the 5G era. Upgraded the China Mobile 5G Innovation Center to an innovation incubator with 260 partners and 20 open laboratories set up worldwide, representing a concerted effort to accelerate the innovative application of 5G. Striking out in new directions Building a new ecosystem in concerted efforts 37 China Mobile Limited 2018 Sustainability Report Cementing Leadership in Innovation and Accelerating Transformation and Development


Operating Digital Content Ecosystem The increasingly enriched technological means have provided people with a brand-new content consumption experience. With a focus on digital content upgrading, and taking the live broadcast of the 2018 FIFA World Cup as an opportunity, China Mobile thoroughly implements our “Internet + digital content” operations model, providing users with a full-scale immersive experience. In 2018, Our MIGU brand was selected to be the official partner for CCTV live stream new media and telecommunications transmission of the FIFA World Cup held in Russia. This is the first time that a Chinese telecommunications operator has been given the live streaming rights for a major international competition. We delivered the live broadcast of all 64 matches to 4.3 billion viewers (person-times), utilizing new services and functions to enable a brand-new, high-definition and smooth viewing experience. Operating Big Sports IP – World Cup Innovative applications Proprietary brands Created content IP and originally developed diversified content formats. Developed big data-based targeted marketing. The triangle management model has enabled digital content-focused collaboration among our headquarters, specialized services companies and provincial subsidiaries, building the coordination matrix encompassing marketing, contact points and content. Became the first telecom operator to deliver networks that spanned broadcasting and TV companies, Internet companies and telecom operators, and obtained the IPTV transmission license plate, starting a new era of China Mobile IPTV. Enhanced product experience based on a number of innovative technologies such as cloud editing, split screen and multiple angles. Created a full-scale immersive experience. Management innovations Business innovations Service innovations We achieved live broadcast of original images at 50 frames per second on small screens (handsets); as for big screens (TV), the real 4K image quality boasted a resolution four times higher than 1080P; the application of HDR technologies allowed viewers to capture the smallest detail on the field. Features such as split screen and multiple angles fully satisfied viewers’ personalized needs for watching the World Cup; content and activities such as World Cup theme music, audio live streaming and virtual run-to-Russia initiatives offered users the opportunity to be fully “engaged” in the matches. The Editor tools can accurately capture important scenes such as shots, fouls and penalties before editing and slicing the footages in real time using AI technologies to immediately bring the wonderful clips to viewers. “Three-dimensional” presentation of the World Cup in true colors “Interactive” experience for a fun World Cup AI Live Stream Editor Our customer service intelligent answering system “Yiwa” is currently the world’s biggest intelligent customer service system. Our products, including Business Converged Gateway, With Seedlings children’s watch, and Find Him/Her Locator, won a number of awards such as Red Dot, METIS, and IDEA. We launched a range of new AI products such as Witness Comparison All-In-One, intelligent loudspeaker, And-MU camera, and Penetrating Eyes, based on the application of new AI technologies such as intelligent voice and machine vision. Introduced proprietary branded intelligent hardware products across the four major areas of households, individuals, industries and chip modules. Accelerated deployment in the area of new retail and launched a new independent terminal pilot, effectively enhancing the efficiency of existing channels. Completed the preliminary development of image recognition, voice recognition, user portrait, big data analysis and other functions, with services like face recognition and intelligent app recommendation already applied in the end products N5 and N5 pro, our selfowned brand cell phones. 38


Reinforcing Compliance Management Honesty and compliance are the cornerstones of a business and the lifeline of its sustainable development. China Mobile commits firmly to honesty in all its operations, operationalizes a culture of rule of law, and complies with relevant laws and regulations. The Company continuously improves its compliance system as well as its management of risks, anti-corruption compliance and supply chains in all respects and makes an all-out effort to progress its culture of compliance, thereby ensuring healthy development. The Company adheres to the governance value and philosophy of “compliance with laws and respect for rules”. Internally, we reinforce all employees’ identification with and faith in rule of law, instill the spirit of integrity and commitment in our employees, and guide our employees to strictly comply with rules, thereby providing rule-based safeguards for the Company’s healthy development. Externally, the Company fulfills its part as a corporate citizen by running law awareness public welfare campaigns. We continued to implement our Compliance Escort Plan in 2018, striving for all-round enhancements in our ability to implement the rule of law and compliance management and ensuring lawful operations and proper management. China Mobile issued ten compliance guidelines regarding market competition, anti-bribery in commerce, cooperation with law enforcement, information security, bidding and procurement, project construction, labor and employment, network security, conflict minerals, and export control, further reinforcing close-loop compliance risk management. With respect to overseas investment, the Company always begins with an in-depth analysis of the macro environment and industry trends of target markets and fully considers the economic, social and environmental impact or value of the projects as a key determinant of investment decisions at all stages such as investment planning, opportunity selection, project implementation and investment decision-making. We live the core corporate value of “Responsibility Makes Perfection”, comply strictly with laws and regulations on human rights protection, and play an active role in protecting the interests of vulnerable groups. Since becoming a member of the UN Global Compact in 2007, we have supported and actively implemented the UNGC Ten Principles, respecting and protecting internationally recognized human rights. Risk Control Our risk evaluation follows a three-tiered management structure comprising the Audit Committee, the departments responsible for functional management, business as well as supervision and evaluation, and the Internal Control and Risk Management Expert Bank at the functional position level, with which we achieve specialized management over planning, decision-making, execution and implementation, thereby ensuring the continuous improvement and effective implementation of our internal control system. Having established regular risk assessment mechanisms and procedures, we conduct major annual risk assessment to evaluate our risk exposures and levels in areas such as strategy, market, finance, operations, legal and compliance as well as information technology, and gradually implement risk control measures and requirements. Complying with Laws and Regulations Compliance Escort Plan For information on our corporate governance and specific financial performance, please refer to our annual report or website www.chinamobileltd.com. Organized compliance trainings, set up the Compliance Escort section on our Online University website, and organized the group-wide Compliance Escort Micro-video Contest. Publicizing a culture of compliance Strengthening compliance management in focal areas Promoted pilot compliance achievements in focal areas such as bidding and procurement and engineering construction, and created compliance management mechanisms embedded in business to effectively prevent compliance risks; published research reports on export control, market competition, etc., and strengthened anti- monopoly compliance learning. Formulated the China Mobile Compliance Management Measures and set up an institutional system centered on compliance management to provide guidance for operations and management. Formulating and optimizing compliance management regulations 39 China Mobile Limited 2018 Sustainability Report Cementing Leadership in Innovation and Accelerating Transformation and Development


By further refining our risk prevention and control measures, we continued to strengthen monitoring over all kinds of risks in 2018. For each type of risks, we have developed a task breakdown template setting out specific countermeasures and work plans, embedding requirements for risk management into our daily work. We organized training on internal control and risk management and set up a tiered and categorized training system to enhance the risk management awareness of all employees. In terms of internal audit, an Internal Audit Department is set up both at the Company’s headquarters and its operating subsidiaries. They undertake financial audit, internal control audit, information system audit, risk evaluation and related work to deliver independent internal audit at each affiliated unit and improve the Company’s risk prevention and management capabilities. In 2018, we intensified audit supervision over areas such as Internet channels, information security and asset management to improve risk prevention and control, and also pushed forward information-based audit based on an in-depth application of technologies such as big data and cloud computing, remarkably enhancing the efficiency and effectiveness of our audit. Anti-corruption China Mobile’s domestic operating units comply strictly with relevant laws and regulations such as the Supervision Law of the People’s Republic of China, and our overseas operating units all act in full compliance with local anti-corruption and anti-bribery laws and regulations. We gradually improve our four-in-one anti-corruption work system of “education, prevention and control, punishment, and accountability” to build a corruption free company. Improving anti-corruption mechanism system Strengthening integrity risk prevention and control Improving supervision and accountability mechanism Improving anti-corruption education on all fronts In 2018, China Mobile formulated 15 regulations and regulatory documents including the “Guideline on Continuously Deepening Construction of Embedded Integrity Risk Prevention and Control Mechanism” and the “Provisions on Implementing the Eight-point Regulation of the Centre and Further Deepening Conduct Construction” to further solidify our anti-corruption mechanism system construction. We improved integrity risk prevention and control by conducting bottom-up checks and establishing an integrity risk assessment system, exploring a maturity rate evaluation model for embedded prevention and control and compiling an evaluation manual, and setting up an important node normalized reminder and supervision mechanism. We listed “micro corruptions” that harm customer and employee interest as one of our priorities for internal supervision and inspection. We conducted an investigation at our grassroots units and clarified corrective measures for prominent issues to drive effective rectification. We compiled the “Work Guideline on Patrol Inspections 2018” and the related work manual to specify rules on patrol inspections. We established and deepened the embedded integrity risk prevention and control mechanism for the patrol inspection work stream to further standardize the work of patrol inspection at all levels. We established robust internal and external supervision mechanisms through reporting channels such as email, dedicated phone number, CEO mailbox and on-site reporting during supervision and inspection. In 2018, the Company received 1,263 reports in the form of letters/ visits, 85% of which have been handled and concluded. We actively organized employee anti-corruption education and training programs and gave equal importance to concentrated education and daily education to develop an all-round, three-dimensional anti-corruption and integrity education structure. We held the anti-corruption and integrity awareness month for the eighth consecutive year and provided innovative anti-corruption and integrity trainings complementary to face-toface lectures with online education platforms such as a dedicated learning area in our Online University, MMS classrooms, video conferences and intranet live broadcasts to drive stronger employee engagement. In 2018, the Company held 3,717 anti-corruption and integrity education activities, covering over 90% employees. 40


Reinforcing Product Responsibility China Mobile pays close attention to end product quality management and ensures product quality through measures such as continuously improving our end product quality evaluation system and standardizing our product labeling and advertising information communication. For our proprietary branded products, we adopt a comprehensive quality management approach and develop corresponding guidance documents targeting product establishment, R&D, production and sales. We conduct product quality checks in four aspects, namely project quality review, company stock entry quality audit, national or industry test and certification, and post-launching spot checks. Pursuant to the guidance documents, we have measures in place to address products that do not pass quality checks, which include upgrade or repair, recall, rework, and the imposition of fines, depending on the severity of the problems. In 2018, we continued to reinforce special testing and evaluation of our personal, home and IoT end products to detect and resolve various problems in a timely manner and implement stringent quality control. We act in strict compliance with the Advertising Law of the People’s Republic of China and the Trademark Law of the People’s Republic of China. We have formulated regulations including the China Mobile Management Measures on Advertising and Publicity, clearly requiring all types of information published for advertising purposes to be true and accurate, forbidding the use of unregulated pictures, terms or texts, and strictly prohibiting the unauthorized use of other people’s portraits, registered trademarks, or works, etc., to ensure that our product information and labeling are faithfully communicated and that we engage in transparent and effective communication with our customers. Pursuant to the requirements of the Ministry of Industry and Information Technology of China, we further regulated tariff marketing management to ensure that our tariff plans are simple, clear, explained in standard terminology, and free from ambiguity. Supply Chain Management China Mobile endorses win-win partnerships with suppliers and works actively to create an open, fair, trustworthy and honest value chain. In 2018, we continued to clearly stipulate our supplier cooperation requirements and improve our test and assessment processes, thus gradually enhancing our responsible procurement management capabilities, with 100% of our partnering first-level centralized procurement suppliers having received our assessment. We publicly published the China Mobile Suppliers Cooperation Guidelines, explicitly requiring our suppliers to fulfill their tax obligations, actively pay for social security and obey legal and regulatory rules for legal employment, labor protection, occupational well-being and safety, social responsibility, environmental protection, etc. We devised the China Mobile Supply Chain Policy on Conflict Minerals and China Mobile Guidelines on Supply Chain Due Diligence Procedures for Conflict Minerals, demanding suppliers to investigate into and report the use of conflict minerals in the supply chain. We formulated the China Mobile Code of Conduct on Professional Integrity for Purchasing Personnel, requiring supplier managers to sign a Business Integrity Pledge, thereby guaranteeing that the procurement activities are standardized and fair. We regard supplier risk management as part of the Company’s overall risk assessment and perform comprehensive assessments on the economic, environmental and social risks of our suppliers by means of on-site inspections, questionnaires, external sustainability agencies, stakeholder information, external database, public opinion supervision, etc. We use certificates for SA 8000 (Social Accountability), OHSAS 18001 (Occupational Health and Safety Assessment Series) and ISO 14000 (environmental management standards) as criteria for assessing suppliers’ overall capabilities, and perform on-site inspections; we require suppliers without such certificates to provide supplementary explanation as regards employee safety and well-being, environmental protection, social contributions and other aspects. We formulated the China Mobile Management Measures on Negative Acts of Tier-1 Centralized Suppliers, specifying punishment standards and work procedures, and helping suppliers rectify negative actions and enhance their integrity. Operational guidance to suppliers Supplier risk management 41 China Mobile Limited 2018 Sustainability Report Cementing Leadership in Innovation and Accelerating Transformation and Development


Indicator 2016 2017 2018 Financial Performance Operating revenue 1 (RMB100 million) 7,084 7,405 7,368 Taxation (RMB100 million) 356 337 359 R&D and Innovation Number of patent applications (pieces) 1,684 2,006 2,222 Number of newly registered patents (pieces) 684 753 1,040 Compliance and Anti-corruption Number of Board Meetings in the year 4 4 4 Number of anti-corruption education activities in the year 3,951 3,580 3,717 Participation of anti-corruption education and training (person-times) 696,106 722,720 759,810 Number of corruption cases disciplined in the year 232 275 321 Number of employees dismissed and disciplined for corruption in the year 302 414 433 Supply Chain Management Number of suppliers 7,243 8,039 7,216 Number of first-level suppliers 553 571 480 Percentage of first-level local suppliers 2 (%) 100 100 100 Number of second-level suppliers 7,148 7,468 6,736 Percentage of secondlevel local suppliers 3 (%) 44.29 55.69 80.35 Number of assessments on first-level suppliers 4 2,393 2,417 2,194 Key Performance Indicators China Mobile and SDGs The arrival of the 5G era has presented telecommunications operators with new opportunities for developing the next generation of ICT infrastructure and extending their digital service offerings as well as new possibilities for building sustainable cities and communities. In response, China Mobile actively leads the development of 5G technologies and industries, enhances the construction of innovative systems, and strives to facilitate the realization of the SDGs by comprehensively improving its independent innovation capabilities, building an industry cooperation innovation mechanism, and collaborating with stakeholders in the R&D and promotion of 5G intelligent applications and solutions. At the same time, the Company continuously improves its compliance management and endeavors to establish an all-encompassing integrity risk prevention and control mechanism to continuously reinforce product responsibility and drive stronger sustainability management in the supply chain so as to promote its own healthy development as well as that of the entire industry. Our Achievements in 2018 Extended 5G service applications to various fields such as intelligent life and smart transportation, accelerated the maturity of 5G technologies on all fronts, and contributed to an intelligent, beautiful lifestyle in collaboration with partners Established industry research institutes and second-tier R&D research agencies in Xiong’an New Area, Chengdu and Shanghai and set up smart hardware innovation centers, thereby deepening R&D mechanism reform, enhancing comprehensive independent R&D capabilities, and advancing the Company’s digital transformation and development Enhanced our compliance institutional system, continued to promote the Compliance Escort Plan, and further intensified risk prevention and control as well as anti-corruption education Accelerate 5G scale experimentation and application innovation with a view to realizing 5G pre-commercial use in 2019 and 5G commercial use in 2020 so as to jointly advance the maturity of the 5G industry Work with business partners to develop 5G innovation demonstration projects to provide novel infrastructure and intelligent applications that support the construction of sustainable cities and communities Further optimize compliance and anti-corruption management, solidify the construction of a culture of integrity, and leverage our leading position in the industry to realize healthy development with higher standards Our Goals for 2019 Our Sustainable Development Rationale Note: 1. The Company has applied the new revenue standard (IFRS/HKFRS 15) since January 1st, 2018. 2. Percentage of first-level local suppliers means the proportion of domestic suppliers (registered in Mainland China) in all suppliers for the first-level procurement. We did not conduct any international tendering projects in 2018, thus did not have any international supplier. 3. Percentage of second-level local suppliers means the proportion of suppliers registered in a province for the second-level procurement of that particular China Mobile provincial subsidiary. 4. The number of supplier assessments carried out by our Procurement Shared Service Center, covering both winning and non-winning suppliers for the first-level procurement. 42


07 Combating Climate Change Greenhouse gas emissions are a major contributor to climate change. Pursuing green, low-carbon development and coping with climate change have become the global consensus. China Mobile has developed a climate strategy centered on energy conservation and emission reduction and has made a positive contribution to showing down global warming by continuously promoting the Green Action Plan since 2007 and enhancing its environmental management capabilities. In 2018, we formulated the “Guideline on China Mobile Green Action Plan 2018”, reinforcing management at source, promoting “whole-process, full-stage, all-employee” energy conservation and emission reduction and making sure that our operations complied with the Law of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution, the Law of the People’s Republic of China on Conserving Energy, and other relevant laws and regulations. Building a comprehensive risk management system whereby the issue of climate change is incorporated into various stages including the identification, screening, integration, ranking and management of risks and opportunities, and formulating and improving the Environmental Management System. Identifying the departments responsible for energy conservation and emission reduction management, and including indicators such as total energy consumption per unit of telecom business and power usage effectiveness (PUE) into the employee performance appraisal system of subsidiaries, and forming energy conservation and emission reduction working groups to oversee the management of climate change and energy related issues in business, networks and office activities. Improving the Carbon Emissions Management System, demonstrating our climate change strategy, management system, risks and opportunities as well as carbon emissions management performance from the dimensions of disclosure, awareness, management and leadership, and promoting the fulfillment of carbon trading commitments at China Mobile’s headquarters, China Mobile Beijing Company, and CM Tietong’s headquarters and Beijing branch. Creating an energy management system that covers 31 provincial subsidiaries and hiring third-party organizations to perform energy audit and authentication, in order to implement overall monitoring of the Company’s daily energy consumption indicators. Pushing forward ISO 14001/50001 environmental/energy management system certification efforts, with our provincial subsidiaries in Beijing, Guangdong, Zhejiang, Fujian and Shaanxi (as well as their city-level subsidiaries) certified to have demonstrated compliance with international standards for environmental/energy management. Strengthening environmental information disclosure and management and continuously improving environmental management measures through participation in CDP (Carbon Disclosure Project) and other relevant industry evaluation surveys. Improving Environmental Management System Committing to Green Development and Environmental Protection 43 China Mobile Limited 2018 Sustainability Report Committing to Green Development and Environmental Protection


Reducing Resource Consumption China Mobile attaches great importance to the reasonable utilization of resources and fulfills its commitment to building a sound ecosystem and environment by intensifying technological innovations, promoting green operations and management both within the Company and in the value chain, and enhancing the environmental awareness of employees and the wider public. Since 2008, China Mobile earmarks a special budget for energy conservation and emission reduction every year to be used for energy-efficient renovations at base stations, data centers, office buildings and stores. In 2018, we further reinforced energy conservation management at our data centers to minimize costs and enhance efficiency. In terms of management approach, we gradually improved the energy efficiency monitoring and management and control system at our data centers, increasing the ambient temperature in machinery rooms and implementing an intelligent air conditioner group control mechanism. On the technology front, we encouraged the use of more energy-efficient integrated rack servers and multi-node servers and recommended putting servers on dynamic energy-efficient operations mode. We also adopted a range of technological renovations in the machinery room facilities, including airflow organization optimization, natural cold source application, air conditioner cold source transformation, waste heat recycling, etc. to continuously improve the energy efficiency at our data centers. In 2018, China Mobile International Information Port Phase-I Data Center, Southern Base Cloud Data Center, Shanghai Ningqiao Data Center, Guizhou Data Center were included in the first batch of national green data centers. Compared with the previous year, the Company’s overall energy consumption per unit of information flow decreased by 57% and the overall energy consumption per unit of telecom business decreased by 53%. China Mobile is actively involved in developing and applying energy-efficient technologies such as 4G base station sleep technology and multi-network coordination energy-saving system as well as innovating and exploiting low-carbon information-based applications and products. At the same time, the Company strives to enhance the proportion of renewable energy sources in areas rich in clean sources of energy such as solar, wind, water and hydrogen but lacking traditional electrical power to drive energy conservation and emission reduction in the whole society. In 2018, we further promoted low-carbon applications such as intelligent charging points and smart meter reading. Income from our low-carbon information-based applications accounted for approximately 7.3% of the Company’s annual revenue. Meanwhile, we intensified R&D of 5G energy-efficient technologies and launched environmental protection guardian products based on frontier “IoT + AI + big data” technologies, realizing 24/7 real-time monitoring over air quality and facilitating the construction of a complete, regionally integrated air pollution monitoring network boasting enhanced effectiveness in environmental protection. China Mobile actively implements green operations by promoting the use of online office software such as Cloud Video System and Conference Assistant as well as paperless office systems such as OA, mail, supply chain management, and the electronic procurement and bidding system. Meanwhile, the Company cultivates its employees’ low-carbon habits by advocating green, healthy and energy-efficient lifestyles. In 2018, 35,774 projects were posted in our electronic procurement and bidding system, and the wholly electronic procurement process resulted in the reduction of about 141,000 paper-based bidding documents. In strict compliance with related requirements of the Water Law of the People’s Republic of China and the Water Pollution Prevention and Control Law of the People’s Republic of China, China Mobile continues to intensify management over daily water use, strictly controls the emission of waste water, advocates water conversation, and encourages the recycling and reuse of rainwater and reclaimed water, thereby reducing the consumption of water resources. In 2018, we further reinforced the management of water use in our machinery rooms, management rooms and stores, realizing zero growth in the average water use per person in management rooms. A rainwater collection and utilization system was built in China Mobile (Xixian New Area, Shaanxi) mobile data center phase I. The system collected, processed and stored rainwater, which was then used as a supplementary water source for watering greens and washing roads, thus enhancing the efficiency of water resources use. Intensifying Energy Reduction Renovations Innovating Environmental Protection Applications Promoting Green Operations Water Resource Management Our Energy Conservation Awareness Week, themed “Green intelligent connectivity; a future created together”, continued in 2018. Through offline activities such as “Low-Carbon Life Hacks” and “Count Me in Environmental Protection” and the online annual “Carbon Emissions Test”, the Company promoted energy conservation and environmental protection measures among its employees and the wider public based on its own business platform and channels like new media. Scan to watch China Mobile Energy Conservation Awareness Week Proposal video. Energy Conservation Awareness Week Featuring Green Connectivity 44


China Mobile constantly explores and improves the standardized management of waste classification and recycling. Pursuant to the requirements of the Law of The People’s Republic of China on Prevention of Environmental Pollution by Solid Wastes, the Catalogue of Waste Electrical and Electronic Products for Disposal (2014) and other relevant laws and regulations, the Company classifies waste into general waste, electronic waste and hazardous waste. Hazardous waste is processed by technological means or handed over to specialized agencies for treatment, while non-hazardous waste is recycled and reused or disposed of according to relevant laws and regulations. We encourage customers involvement to participate in environmentally friendly recycling initiatives. We organized the Green Box Environmental Protection Campaign in combination with our And Machine Swap service, recycling electronic waste such as scrap mobile phones and mobile phone accessories and offering smart terminal refurbishment services in a number of provinces. In 2018, a total of 39,909 electronic items were recycled via the Company’s Green Box volunteer initiative. Waste Management In 2018, China Mobile Zhejiang Company set up an information-based hazardous waste management platform in Huzhou. By electronically recording all stages of waste management encompassing collection, storage, utilization and disposal, the platform ensures the standardization and traceability of hazardous waste management, timeliness of its entry and exit, legality of transfer, and compliance with waste disposal agency qualifications. At present, three types of hazardous waste have been included in the platform. China Mobile actively propels suppliers’ full-lifecycle energy conservation and emission reduction encompassing R&D, manufacturing, transportation and recycling of products. By setting energy conservation standards for the telecommunications industry chain, the Company drives suppliers to adopt green designs. By renewing energy efficiency grading standards and procuring energy- efficient products, we are fueling the green transformation of the industry chain. We have formulated the China Mobile Electromagnetic Fields Management Methods, combining random inspections by experts with daily monitoring at provincial subsidiaries to safeguard continuous monitoring of our base stations, keeping electromagnetic radiation within regulatory limits and protecting the health and safety of residents. We customized our publicity vans by equipping them with in-vehicle electromagnetic radiation dynamic monitoring systems, professional testing devices and technical personnel and raised the awareness of residents through educational activities such as expert Q&A, educational videos and onsite electromagnetic radiation tests on household appliances, thereby facilitating deep engagement with the community and dispelling public concerns. Green Supply Chain Electromagnetic Radiation Management Hazardous Waste Management Platform Green Packaging In 2018, we continued to promote the use of green packaging. We replaced the traditional wood packaging with environmentally friendly or recyclable materials such as metal trays, metal circulation racks and environmentally friend cartons. We demanded our suppliers to fulfill their commitment to centralized procurement, ensuring that the green packaging usage ratio of newly added main equipment reached 67%, equivalent to 168,000 m3 of wood saved. We promoted green packaging recycling among our suppliers, achieving effective material recycling and reuse and energy consumption reduction. We also started adopting customized delivery bags for our SIM cards. Green Warehousing With a view to building energy-efficient and environmentally friendly warehouses, we renovated the mode and intensity of lighting in some of our warehouses in 2018. By changing to LED lights, using voice-control switches and enforcing rules on “one-hour lights off during lunchtime”, we reduced warehouse electricity use by 50%. Green Transportation Since June 2017, our pilot zero-emissions “new energy vehicles” have been put into operation in Shanghai, Guangxi and other provinces/regions to carry out green transportation. As of December 2018, 14 such vehicles had been put in use. China Mobile Limited 2018 Sustainability Report Committing to Green Development and Environmental Protection 45


China Mobile and SDGs Our Achievements in 2018 Continued to improve our environmental management system and realized the reduction of our overall energy consumption per unit of information flow by 57% compared to last year through measures like energy-saving renovations, environmentally friendly applications and green operations 100% of our bidding projects were handled via our electronic procurement and bidding system, realizing fully electronic procurement Gradually explored and improved our waste management and promoted the use of lightweight and green packaging materials, achieving a percentage of 67% in the use of green packaging for newly purchased equipment Reduced our annual energy consumption by 2,660 GWhs, equivalent to a reduction of GHG emission by 1.706 million tonnes Reduce our overall energy consumption per unit of information flow by 15% compared with 2018 and our overall energy consumption per unit of telecom business by 10% Continue to promote the use of green packaging, urge suppliers to fulfill their centralized procurement commitment, and keep the percentage of newly purchased equipment that uses green packaging at no lower than 60% Our Goals for 2019 46 Our Sustainable Development Rationale “Lucid waters and lush mountains are invaluable assets.” Economic development and business activities should not be pursued at the expense of a sustainable ecosystem. China Mobile pays attention to the continued rise in the energy consumption as a result of its extensive network construction and implements energy conservation and emission reduction and cost optimization by improving its environmental management system, promoting energy efficient renovations, innovating energy efficient technologies, introducing renewable energy sources, and optimizing waste management. The Company takes areas such as smart cities, smart delivery and intelligent transportation as key scenarios for 5G application innovation and actively develops energy efficient and environmentally friendly solutions to contribute to the construction of ecological civilization.Key Performance Indicators Indicators 2016 2017 2018 Energy Consumption Total electricity consumption (100 GWhs) 197.1 223.3 244.7 Natural gas consumption (million m3) 9.1 7.9 11.2 LPG consumption (100 tonnes) 3.7 3.1 2.7 Coal gas consumption (million m3) 0.20 0.10 0.05 Coal consumption (10,000 tonnes) 0.5 0.1 0.2 Total gasoline consumption (million liters) 126.9 121.5 112.4 Total diesel fuel consumption (million liters) 17.6 19.4 14.8 Purchased heating costs (RMB million) 150.4 160.9 123.4 SUSTAINABLE DEVELOPMENT GOALS


Indicators 2016 2017 2018 Emissions CO2 emissions (million tonnes) 14.38 15.98 16.17 Direct GHG emissions (Scope 1) (million tonnes) 0.35 0.33 0.31 Indirect GHG emissions (Scope 2) (million tonnes) 14.03 15.65 15.86 Carbon emission intensity (tCO2e/ RMB10,000) 0.203 0.216 0.219 SO2 emissions (tonnes) 95.22 23.59 35.93 NOx emissions (tonnes) 0 0 0 CH4 emissions (tonnes) 0 0 0 Carbon emissions from commute (10,000 tonnes) 59.87 37.79 39.45 Carbon emissions from business travels (10,000 tonnes) 9.25 29.44 7.10 Indicators 2016 2017 2018 Energy Savings Total electricity savings (100 GWhs) in the year 3.8 21.4 26.6 Equivalent cost savings (RMB100 million) in the year 5.2 28.9 37.7 Equivalent GHG emission reduction (10,000 tonnes) in the year 26.4 148.5 170.6 Indicators 2016 2017 2018 Water Use Total amount of water consumption (million tonnes) 41.25 42.24 35.12 Average amount of water consumption per employee (tonnes) 90 91 76 Indicators 2016 2017 2018 Green Operations Number of cross-provincial videoconferences at headquarters 800 882 970 Online sales volume (RMB100 million) 3,934 4,648 4,785 Reduction in overall energy consumption per unit of information flow (%) 36 40 57 Investment in Green Action Plan (RMB100 million) 1.9 1.4 1.9 Total amount of resources used for producing terminal devices (tonnes) 3,171 8,847 9,394 Indicators 2016 2017 2018 Weight of Waste Recycled by Certified Third Parties Network waste (tonnes) 21,046 32,531 35,559 Acid batteries (tonnes) 13,997 20,219 19,458 Communication equipment (tonnes) 3,366 6,869 10,743 Cables (tonnes) 1,088 2,136 2,203 Other waste (tonnes) 2,595 3,307 3,155 Office waste (tonnes) 1,512 2,367 4,102 Electronic equipment (tonnes) 1,234 1,895 2,941 Other waste (tonnes) 278 472 1,161 Devices (tonnes) 184 137 98 Total (tonnes) 22,742 35,035 39,759 Indicators 2016 2017 2018 Value of Waste Recycled by Certified Third Parties Network waste (RMB10,000) 10,574 21,255 22,898 Acid batteries (RMB10,000) 7,942 13,220 13,103 Communication equipment (RMB10,000) 1,513 3,727 6,886 Cables (RMB10,000) 386 3,313 1,684 Other waste (RMB10,000) 733 995 1,225 Office waste (RMB10,000) 712 892 1,717 Electronic equipment (RMB10,000) 612 798 1,336 Other waste (RMB10,000) 100 94 381 Devices (RMB10,000) 140 122 297 Total (RMB10,000) 11,426 22,269 24,912 Indicators 2016 2017 2018 Waste Management Hazardous waste (tonnes) 22,742 35,035 10,165 Non-hazardous waste (tonnes) - - 29,594 Hazardous waste emission intensity (kg/RMB10,000) - - 0.14 Non-hazardous waste emission intensity (kg/RMB10,000) - - 0.40 Note: In 2018, the Company classified its waste more finely and disclosed weight and intensity of hazardous/non-hazardous waste emission recycled by certified third parties. 47  China Mobile Limited 2018 Sustainability Report Committing to Green Development and Environmental Protection


08 Drawing on continuous improvement to its training system and innovation in its incentive mechanism, China Mobile strives to cultivate the next generation of multi-talented workforce in network, IT system, digital services and other key areas. The Company fosters innovation among all employees, and shares with them the value of sustainable development. Improving Effectiveness of Training China Mobile has formulated and strictly abides by the Training Management Methods and implements the annual training plan in an orderly fashion. The Company develops the caliber of capabilities needed for transformation and development based on its key groups, key capabilities and position characteristics. In 2018, we strengthened the full-process closed-loop management of our training projects, continued to carry out annual training project evaluation, and constantly enhanced the effectiveness of various lines of professional training work. Meanwhile, we worked to enhance our training and teaching abilities on all fronts by actively improving our integrated Group-wide internal trainer development system, organizing a rich variety of teaching and research activities such as course teaching and development and course delivery to grassroots employees, and engaging in a concerted effort to develop and share excellent internal teaching resources. We continuously explored and applied a variety of employee training methods, and designed training programs that matched the subject matter of trainings and characteristics of participants. In 2018, we adopted online and offline community-based learning, guided discussion, online learning, experience distillation, outreach training and other learning methods to improve the pertinence and effectiveness of our trainings. In 2018, we provided training for 1.821 million person-times in total, and the average training time per employee reached 100.8 hours. Supporting Employee Development We held the Mobile Voyage New Employee Growth Camp, where participants received learning resources on a themed basis and had their personalized and varied learning needs met through a number of interactive means of learning. We strengthened leadership training for top management in the transformation phase to improve their team management strategic thinking and ability to discharge work responsibilities, and provided targeted training modules for middle management to improve their strategy execution capabilities. We reinforced systematic training for our backbone personnel by promoting our network marketing course system, deepening the implementation of group client manager learning roadmap and launching centralized audit capability enhancement programs for audit management personnel. We formulated the New Drivers Capability Enhancement Plan, completed the development of skill maps and learning roadmaps, and conducted intermediate and advanced network training as well as business support expert advanced IT training to further reshape the core competencies of our technical personnel. New employees Management Business elite Technological personnel Facilitating Employee Growth and Fostering Innovative Talents 48


Online Learning Program Based on our new Online University platform, we provide low-cost, expansive, universal and convenient training programs for employees on a Group-wide basis, featuring an organic combination of online training on PC and mobile phone and offline training. Our online learning program focuses on the 10 major projects under our Big Connectivity strategy. In 2018, the program offered nearly 40 themed learning modules such as intelligent IoT and AI with a viewership of over 1 million person-times, and held 510 job post skills certification exams with a candidature of over 240,000 person-times.In 2018, China Mobile was awarded the “Most Socially Responsible Employer Award” under the China Best Employer Awards. China Mobile University was awarded the “Outstanding Contribution Award” under China’s Best Enterprise University Rankings 2018, the “Excellent Enterprise University Award” and “Enterprise Universities Top 50” under the China Talent Development Elite Awards, as well as the “Advanced Enterprise University Award” and “Advanced Network Academy (Online Platform) Award” by the China Association for Executives Development. China Mobile Hong Kong Company was awarded the “Best Employer Award 2018” by Job Market.Innovation Incentive Mechanism In 2018, we made an all-out effort to establish a technological innovation reward system. We reformed our rewards for technological advancements as well as business and service innovations and formulated the China Mobile Technological Innovation Management Measures, further complementing our innovation incentive mechanism. We rewarded major technological innovations, on-the-job technological innovations, and fruition of technological endeavors. We continued to increase our rewards to incubation-oriented innovation and entrepreneurship efforts and make sure that our employees are incentivized. We provide our employees with an internal mass entrepreneurship and innovation incubation service platform and host the China Mobile Independent Development Competition to unleash our employees’ innovative potential. In 2018, ten teams from nine provincial subsidiaries were shortlisted for the finals of our 4th Independent Development Competition. Smart “Wukong” and Its Penetrating Eyes “Wukong”, a smart image converter developed by a team from China Mobile Chongqing Company, entered the finals of the China Mobile 2018 Independent Development Competition and won an award. Not only can the product be used by the general public to perform such image processing functions as old photo renovation and shake reduction but it can help image processing professionals improve their user interface (UI) design efficiency as well. During its participation in the competition, the team was provided with resource support by China Mobile such as R&D cloud and AI platform. The process of working hard together to solve one tough problem after another helped the team hone their technological competencies and motivated them to undertake more innovation R&D to help solve real-life problems.“The competition has helped us establish a technological basis in a new field. In overcoming difficulties along the way, we have achieved progress and growth. We are greatly thankful to the Company for providing us with a platform for self-realization.” — Cao Xu, Team Leader “With the help of the Company and my team, I have overcome my fear of public speaking. It took me a lot of courage and also gave me a strong sense of fulfillment. It has made me realize that with passion and dreams, one’s possibilities are limitless.” —Wang Feng, Team Member “Wukong” team road show at the finals of the Independent Development Competition China Mobile Limited 2018 Sustainability Report Facilitating Employee Growth and Fostering Innovative Talents 49


Since 2013, we have held “The Most Beautiful Mobiler” event every year to recognize the individual value of our employees and develop a role model for growth. In 2018, 21 of our employees (group) were each named “The Most Beautiful Mobiler”. “Gold Digger” in the Big Data Era – Yang Weimin A veteran in mobile telecommunications operations and R&D, Yang Weimin initiated the establishment of the Fujian Mobile Network Maintenance Innovation Studio. He has led his team to overcome technological barriers in 35 fields and successfully implemented their products in more than ten provinces/cities, generating a comprehensive economic return of over RMB450 million and helping save RMB33 million in annual cost. Moreover, Yang Weimin has spent all his bonuses received over the years, totaling hundreds of thousands of RMB, on talent cultivation in an effort to build a strong caliber of technological talents.The “Pathfinder” that Delivers the Mobile Speed – Cen Shuwei As a technological pioneer, Cen Shuwei has led his team to break innumerous barriers to achieve groundbreaking success in large-scale 4G pilot networks and support Hangzhou City in its launch of China’s first 4G-covered bus line. He delivered a multitude of innovations in new technologies, connected cars, Internet of Things and other areas during the G20 Hangzhou Summit, achieving new heights of performance in the network quality and perception of Hangzhou city. Now, Cen Shuwei is leading his team to explore 5G networking models and standards and actively participate in the construction project of the “5G Demonstration Area” thereby making preparations for the imminent arrival of the 5G era.Protecting Employee Rights and Interests China Mobile strictly complies with the laws and regulations on employee rights protection, including the Labor Law and Labor Contract Law of the People’s Republic of China, the Special Provisions on Labor Protection of Female Employees, and the Law of the People’s Republic of China on the Protection of Rights and Interests of Women, as well as those of overseas jurisdictions where it operates, in order to protect the legitimate rights of its employees by various means.We formulated and strictly abide by the Management Approach on Employee Recruitment and ensure that our hiring process is open, fair and transparent by establishing a scientific, standard and systematic recruitment system. We do not use discriminating recruitment requirements and strictly forbid the use of child labor and forced labor. We optimized our employee career development system and relevant guidance to advance the construction of employee promotion and career development channels. We revised and distributed the Labor Management Regulations to further implement standardized labor management as regards job classification, forms of labor, labor contract, work time, rest and vacation, and other aspects. We protect employees’ legitimate rights to remuneration, work time, rest and vacation, insurance and benefits, and other aspects. The average salary of our employees is higher than local minimum wage. We formulated the China Mobile Implementation Plan for Incentive Annuities and built a comprehensive employee benefits insurance system. We formulated targeted special incentive and dedicated incentive plans to improve our employees’ sense of gain. We prioritized and strengthened “four-period protection” (covering menstrual period, pregnancy period, delivery period and breastfeeding period) to cater to female employees’ special needs.We respect and protect our employees’ rights to information and expression and enable robust employee feedback mechanisms by establishing the CEO mailbox, hotlines, employee forums, employee representative conferences and other channels. Moreover, we collect written feedback, hold employee conversation and conduct field surveys to comprehensively review outstanding practices, typical cases and employee demands as regards employee rights protection. We compile those findings into themed research reports and focal problem summaries, which are important tools for improving our ability to protect employee rights and interests. Remuneration and benefits Recruitment and promotion 50


In 2018, China Mobile invited professional lawyers to offer lectures to our female employees on the Law of the People’s Republic of China on the Protection of Rights and Interests of Women, the Special Provisions on Labor Protection of Female Employees, and relevant laws and regulations. We held one-to-one and one-to-many face-to-face communication sessions to collect suggestions and opinions from our female employees, thereby delivering timely solutions to frequently raised issues and improving their ability to safeguard their own legitimate rights and interests. China Mobile strictly abides by relevant laws and regulations such as the Labor Law of the People’s Republic of China and the Law of the People’s Republic of China on the Prevention and Treatment of Occupational Diseases in providing a safe work environment and safeguarding employees against occupational hazards. We continued to provide all of our employees with medical examination and health lectures, with a medical examination rate of 97% in 2018. We provide essential assistance to alleviate the pressing needs of sick and troubled employees by offering poverty aid fund, major illness assist fund, medical insurance, employee mutual help fund, etc.. We promoted the physical and mental well-being of our employees and helped them balance their work and life demands by implementing initiatives such as the Employee Assistance Program (EAP), “Five Smalls” (small canteens, small lounges, small bathrooms, small activity rooms and small libraries) project, and “Happiness 1+1” (engaging in 1 sports activity and developing 1 hobby) program. The China Mobile “Happiness 1+1 program started in 2015 and calls on employees to participate in 1 sports activity and develop 1 hobby. The program is designed to improve employees’ physical and spiritual well-being by encouraging them to take part in activities such as brisk walking, yoga, basketball, mountain climbing, calligraphy and photography. Our “Happiness 1+1” events in 2018 included China Mobile Employee Ping Pong Competition, Happiness 1+1 Parent-child Talent Show, public welfare tree planting and many more, attracting the participation of 332,000 employees. In terms of employee safety, we revised the China Mobile Responsibility System for Safe Production and compiled publicity materials such as the China Mobile Electrical Safety Manual, the Elevator Safety Management, and the Personal Safety Instructions for Women. Additionally, we organized a variety of training and education activities to raise employees’ safety awareness, including the Safe Production Month, the Fire Control Awareness Month, as well as safety management personnel capability enhancement training and new employee safety orientation. As regards emergency preparedness, we formulated the China Mobile Emergency Response Plan and actively organized emergency drills and improved our emergency preparedness procedures, thereby continuously enhancing our ability to handle emergencies and engage in safe production. By doing so, we strove and prevent emergencies and reduce their negative impact on our operations and to ensure employee safety during production. Female Employee Rights Protection Training ”Happiness 1+1” In 2018, we continued to promote our “Five Smalls” project (small canteens, small lounges, small bathrooms, small activity rooms and small libraries). We invested RMB557 million and prioritized areas with harsh natural conditions and backward infrastructure, satisfying the basic needs of our grassroots employees for food, water and access to the bathroom and improving their work conditions. “Five Smalls” Employee Care Project China Mobile continued to fully implement the Employee Assistance Program (EAP). Through the program, we provide an allyear- round psychological consultation hotline and managers’ hotline and work with professional units to offer an array of services that cover all our employees including face-to-face psychological consultations, themed sharing sessions, psychological health tests, high depression tendency screening, psychological crisis identification and prevention, etc. to contribute to our employees’ psychological well-being. In 2018, Our EAP activities covered over 320,000 employees from 31 provincial subsidiaries and specialized services companies and directly affiliated units. So far, we have trained 3,093 EAP specialists and set up 120 stress relief rooms and care rooms. Employee Assistance Program (EAP) Facilitating Employee Growth and Fostering Innovative Talents Happiness 1+1 Employees’ Arts Show Promoting Employee Well-being China Mobile Limited 2018 Sustainability Report 51


Sustainable development goals 3 good Health And well being 4 quality education 5 gender equality 8 decent work and economic growth 10 reduce inqualitie China Mobile and SDGs Our Achievements in 2018 Improved the incentive mechanism, innovated training methods and strengthened innovative talent cultivation, providing 1.821 million person-times of training to our employees Provided a well-run employee complaint mechanism and intensified protection of employee rights and interests, with 100% of our headquarters, provincial subsidiaries, with and specialized services companies signing collective bargaining contract with employees, and 100% of our female employees returning to work after maternity leave at headquarters level Implemented activities such as the Employee Assistance Program (EAP), Five Smalls project and Happiness 1+1 to promote the physical and mental well-being, covering over 320,000 employees Promote implementation of the New Drivers Capacity Enhancement Plan and further reshape the core competencies of the workforce at the stage of transformation to gradually enhance the comprehensive capabilities of technical personnel Further innovate incentive mechanism and establish more diversified and categorized employee incentives Fully respond to diverse employee demands, continue to improve employee rights protection and strive for harmonious labor relations Our Sustainable Development Rationale Against the development backdrop of the imminent arrival of an era of intelligent IoT accelerated by the 5G technology, it is vitally important for telecom operators to attract and retain cornerstone talents and boost the technological transformation of their employees. In light of the critical demand for transformational development in order to achieve sustainable development, China Mobile endeavours to promote the cultivation of innovative talents by further increasing investment in its innovation incentives and training resources. Meanwhile, the Company is intent on sharing the value of sustainable development with the employees by providing more robust career advancement channels, better opportunities for innovation and entrepreneurship, more complete benefits plans, and a more accommodating work environment. Key Performance Indicators Indicators 2016 2017 2018 Total number of employees 460,647 464,656 459,152 Human Resource Composition Percentage of technical personnel (%) - 23.34 25.18 Percentage of marketing personnel (%) - 56.56 55.17 Percentage of management personnel (%) - 7.25 7.29 Percentage of general affairs personnel (%) - 10.09 10.50 Other personnel (%) - 2.76 1.86 SUSTAINABLE DEVELOPMENT GOALS 52


Indicators 2016 2017 2018 Diversity Percentage of employees under 30 years of age (%) 35.15 29.62 24.35 Percentage of employees between 30 and 50 years of age (%) 61.25 65.95 71.13 Percentage of employees over 50 years of age (%) 3.60 4.43 4.52 Percentage of female employees (%) 55.54 55.11 53.17 Percentage of female employees at senior management level (%) 18.00 13.18 16.45 Percentage of ethnic minority employees (%) 7.16 6.83 7.03 Percentage of local employees in Hong Kong Company (%) 91.9 89.4 89.5 Percentage of local employees at management level in Hong Kong Company (%) 70.7 75.0 71.2 Employee Turnover Total number of employees newly hired in the year 16,842 27,011 20,259 Number of female employees newly hired 9,040 14,194 8,397 Number of male employees newly hired 7,802 12,817 11,862 Total number of employees resigned in the year 10,404 14,831 18,217 Number of resigned female employees 5,950 8,242 9,411 Number of resigned male employees 4,454 6,589 8,806 Total number of employees dismissed in the year 636 925 1,317 Number of female employees dismissed 347 589 888 Number of male employees dismissed 289 336 429 Percentage of employees resigned and dismissed among employees under 30 years of age (%) 1.94 2.24 1.55 Percentage of employees resigned and dismissed among employees between 30 and 50 years of age (%) 0.95 1.59 2.56 Percentage of employees resigned and dismissed among employees over 50 years of age (%) 0.02 0.21 0.15 Female employee turnover (%) - - 2.05 Male employee turnover (%) - - 1.92 Note: The indicators under Diversity and Employee Turnover are based on the number of on-post employees at the end of 2018. Indicators 2016 2017 2018 Employee Training Training expense per employee (RMB) 1,646 1,717 1,892 Total number of employees trained (10,000 person- times) 154.9 183.9 182.1 Number of senior management trained (person- times) 867 986 1,047 Number of middle-level management trained (person-times) 15,546 28,669 18,744 Number of general employees trained (10,000 person-times) 153.2 181.0 180.1 Average training time per employee (hours) 64.4 88.5 100.8 Average training time per senior management (hours) 99.8 106.9 106 Average training time per middle-level management (hours) 79.8 88.1 109.5 Average training time per general employee (hours) 64.2 88.6 100.7 Number of Online University users (10,000 persons) 39.5 40.5 41.6 Average Online University study time per employee (hours) 38.2 50 53.6 Number of Online University users via mobile phone (10,000 persons) 27.8 29.1 34.5 Indicators 2016 2017 2018 Respecting and Protecting Human Rights Number of jobs created (10,000) 268 260 288 Percentage of contracted employees who are labor union members (%) 100 100 100 Percentage of dispatched employees who are labor union members (%) 98 98 98 Indicators 2016 2017 2018 Health and Safety Management Number of safety emergency drills 1,214 1,250 1,225 Participation rate in safety emergency drills (%) 86 86 86 Accident fatality rate per 1,000 employees (%) 0.0065 0.004 0.004 Number of fatalities caused by production safety incidents — — 2 China Mobile Limited 2018 Sustainability Report Facilitating Employee Growth and Fostering Innovative Talents 53


Stakeholder Engagement and Materiality Analysis China Mobile has various communication channels in place to help us maintain regular and close communication with six stakeholder groups, including customers, employees, shareholders and investors, governments and regulators, value chain partners, and community and environmental representatives. When preparing this report, we used questionnaires to identify sustainability issues that concerned different stakeholder groups and determined areas to be disclosed in the report based on a materiality analysis. Stakeholders Key Issues of Concern (Top 5) * Engagement Approaches Customers 1.Service Quality and Customer Rights Protection 2.Information Security and Privacy Protection 3.Network Quality 4.R&D and Innovation 5. Offshore Compliance of Corporate Social Responsibilities 1.Customer Reception Day 2.10086 Hotline 3.Weibo and WeChat Interactions 4.Online and Mobile Customer Service Platforms Employees 1.Service Quality and Customer Rights Protection 2.Information Security and Privacy Protection 3.Network Quality 4.Workplace Health and Safety 5.Human Resources Development 1.Employee Representative Conferences 2.Regular Trainings 3.Performance Communication Mechanism 4.MMS Magazine Mobile Weekly Shareholders and Investors 1.Service Quality and Customer Rights Protection 2.Information Security and Privacy Protection 3.Financial Performance and Tax Payment 4.Corporate Governance and Risk Management 5.Network Quality 1.Annual Reports, Interim Reports and Announcements 2.General Meetings 3.Investor Briefings and Conferences Governments and Regulators 1.Information Security and Privacy Protection 2.Network Quality 3.Anti-corruption and Compliance 4.Service Quality and Customer Rights Protection 5.Corporate Governance and Risk Management 1.Regular Reports and Communications 2.Specific Investigations and Meetings 3.Relevant Forums 4.CEO Mailbox Value Chain Partners 1.Information Security and Privacy Protection 2.Service Quality and Customer Rights Protection 3.Corporate Governance and Risk Management 4.Network Quality 5. Offshore Compliance of Corporate Social Responsibilities 1.Procurement 2.Supplier Web Portal, Service Station and Supplier Hotline 3.Training and Assessment 4.Forums and Meetings 5.CEO Mailbox Community and Environmental Representatives 5.Customer Satisfaction Surveys 6.Mobile App 7.CEO Mailbox 1.Information Security and Privacy Protection 2.Service Quality and Customer Rights Protection 3.Network Quality 4.Reducing Carbon Emissions 5.Reducing Environmental Resource Use 5.Employee Recognition Mechanism 6.Employee Complaint Mechanism 7.CEO Mailbox 1.Community Activities 2.Mass Media 3.New Media (Weibo, WeChat) 4.Charity Platform 5.CEO Mailbox *Note: The top 5 key issues of concern of each stakeholder group come from the results of the stakeholder survey. Please refer to the materiality analysis on P55. CSR Communication Day On July 19, 2018, we held the CSR Communication Day event in our sales channels which, together with our General Manager Customer Reception Day, aimed to collect opinions and suggestions from our stakeholders regarding our corporate social responsibility practices. 4,763 self-owned sales channels participated in these events and organized a variety of activities with local characteristics. 1,921 China Mobile representatives, including general managers of branch companies and department directors of provincial subsidiaries, were present to communicate with 78,000 customers (person-times). Indicators 2016 2017 2018 CSR training participation (person-times) 353,958 471,669 447,006 Number of emails received in CEO Mailbox 1,033 1,279 1,315 Number of customer visits on Customer Day (person-times) 105,076 102,060 138,301 Number of complaints and inquiries handled on Customer Day 106,020 91,960 118,304 54


In 2018, based on the materiality analysis of the various sustainability issues, we evaluated the degree of impact being brought on stakeholders by economic, environmental and social issues, and China Mobile’s impact on these issues, and identified issues of high materiality to be highlighted in this report. Identification Evaluation Report Preparation International Standard Benchmarking HKEx ESG Reporting Guide GRI Standards UN SDGs UNGC Ten Principles Analysis of key sustainability issues and key industry issues Corporate strategy analysis Using online questionnaires, we carried out the key stakeholder survey with respect to the degree of impact of sustainability issues on stakeholders, collecting 3,302 valid questionnaires in total. With reference to industry practices, we teamed up internal and external experts to evaluate the impact of China Mobile’s operations on different sustainability issues. A materiality matrix was formed (see the figure below) to highlight issues to be prioritized in the report. Issues Pages Reporting scope Information security and privacy protection 13-17 Customers, government and regulators, community and environmental representatives Network quality 8-12 Customers, government and regulators, community and environmental representatives Service quality and customer rights protection 13-24 Customers, value chain partners, community and environmental representatives R&D and innovation 18-24, 36-42 Customers, government and regulators, value chain partners Corporate governance and risk management 36-42 Employees, shareholders and investors, government and regulators Human resources development 48-53 Employees, shareholders and investors Anti-corruption and compliance 39-42 Employees, government and regulators, shareholders and investors Financial performance and tax payment 39,42 Shareholders and investors, government and regulators Workplace health and safety 50-53 Employees, value chain partners Fair employment and non-discrimination 50-53 Employees, value chain partners Public welfare 25-34 Customers, community and environmental representatives Supply chain management 41-42 Value chain partners, community and environmental representatives Reducing carbon emissions 43-47 Customers, employees, government and regulators, value chain partners Reducing environmental resource use 43-47 Customers, employees, government and regulators, value chain partners Offshore compliance of corporate social responsibilities 9,39 Customers, value chain partners Stakeholder engagement 54-55 Customers, employees, shareholders and investors, government and regulators, value chain partners, community and environmental representatives Waste management 45-47 Customers, employees, value chain partners High Materiality Issues Moderate Materiality Issues Low Materiality Issues Information security and privacy protection Network quality Service quality and customer rights protection R&D and innovations Corporate governance and risk management Human resources development Anti-corruption and compliance Financial performance and tax payment Workplace health and safety Fair employment and non-discrimination Public welfare Supply chain management Reducing carbon emissions Reducing environmental resource use Offshore compliance of corporate social responsibilities Stakeholder engagement Waste management High The Degree of the Issue’s Impact on the Stakeholders The Degree of China Mobile’s Impact on the Issue High China Mobile Limited 2018 Sustainability Report Stakeholder Engagement and Materiality Analysis 55 17 16 15 14 13 12 11 10 9 7 8 6 7 5 4 1 2 3


Independent Assurance Report To the Board of China Mobile Limited: I. Scope of Our Engagement The 2018 Sustainability Report (the “Sustainability Report”) of China Mobile Limited (the “Company”) has been prepared by the Company. Management of the Company (the “Management”) is responsible for the collection and presentation of information within the GRI Standards issued by the Global Sustainability Standards Board (GSSB), and for maintaining adequate records and internal controls that are designed to support the sustainability reporting process. Our responsibility is to carry out limited assurance procedures in accordance with International Standard on Assurance Engagements 3000 (“ISAE3000”): “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” issued by the International Federation of Accountants and issue the assurance statement for the year ended 31 December 2018 in accordance with the Management’s instructions. Our work was limited to these stated above and our report is made solely to you, as a body, and for no other purpose. We do not therefore accept or assume any responsibility for any other purpose or to any other person or organization. Any reliance any such third party may place on the Sustainability Report is entirely as its own risk. II. Work Performed Our review has been planned and performed in accordance with ISAE3000. In order to form our conclusions, we carried out the following procedures: According to the Managements instructions, we performed limited assurance procedures in:China Mobile Limited Head Office China Mobile Liaoning Company Limited China Mobile Shaanxi Company Limited China Mobile Guangxi Company Limited We did not perform limited assurance procedures on other sites.The limited assurance procedures were performed over the following key performance indicators in the Sustainability Report for the year ended 31 December 2018:Economic indicators Number of first-level suppliers Number of second-level suppliers Percentage of first-level local suppliers Percentage of second-level local suppliers Number of assessments on first-level suppliers Number of administrative villages with broadband service launched in the “Telecommunications Universal Service Project” Number of Rural Information Service customers Number of sales channels in township-level areas Environmental indicators Total electricity consumption Natural gas consumption LPG consumption Coal gas consumption Coal consumption Gasoline consumption Diesel fuel consumption CO2 emissions Carbon emission from business travel Carbon emission from commute Number of video conferences usage at group level Ey 56


Social indicators Number of spam messages report handled Number of emergency support Number of emergency support vehicles deployed Number of emergency support equipment installed Number of person-times involved in emergency support Number of principals of rural primary and secondary schools trained newly added Number of assisted children in poverty who suffered from congenital heart disease newly added Number of person-times trained Percentage of female employees Ethnic minorities as a percentage of total employees Total number of newly hired employees Total number of resigned employees Total number of dismissed employees Number of Anti-Correuption Education programme organized Attendance of anti-corruption education and trainings The limited assurance procedures we carried out are following: Our scope of work did not include: Interviewing the Company’s management and staffs responsible for the selected key performance information; Performing analytical review procedures; Performing sample inspection on the selected key performance information; Performing recalculation procedures on the selected key performance information; Other procedures we considered necessary. III. Limitations of Our Scope Our scope of work did not include: Assessing the accuracy or fairness of information (including financial information) other than the selected key performance information. Reviewing the forward-looking statements made by the Management. Reviewing and consequently providing assurance on historical data. IV. Level of Assurance Our evidence gathering procedures have been designed to obtain a limited level of assurance (as set out in ISAE 3000) on which to base our conclusion. The procedures conducted do not provide all the evidence that would be required in a reasonable assurance engagement and accordingly, we do not express a reasonable assurance opinion or an audit opinion. While we considered the effectiveness of the Management’s internal controls when determining the nature and extent of our procedures, our review was not designed to provide assurance on internal controls.V. Our Conclusions Subject to the limitations of scope and based on the procedures specified above for this limited assurance engagement, we provided the following conclusions: Nothing has come to our attention that causes us to believe that the selected indicators were not presented fairly in all material respects in the 2018 Sustainability Report of China Mobile Limited.VI. Our Independence We are in compliance with the Ernst & Young Global Independence Policy which was designed to comply with the requirements of the IFAC Codes of Ethics for Professional Accountants (the IFAC Code). We believe that there were no events or prohibited services provided which could impair our independence. VII. Our Assurance Team Our assurance team has been drawn from our sustainability assurance service network, which undertakes similar engagements to this with a number of domestic or international businesses. Our assurance team has met the requirements of competence and work experience of this engagement .Ernst & Young Hua Ming LLP Beijing, PRC 26 March, 2019 emat & young hua ming up 57 China Mobile Limited 2018 Sustainability Report Independent Assurance Report


About this Report This report is the 13th Sustainability Report of China Mobile Limited. The report discloses relevant information about our economic, social, and environmental sustainability performance. Unless otherwise stated, the time span of this report is from 1 January 2018 to 31 December 2018. Reporting Form This report is published in both Chinese and English and presented in both printing and online edition. (Read and download the report at www.chinamobileltd.com) Reporting Standards The report has been prepared to comply with globally recognized benchmarks for disclosure of sustainability information while highlighting the industry background and China Mobile’s unique characteristics. The standards as key references used for developing this report include: Hong Kong Stock Exchange (HKEX) Environmental, Social and Governance Reporting Guide GRI Sustainability Reporting Standards by the Global Sustainability Standards Board (GSSB) United Nations 2030 Agenda for Sustainable Development Ten Principles of the United Nations Global Compact ISO Guideline on Social Responsibilities (ISO 26000) Chinese CSR Report Preparation Guide (CASS-CSR 4.0) issued by the Chinese Academy of Social Sciences China Mobile has complied with the “comply or explain” provisions set forth in the HKEx Environmental, Social and Governance Reporting Guide, and this report has been prepared in accordance with the core option of the GRI Standards. Reporting Content and Boundary In accordance with the principles of “stakeholder engagement, sustainability context, materiality, and completeness”, China Mobile determined materiality issues and their boundary through a materiality analysis (See P54-55 in this report for the process and result of materiality analysis.) Reporting Scope Unless otherwise stated, all the cases and data in this report were collected from China Mobile Limited and our subsidiaries (See Page 4 in this report for detailed information about our subsidiaries.)Data and Information Disclosure The main channels for the collection of data and information in 2018 Report include: Relevant data collection systems and statistical statements inside our company; Cases about corporate social responsibility practice submitted by provincial subsidiaries every quarter; China Mobile 2018 Best CSR Practices Selection; Questionnaires developed to collect qualitative and quantitative information based on the reporting framework. Currency Unless otherwise specified, all monetary figures shown in this report are expressed in RMB (yuan). Report Assurance In 2018, China Mobile hired Ernst & Young (special general partnership) to provide independent third-party assurance report (see P56-57). The Company’s 2018 Annual Report contains details regarding audited financial statements and other financial performance and operating performance for the year ended December 31, 2018 and can be downloaded from the Company’s website atwww.chinamobileltd.com. 58


102-1 102-2 102-3 102-4 102-5 102-6 102-7 102-8 102-9 102-10 102-11 102-12 102-13 4 4 4 4 4 4 4, 42, 53 52-53 41-42, 45 4, 41-42 13-16, 39-41 39, 55, 58 18-19, 37, 39 102-18 102-19 102-20 102-21 102-22 102-23 102-24 102-25 102-26 102-27 102-16 102-17 102-14 102-15 2-3 2-3 5-6 39-40 Annual Report 6 6 54-55 Annual Report Annual Report Annual Report Annual Report 5-6 5-6 No. Pages/Omissions ORGANIZATIONAL PROFILE STRATEGY ETHICS AND INTEGRITY GOVERNANCE 102-45 102-46 102-47 102-48 102-49 102-50 102-51 102-52 102-53 102-54 4 58 55 58 55 58 58 58 64 56-57 102-28 102-29 102-30 102-31 102-32 102-33 102-34 102-35 102-36 102-37 102-38 102-39 102-40 102-41 102-42 102-43 102-44 54 52 54-55 6, 54-55 54-55 We plan to establish such process in the future 54-55 We plan to establish such process in the future 5-6, 39 6 6, 54 6, 54-55 Annual Report Annual Report Annual Report Confidential Information Confidential Information STAKEHOLDER ENGAGEMENT REPORTING PRACTICE 103-1 103-2 103-3 Management Approach 201-1 201-2 201-3 201-4 Management Approach 202-1 202-2 203-1 203-2 204-1 205-1 205-2 205-3 41-42 42 39-40, 42 39-40 40, 42 40, 42 8-38, 42 8-38 8-38 48-52 50 52 39-40 34, 42 43-46 We participate in Social Insurance System in accordance with Chinese Law Annual Report 5-55 5-55 5-55 59-60 56-57 102-55 102-56 GRI 103: MANAGEMENT APPROACH GRI 201: ECONOMIC PERFORMANCE GRI 202: MARKET PRESENCE GRI 203: INDIRECT ECONOMIC IMPACTS GRI 204: PROCUREMENT PRACTICES GRI 205: ANTI-CORRUPTION No. Pages/Omissions No. Pages/Omissions Management Approach Management Approach Management Approach Report Disclosure Indexes GRI Sustainability Reporting Standards  China Mobile Limited 2018 Sustainability Report Report Disclosure Indexes 59


No. Pages/Omissions GRI 206: ANTI-COMPETITIVE BEHAVIOR Management  Approach 39 206-1 39 GRI 302: ENERGY Management  Approach 43-46 302-1 46-47 302-2 Currently we do not  have in place an external  energy statistic  system; we plan to  establish such a system  in the future 302-3 46-47 302-4 44, 46-47 302-5 44, 46-47 GRI 305: EMISSIONS Management Approach 43-46 305-1 46 305-2 46 305-3 46 305-4 46 305-5 46 305-6 ODS is not one of our  major emission substances 305-7 Our major emission substances do not include such emissions GRI 306: EFFLUENTS AND WASTE Management 43-46 306-1 47 306-2 45, 47 306-3 No significant spills occurred  during the year 306-4 306-5 45 44 GRI 307: ENVIRONMENTAL COMPLIANCE  Approach Management  Approach 43-46 307-1 43-46 No. Pages/Omissions GRI 308: SUPPLIER ENVIRONMENTAL  ASSESSMENT Management Approach 41, 45-46 308-1 45-46 308-2 41-42,42-46 GRI 401: EMPLOYMENT Management Approach 50-52 401-1 52-53 401-2 50-51 401-3 50,52 GRI 402: LABOR/MANAGEMENT  RELATIONS Management Approach 50-52 402-1 50-52 GRI 404: TRAINING AND EDUCATION Management Approach 48-50 404-1 53 404-2 48-49 404-3 48-50 GRI 405: DIVERSITY AND EQUAL  OPPORTUNITY Management Approach 50-52 405-1 52-53 405-2 50 GRI 406: NON-DISCRIMINATION Management Approach 50-52 406-1 50-52 GRI 407: FREEDOM OF ASSOCIATION  AND COLLECTIVE BARGAINING Management Approach 50,52 407-1 50,52 No. Pages/Omissions GRI 413: LOCAL COMMUNITIES Management Approach 25-34,41,45 413-1 25-34,41,45 413-2 41 GRI 414: SUPPLIER SOCIAL ASSESSMENT Management Approach 41-42 414-1 41-42 414-2 41-42 GRI 416: CUSTOMER HEALTH AND  SAFETY Management Approach 10-17, 32, 41, 45 416-2 15,17 GRI 417: MARKETING AND LABELING Management Approach 41 417-1 41 417-2 41 417-3 41 GRI 418: CUSTOMER PRIVACY Management Approach 13-17 418-1 13-14,17 GRI 419: SOCIOECONOMIC COMPLIANCE Management Approach 15-17, 39-42 419-1 15, 39-42 60


The UN Global Compact’s Ten Principles No. Index Pages Human Rights Principle 1 Businesses should support and respect the protection of internationally proclaimed human rights 13-17, 20, 25-34, 39, 41, 50, 53 Principle 2 Make sure that they are not complicit in human rights abuses 13-17, 20, 25-34, 39, 41, 50, 53 Labor Standards Principle 3 Business should uphold the freedom of association and the effective recognition of the right to collective bargaining 50, 52 Principle 4 The elimination of all forms of forced and compulsory labor 50 Principle 5 The effective abolition of child labor 50 Principle 6 The elimination of discrimination in respect of employment and occupation 50 Environment Principle 7 Business should support a precautionary approach to environmental challenges 43-46 Principle 8 Undertake initiatives to promote greater environmental responsibility 43-46 Principle 9 Encourage the development and diffusion of environmentally friendly technologies 43-44 Anti-Corruption Principle 10 Business should work against corruption in all its forms, including extortion and bribery 39-42 ISO 26000 Core Issues Index Pages Organizational Governance 4, 39 Human Rights 1. Due diligence 41 2. Human rights risk situations 13-17, 20, 25- 34, 39, 41, 50 3. Avoidance of complicity 39-40 4. Resolving grievances 40, 50 5. Discrimination and vulnerable groups 20, 25-34, 39, 50 6. Civil and political rights 13-17, 20, 25- 34, 39, 41, 50 7. Economic, social and cultural rights 8-9, 20, 25- 34, 48-49, 53 8. Fundamental principles and rights at work 48-52 Labor Practices 1. Employment and employment relationships 50, 52-53 2. Conditions of work and social protection 50-51 3. Social dialogue 50-51, 54 4. Health and safety at work 51-52 5. Human development and training in the workplace 48-50 The Environment 1. Prevention of pollution 43-46 2. Sustainable resource use 44-45 3. Climate change mitigation and adaptation 43-46 4. Protection of the environment, biodiversity and restoration of natural habitats 43-46 Core Issues Index Pages Fair Operating Practices 1. Anti-corruption 40 2. Responsible political involvement — 3. Fair competition 39 4. Promoting social responsibility in the value chain 41-42, 45-46 5. Respect for property rights 37 Consumer Issues 1. Fair marketing, factual and unbiased information and fair contractual practices 13-15, 41 2. Protecting consumers’ health and safety 10-11, 15-17, 32, 45 3. Sustainable consumption 44-45 4. Consumer service, support, and compliant and dispute resolution 13-17 5. Consumer data protection and privacy 13-17 6. Access to essential services 8-9, 15-17, 25 7. Education and awareness 21, 27, 31-34 Community Involvement and Development 1. Community involvement 25-34 2. Education and culture 25, 27, 31-32 3. Employment creation and skills development 25-27, 53 4. Technology development and access 21-22, 26-28, 32 5. Wealth and income creation 42 6. Health 28, 30 7. Social investment 25-34 China Mobile Limited 2018 Sustainability Report Report Disclosure Indexes 61


HKEx ESG Reporting Guide Subject Areas Indicators Pages A. Environmental A1: Emissions A1.1 The types of emissions and respective emissions data. 46-47 A1.2 Greenhouse gas emissions in total (in tonnes) and, where appropriate, intensity (e.g. per unit of production volume, per facility). 46-47 A1.3 Total hazardous waste produced (in tonnes) and, where appropriate, intensity (e.g. per unit of production volume, per facility). 47 A1.4 Total non-hazardous waste produced (in tonnes) and, where appropriate, intensity (e.g. per unit of production volume, per facility). 47 A1.5 Description of measures to mitigate emissions and results achieved. 43-47 A1.6 Description of how hazardous and non-hazardous wastes are handled, reduction initiatives and results achieved. 45, 47 A2: Use of Resources A2.1 Direct and/or indirect energy consumption by type (e.g. electricity, gas or oil) in total (kWh in ’000s) and intensity (e.g. per unit of production volume, per facility). 44, 46-47 A2.2 Water consumption in total and intensity (e.g. per unit of production volume, per facility). 47 A2.3 Description of energy use efficiency initiatives and results achieved. 43-47 A2.4 Description of whether there is any issue in sourcing water that is fit for purpose, water efficiency initiatives and results achieved. 44, 47 A2.5 Total packaging material used for finished products (in tonnes) and, if applicable, with reference to per unit produced. 45, 47 A3: The Environment and Natural Resources A3.1 Description of the significant impacts of activities on the environment and natural resources and the actions taken to manage them. 43-46 B. Social B1: Employment B1.1 Total workforce by gender, employment type, age group and geographical region. 52-53 B1.2 Employee turnover rate by gender, age group and geographical region. 53 B2: Health and Safety B2.1 Number and rate of work-related fatalities. 53 B2.2 Lost days due to work injury. Data not collected B2.3 Description of occupational health and safety measures adopted, how they are implemented and monitored 51-52 B3: Development and Training B3.1 The percentage of employees trained by gender and employee category (e.g. senior management, middle management). 53 B3.2 The average training hours completed per employee by gender and employee category. 53 B4: Labor Standards B4.1 Description of measures to review employment practices to avoid child and forced labour. 50 B4.2 Description of steps taken to eliminate such practices when discovered. 50 B5: Supply Chain Management B5.1 Number of suppliers by geographical region. 42 B5.2 Description of practices relating to engaging suppliers, number of suppliers where the practices are being implemented, how they are implemented and monitored. 41-42 B6: Product Responsibility B6.1 Percentage of total products sold or shipped subject to recalls for safety and health reasons. 41 B6.2 Number of products and service related complaints received and how they are dealt with. 13-14, 17 B6.3 Description of practices relating to observing and protecting intellectual property rights. 37, 42 B6.4 Description of quality assurance process and recall procedures. 41, 45 B6.5 Description of consumer data protection and privacy policies, how they are implemented and monitored. 15-17 B7: Anti-corruption B7.1 Number of concluded legal cases regarding corrupt practices brought against the issuer or its employees during the reporting period and the outcomes of the cases. 40, 42 B7.2 Description of preventive measures and whistle-blowing procedures, how they are implemented and monitored. 39-40 B8: Community Investment B8.1 Focus areas of contribution (e.g. education, environmental concerns, labour needs, health, culture, sport). 25-34 B8.2 Resources contributed (e.g. money or time) to the focus area. 25-34 62


UN Sustainable Development Goals SDGs Our Practices Pages Goal 1: No poverty Promoting work in partner assistance and targeted poverty alleviation, introducing poverty-alleviation preferential tariff policies, undertaking poverty alleviation support, education improvement, healthcare, and other areas, and rallying all possible social forces to participate in poverty alleviation donations to help impoverished households gradually get out of poverty and lead a decent life. 25-27,30-32 Goal 2: Zero hunger Providing information products and innovative solutions based on new technologies such as IoT, big data, and cloud computing to facilitate agricultural development, thereby helping farmers increase their production and income and boosting local economic development. 25-29 Goal 3: Good health and well-being Providing free screening and treatment for impoverished children diagnosed with congenital heart disease, accelerating the deployment and upgrading of hospital information system in impoverished regions to realize the interconnection of medical resources; offering medical check-ups to all employees and promoting their physical and mental well-being by organizing activities such as the Employee Assistance Program (EAP) and Happiness 1+1. 30, 50-52 Goal 4: Quality education Conducting the Blue Dream Educational Aid Plan to provide training for rural primary and secondary school principals in central and western China, donating teaching facilities to primary and secondary schools in impoverished regions; encouraging employee volunteers to participate in poverty alleviation education assistance activities, and improving school education in impoverished regions by offering access to a richer selection of education and teaching resources. 30-32, 48-49 Goal 5: Gender equality Providing employees with equal employment and training opportunities and a fair work environment; strengthening “four-period” rights protection for female employees and offering them educational lectures on legal rights protection. 48-51 Goal 6: Clean water and sanitation Advocating water conservation and the recycling and reuse of rainwater and reclaimed water to reduce water use; all wastewater produced from company operations over the year was discharged into the sewage network, and there was no incident of significant impact due to water withdrawal within the Company. 44 Goal 7: Affordable and clean energy Continuously increasing the proportion of new energy use, piloting the zero-emissions “renewable energy vehicles”, advocating whole-lifecycle energy conservation and emission reduction in supply chain, and contributing to enhancing industry-wide green operations. 44-46 Goal 8: Decent work and economic growth Providing employees with a robust platform for career advancement and a well-designed vocational training system; encouraging employee engagement in mass entrepreneurship and innovation activities, and fostering innovative talents; creating an openness and cooperation platform for partner businesses, and supporting the development of SMEs by providing information solutions and premium services. 18-20, 48-50 Goal 9: Industry, innovation and infrastructure Implementing the Telecommunication Universal Service Project to advance network infrastructure construction and information-driven development in rural areas; intensifying 5G technology R&D and comprehensively enhancing the construction of new types of infrastructure to boost the digital transformation and upgrading of industries. 8-9, 19-25,32, 36-38 Goal 10: Reduced inequalities Continuously expanding 4G coverage in administrative villages and minimizing urban-rural digital divide; pushing society forward with the Company’s own development and sharing the development achievements with all stakeholders. 25-29, 48-52 Goal 11: Sustainable cities and communities Developing and promoting information applications to contribute to an intelligent urban life, and serving national strategies for regional development; continuously expanding the application scenarios for 5G technologies to facilitate intelligent city management and deliver a more intelligent user experience. 8-11, 21-23, 30-33, 36-38 Goal 12: Responsible consumption and production Strengthening customer privacy protection and preventing telecommunications frauds to ensure secure consumption; continuing to optimize the product and service quality evaluation system to improve customer satisfaction; carrying out the Green Box Environmental Protection Campaign to recycle electronic waste such as scrap mobile phones and mobile phone accessories so as to reduce environmental footprint. 13-17, 41-46 Goal 13: Climate action Conducting the Green Action Plan, and gradually improving the Environmental Management System to oversee all the environmental impacts of the Company; reinforcing R&D of energy conservation technologies and low-carbon applications, and hosting environmental protection awareness campaigns to drive energy conservation and emission reduction in the wider society. 43-47 Goal 14: Life below water No relevant practice. — Goal 15: Life on land Assessing local biodiversity before building a base station and taking measures to protect the local natural environment; no species was found significantly impacted by the Company’s operations. 39, 44-45 Goal 16: Peace, justice and strong institutions Promoting the Compliance Escort Plan, solidifying compliance management on all fronts, and gradually improving the four-in-one anti-corruption work system of “education, prevention and control, punishment, and accountability”.39-40 Goal 17: Partnerships for the goals Actively participating in international initiatives and actions for sustainable development and propelling the sound and sustainable development of industry ecosystem in collaboration with international telecom operators and relevant industry players. 18-19,30-32, 37 63 Report Disclosure Indexes China Mobile Limited 2018 Sustainability Report


Feedback Dear readers, Thank you very much for taking the time to read China Mobile’s “2018 Sustainability Report”. In order to constantly improve the sustainability performance of China Mobile and the quality of our reporting, we shall very much appreciate your comments and suggestions. China Mobile Report Team March, 2019 Please rate the report on a scale of 1 to 5 (1 being the lowest and 5 being the highest) about the following aspects. 1. Your overall opinion on China Mobile Sustainability Report 2. Your opinion on whether this report reflects significant economic,social and environmental impacts of China Mobile 3. Your overall opinion on our communication with stakeholders 4. Your overall opinion on information disclosure in this report 5. Your overall opinion on the format and design of this report You are welcome to give more opinions and suggestions: Contact Information:Name:Company:Telephone:E-mail: You may send an email to China Mobile 2018 Sustainability Report Team at CR@chinamobile.com or fax the form to +86-10-52616167. We will take your comments seriously and promise not to disclose your information to any unauthorized third party. Scan the QR code to send your feedback.


With Perfect sincerity and integrity, we will strive to fulfill our triple-sided responsibilities: our economic responsibility; our social responsibility and  our environmental responsibility China Mobile Limited Registered Address: 60/F, The Centre, 99 Queen’s Road Central, Hong Kong Website for Report Download:www.chinamobileltd.com All copyrights reserved. No reproduction by any means is allowed without acknowledgement.

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Webplus: CHL/20190412/6-K/1/000.htm SEC Original: chl-6k_20190412.htm
Number 99.1 2018 Annual Report, dated April 11, 2019 99.2 2018 Sustainability Report, dated April 11, 2019 • our business objectives and strategies, including those relating to the development of our terminal procurement and distribution business; • our operations and prospects; • our network expansion and capital expenditure plans; • the expected impact of any acquisitions or other strategic transactions;



s:9043:" 6-K 1 chl-6k_20190412.htm 6-K


EXHIBITS

FORWARD-LOOKING STATEMENTS

This announcement contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are, by their nature, subject to significant risks and uncertainties. These forward-looking statements include, without limitation, statements relating to:

our business objectives and strategies, including those relating to the development of our terminal procurement and distribution business;

our operations and prospects;

our network expansion and capital expenditure plans;

the expected impact of any acquisitions or other strategic transactions;

our provision of services, including fourth generation, or 4G, services, wireline broadband services and services based on technological evolution, and the ability to attract customers to these services;

the planned development of future generations of mobile technologies, including 5G technologies, and other technologies and related applications;

the anticipated evolution of the industry chain of 5G and future generations of mobile technologies, including future development in, and availability of, terminals that support our provision of services based on 5G and future generations of mobile technologies, and testing and commercialization of future generations of mobile technologies;

the expected benefit from our investment in and any arrangements with China Tower Corporation Limited;

the expected impact of the implementation in Mainland China of the policy of “speed upgrade and tariff reduction” and the cancellation of roaming tariffs on our business, financial condition and results of operations;

the expected impact of tariff changes on our business, financial condition and results of operations;

the expected impact of supply chain disruption as a result of import and export controls and additional trade restrictions as well as any alleged violation of sanction laws by our suppliers on our business, financial condition and results of operations;

the expected impact of new service offerings on our business, financial condition and results of operations; and

future developments in the telecommunications industry in Mainland China, including changes in the regulatory and competitive landscape.

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The words “aim”, “anticipate”, “believe”, “could”, “endeavor”, “estimate”, “expect”, “intend”, “may”, “plan”, “seek”, “should”, “strive”, “target”, “will” and similar expressions, as they relate tous, are intended to identify certain of these forward-looking statements.We do not intend to update these forward-looking statements and are under no obligation to do so.

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results may differ materially from information contained in the forward-looking statements as a result of a number of factors, including the risk factors set forth in the “Risk Factor” section of our latest Annual Report on Form 20-F, as filed with the U.S. Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHINA MOBILE LIMITED

Date:

April 12, 2019

By:

/s/ Li Yue

Name:

Li Yue

Title:

Executive Director and Chief Executive Officer

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Company Info:

Ticker: CHL, Company: CHINA MOBILE LTD /ADR/, Type: 6-K, Date: 2019-04-12CIK: 0001117795, Location: F4, SIC: 4813, SIC Desc: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE)
Business Phone & Address:
60TH FLOOR THE CENTER 99 QUEENS ROAD CEN
HONG KONG

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