China Mobile Ltd. – Navigating a New Tax Regime and Expanding Global Reach
China Mobile Ltd. (00941.HK) has recently faced a significant regulatory change that will reshape its tax landscape and, by extension, its earnings profile. On 1 February 2026, the company announced that the Chinese Ministry of Finance and the State Administration of Taxation had issued an ordinance effective 1 January 2026, shifting the value‑added tax (VAT) category for services delivered through fixed‑line, mobile, satellite, and internet platforms—from value‑added telecommunications services to basic telecommunications services. The corresponding VAT rate has risen from 6 % to 9 %. This adjustment applies to key revenue streams such as mobile data, SMS and MMS, and broadband internet access, all of which form the backbone of China Mobile’s consumer and corporate portfolios. Management has emphasized its commitment to core operations and its intent to strengthen communication services, computing power, and intelligent solutions while pushing network infrastructure, stack innovation, and lean management practices. The company’s stated focus on “building a strong network foundation” and “deepening precise management to enhance quality and efficiency” signals a proactive stance toward mitigating the fiscal impact of the new rate.
Global SDR Listing – A Strategic Expansion
On 30 January 2026, the Singapore Exchange announced that China Mobile would join two other Hong Kong‑listed peers—Zijin Gold and Horizon Robotics—as part of a new Singapore Depository Receipt (SDR) offering effective 2 February. The SDRs allow investors to trade the shares in Singapore dollars, lowering the minimum investment threshold to under SGD 400, compared with the HK 7,000 minimum on the Hong Kong market. This move expands China Mobile’s investor base, enhances liquidity, and taps into the robust retail demand for technology and AI‑related equities, which the Singapore Exchange notes has been strong in 2025.
Market Sentiment and Capital Flows
China Mobile’s stock closed at HK 79.80 on 29 January, well below its 52‑week high of HK 112.56 but above its low of HK 74.55. The market cap sits at approximately HK 1.75 trillion, with a P/E ratio of 11.45—indicative of solid earnings potential relative to peers.
Capital flow data from 30 January shows a net outflow of HK 6.46 billion from China Mobile via the Hong Kong‑Shanghai‑Shenzhen stock‑link program, contrasting with inflows into Tencent and Xiaomi. Despite this short‑term selling pressure, the broader communication sector attracted HK 58.41 billion in net inflows that day, driven by sectoral growth expectations and favorable regulatory sentiment.
Infrastructure and AI‑Driven Demand
China Mobile’s strategic focus on AI and digital infrastructure dovetails with broader industry trends. Recent reports indicate a surge in demand for optical fiber and cable in AI data centers, both domestically and abroad. China Mobile’s 2025/2026 procurement of optical cable at a weighted average price of HK 53.85 per core‑kilometer—down 26.2 % from the previous cycle—demonstrates a cost‑effective approach to meeting bandwidth demands. While domestic AI data center construction has not yet markedly influenced fiber prices, overseas projects (e.g., Meta’s 2030 commitment to Corning) suggest an upward trajectory for specialized fiber, which could enhance China Mobile’s high‑capacity offerings.
Forward View
The VAT rate increase introduces a higher cost burden on China Mobile’s core service revenue, potentially compressing margins. However, the company’s disciplined approach to network expansion, emphasis on AI‑enabled services, and recent procurement efficiencies provide a buffer. The SDR listing is poised to diversify the shareholder base and improve liquidity, while the sector’s capital inflows hint at investor confidence in China Mobile’s long‑term growth strategy.
In sum, China Mobile is navigating a complex regulatory environment, capitalizing on global market access, and positioning itself at the nexus of telecommunications and AI infrastructure. Its disciplined cost management, coupled with a forward‑leaning investment in high‑bandwidth capabilities, suggests resilience and a clear trajectory toward sustained value creation.
