Form 6-K CHINA MOBILE LTD /ADR/ For: Apr 16

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the Month of April 2020

Commission File Number: 1-14696

 

China Mobile Limited

(Translation of registrant’s name into English)

 

60/F, The Center

99 Queen’s Road Central

Hong Kong, China

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.:

 

 

Indicate by check mark if the registrant is submitting the Form 6-K on paper as permitted by Regulation S-T Rule 101(b)(1):            

 

Indicate by check mark if the registrant is submitting the Form 6-K on paper as permitted by Regulation S-T Rule 101(b)(7):            

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-           .

 

 

 

 

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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:

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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 to us, 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.

 

 

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Exhibit 1.1

 

 

China Mobile Limited   Stock Code: 941   ANNUAL REPORT 2019    EDGE  AI  IoT   CLOUD   BIG DATA    ...... Inf inite Future

 

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THEME   China Mobile put in an all-out effort to drive the “5G+” plan  forward in 2019, pursuing every possible avenue to promote  5G+4G coordinated development, foster 5G+AICDE integrated  and joint innovations, cultivate collaborative 5G+Eco ecology  and encourage the wider use of 5G+X applications. Central to  the “5G+” plan is our overarching mission to inspire the world  with brand-new experiences: from providing a fresh impetus  to economic growth and creating new opportunities for social  development, to offering an unprecedented digital lifestyle and  building new business models driven by cooperation. We are  confident what lay ahead of our exciting 5G journey are infinite  possibilities and enchantments, plus a marvellous future.   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.

 

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02 04  05 06  6244  70  78  80  152  61  14  Chairman’s  Statement  Contents  Milestones Financial  Highlights  Biographies of Directors  and Senior Management  Company  Profile  28  Business Review  36  Financial Review  Notice of the Annual  General Meeting  Consolidated Balance  Sheet  Consolidated Statement of  Comprehensive Income  24  Corporate  Recognitions  Corporate  Governance  Report  73 Independent  Auditor’s Report  Report of  Directors  Human  Resources  Development  Corporate  Information  149 Financial Summary  85 Notes to the Consolidated  Financial Statements  83 Consolidated Statement  of Cash Flows  82 Consolidated Statement  of Changes in Equity  14  Chairman’s  Statement  Contents  Milestones Financial  Highlights  Biographies of Directors  and Senior Management  Company  Profile  28  Business Review  36  Financial Review  Notice of the Annual  General Meeting  Consolidated Balance  Sheet  Consolidated Statement of  Comprehensive Income  24  Corporate  Recognitions  Corporate  Governance  Report  73 Independent  Auditor’s Report  Report of  Directors  Human  Resources  Development  Corporate  Information  149 Financial Summary  85 Notes to the Consolidated  Financial Statements  83 Consolidated Statement  of Cash Flows  82 Consolidated Statement  of Changes in Equity

 

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China Mobile Limited02 02  Milestones   MARCH 2019   • Supported a medical institution in  Beijing to perform China’s first- ever 5G-based remote surgery  on a human;  FEBRUARY 2019 JUNE 2019 AUGUST 2019  • Joined hands with China Media • Obtained the 5G operating permit • China Mobile made a statement  Group to debut the Chinese New and announced the “5G+” plan; on its overall development plan  Year Gala live using “5G+4K” which aims for becoming a  technologies; world-class enterprise by building   a dynamic “Powerhouse”;

 

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Annual Report 2019 03Milestones 03Milestones  AUGUST 2019  • Unveiled the first self-branded  5G handset, “Pioneer X1”;  OCTOBER 2019 NOVEMBER 2019 DECEMBER 2019   • Officially released 5G commercial • Fully implemented “Mobile Number • China Mobile was granted the  packages and launched 5G Portability”; accolade of “Top Ten Model  services in 50 cities in China; Brands of the Year” at the  “2019 China Brand Power Grand  Ceremony” held by China Media  Group.

 

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China Mobile Limited04 04  Financial Highlights   Operating Revenue EBITDA   (RMB million)  (RMB million)    2018 2019 2018 2019  736,819 745,917 275,541 295,967   Profit Attributable to Equity Shareholders Basic Earnings per share   (RMB million) (RMB)    2018 2019 2018 2019  117,781 106,641 5.75 5.21   2019 2018   Operating revenue (RMB million) 745,917 736,819  Of which: Revenue from telecommunications services (RMB million) 674,392 670,907  EBITDA1 (RMB million) 295,967 275,541  EBITDA margin2 39.7% 37.4%  EBITDA as % of revenue from telecommunications services 43.9% 41.1%  Profit attributable to equity shareholders (RMB million) 106,641 117,781  Margin of profit attributable to equity shareholders3 14.3% 16.0%  Basic earnings per share (RMB) 5.21 5.75  Dividend per share – Interim (HK$) 1.527 1.826  – Final (HK$) 1.723 1.391  – Full year (HK$) 3.250 3.217   1 EBITDA = profit from operations + depreciation and amortization  2 EBITDA margin = EBITDA/operating revenue  3 Margin of profit attributable to equity shareholders = profit attributable to equity shareholders/operating revenue  4 The Company has adopted the new accounting standard on leases (IFRS/HKFRS 16) with effect from 1 January 2019

 

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Annual Report 2019 05 05  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 2019, the  Group had a total of 456,239 employees, and a total of  950 million mobile customers and 187 million wireline  broadband customers, with its annual revenue totalling  RMB745.9 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 2019, 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 2019, the Company was once again selected as one  of The Global 2,000 World’s Largest Public Companies  by Forbes magazine and Fortune Global 500 by Fortune  magazine. The China Mobile brand was once again  listed in BrandZTM Top 100 Most Valuable Global Brands  of 2019 by Millward Brown ranking 27. 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.   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 • China Mobile (Hangzhou) Information Technology  Co., Ltd. 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.

 

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06 06  Biographies of Directors and   Senior Management   EXECUTIVE DIRECTORS    Mr. YANG Jie   Age 57, Executive Director and Chairman of the  Company, joined the Board of Directors of the Company  in March 2019, in charge of the overall management  of the Company. 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 China Telecommunications  Corporation, vice president, 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. WANG Yuhang   Age 58, Executive Director of the Company, joined the  Board of Directors of the Company in October 2019,  principally in charge of human resources and inspection  matters. He is also a Director of CMCC and CMC. Mr.  Wang formerly served as a deputy general manager  of Development Department, general manager of  Supervision Department, deputy director of Supervision  and Inspection Office, the chief director of Legal Center,  general manager of Human Resources Department and  executive vice president of China Ocean Shipping (Group)  Company; a vice president of COSCO Americas Inc.;  the general manager of COSCO Shipbuilding Industry  Company; the general manager of COSCO Shipyard  Group Co., Ltd. as well as the executive vice president  of China COSCO SHIPPING Corporation Limited.  Over the past three years, Mr. Wang had served as  a non-executive director and vice chairman of China  International Marine Containers (Group) Co., Ltd. (listed  in Hong Kong and Shenzhen), a non-independent and  non-executive director and the chairman of COSCO  SHIPPING International (Singapore) Co., Ltd. (listed  in Singapore), a non-executive director of COSCO  SHIPPING Holdings Co., Ltd. (listed in Hong Kong and  Shanghai), and an executive director and the chairman  of COSCO SHIPPING International (Hong Kong) Co.,  Ltd. (listed in Hong Kong). Mr. Wang graduated from  Dalian Maritime College in 1983 with a major in marine  engineering management. He is a senior engineer with  many years of experience in the shipping industry and in  human resources and corporate management.

 

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07Biographies of Directors and Senior Management 07Biographies of Directors and Senior Management  Mr. DONG Xin   Age 53, Executive Director, Vice President and Chief  Financial Officer of the Company, joined the Board of  Directors of the Company in March 2017, principally in  charge of corporate affairs, planning and construction,  finance, internal audit and investor relations of the  Company. 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”, listed in Hong Kong). 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  DIRECTOR    Dr. Moses CHENG Mo Chi, GBM, GBS, OBE, JP   Age 70, 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,   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  a non-executive director of Kader Holdings Company  Limited and an independent non-executive director of  ARA Asset Management Limited, a company formerly  listed in Singapore.

 

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08 Biographies of Directors and Senior Management 08 Biographies of Directors and Senior Management  Mr. Paul CHOW Man Yiu, GBS, SBS, JP   Age 73, 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,  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 and an independent non-executive director of  CITIC Limited from March 2016 to June 2019. Mr.  Chow currently serves as an independent non-executive  director of Julius Baer Group Ltd. and Bank Julius Baer  & Co. Ltd.   Mr. Stephen YIU Kin Wah   Age 59, 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.

 

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09Biographies of Directors and Senior Management 09Biographies of Directors and Senior Management  SENIOR MANAGEMENT    Dr. YANG Qiang   Aged 58, 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.   Mr. LI Huidi   Age 51, Vice President of the Company, appointed  in September 2019, principally in charge of network,  international information harbor, information security,  procurement, terminals and others. He is also a Vice  President of CMCC and a Director and Vice President  of CMC. Previously he served as a research fellow  in Lucent Technologies – Bell Labs Innovations, a  vice president of UTStarcom Inc., a vice president  and general manager of New Mobile Technology and  High-end Products Division of Lenovo Group Limited,  chief technology officer and chairman of Technology  Innovation Committee of Lenovo Mobile Communication  Technology Co., Ltd. Mr. Li graduated in 1990 with a  Bachelor of Electronic Engineering from Harbin Institute  of Technology, and received a master’s degree in Mobile  Communications from Polytechnic Institute of New York  University and a doctoral degree in management from  Hong Kong Polytechnic University.

 

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10 Biographies of Directors and Senior Management 10 Biographies of Directors and Senior Management  Mr. GAO Tongqing   Age 56, Vice President of the Company, appointed  in February 2020, principally in charge of legal and  regulatory matters, technology R&D, international  business, investment and others. He is also a Vice  President of CMCC, a Director and Vice President of  CMC. Mr. Gao previously served as a deputy director  general of Xinjiang Uygur Autonomous Region Posts  and Telecommunications Administration, deputy  general manager and general manager of Xinjiang  Uygur Autonomous Region Telecom Company, general  manager of China Telecom Jiangsu branch, vice  president of China Telecommunications Corporation, and  executive director and executive vice president of China  Telecom Corporation Limited. He graduated from the  Changchun Institute of Posts and Telecommunications  with a major in telecommunications engineering and  received a doctorate degree in business administration  from the Hong Kong Polytechnic University.   Mr. JIAN Qin   Age 54, Vice President of the Company, appointed in  September 2019, principally in charge of marketing,  customer service, information and technology, mobile  Internet, financial technology and others. He is also a Vice  President of CMCC, a Director and Vice President of CMC  and a Director of Phoenix Media Investment (Holdings)  Limited. Previously he served as a deputy director of the  Nanchang Telecom Bureau, chairman and president of  Jiangxi Mobile, Sichuan Mobile and Guangdong Mobile.  Mr. Jian graduated in 1989 from Beijing University of  Posts and Telecommunications majoring in Computer  and Communication, and received a doctoral degree in  Industrial Economics from Jiangxi University of Finance  and Economics.

 

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11Biographies of Directors and Senior Management 11Biographies of Directors and Senior Management  Mr. ZHAO Dachun   Age 49, Vice President of the Company, appointed  in September 2019, principally in charge of corporate  customers, software technology R&D, IoT and other  matters. He is also a Vice President of CMCC and a  Director and Vice President of CMC. Previously he  served as the chairman and president of Shaanxi Mobile  and Sichuan Mobile. Mr. Zhao graduated in 1993 from  Southeast University majoring in Radio Technology and  received an EMBA from Nanjing University.

 

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+ 4G  Coordinated Development  + 4G  Coordinated Development

 

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4g 100m 48mph

 

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14 14  Chairman’s Statement   As we speak, the development of the global digital economy has  entered a new phase, driven by cross-sector integration, systematic  innovation and increasing digitisation. A new generation of  information technology, with the emergence of 5G at the forefront, is  triggering faster and more frequent technological breakthroughs and  industry revolutions that are systematic, sweeping and extensive.  Riding the wave of 5G development and after thoroughly assessing  external factors and trends, we have accelerated “gear-changes”  in three areas. In terms of business development, we extended  our solutions beyond telecommunications to information services;  our market focus has shifted from the mobile market to the more  encompassing CHBN “four growth engines”, comprising the  “customer”, “home”, “business” and “new” markets; and finally, our  development model has transformed from being resource-driven  to innovation-driven, which we believe is essential for any company  seeking to grow further.  Good strategists win in the market; long-term strategic planning  ensures sustainable prosperity. With the development of 5G, the future  presents infinite possibilities. China Mobile will follow the industry  development trends and serve as a major force in the development  of China as a “Cyberpower”, digital nation and smart society. Working  towards our goal of becoming a world–class enterprise by building  a dynamic “Powerhouse”, we will further implement the “5G+” plans,  connecting all industries and servicing mass demand. By doing so, we  aim to create more value for our investors in the 5G era.

 

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15Chairman’s Statement 15Chairman’s Statement

 

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China Mobile Limited16 Chairman’s Statement 16 Chairman’s Statement  Dear Shareholders,   We were faced with a challenging and complicated  operating environment in 2019 where the upside of data  traffic was rapidly diminishing and competition within  the telecommunications industry and from cross-sector  players was becoming ever more intense. Coupled  with this was the impact of government policies,  including the continued implementation of the “speed  upgrade and tariff reduction”. Against this backdrop,  all of us at China Mobile joined together to overcome  these hurdles and work towards our ultimate goal of  becoming a world-class enterprise by building a dynamic  “Powerhouse”. This was centred on the key strategy of  high-quality development, supported by a value-driven  operating system that leverages our advantages of scale  to drive further convergence, integration and digitization  across the board. We structured our organization to  enable effective and synergetic capability building and  collaborative growth, while nurturing internal vitality. In  addition, we further implemented our “5G+” plan to  spearhead the development of “four growth engines”,  comprising the “customer”, “home”, “business” and  “new” markets. These measures have helped us obtain  positive momentum in overall operating results, which  was a hard-earned achievement for us in a tough year.   OPERATING RESULTS   China Mobile recorded operating revenue of RMB745.9  billion for the 2019 financial year, up by 1.2% compared  to last year. Of this, telecommunications services  revenue amounted to RMB674.4 billion, or growth of  0.5% year-on-year. EBITDA was RMB296.0 billion, up  by 7.4% from last year. EBITDA margin was 39.7%,  up by 2.3 percentage points compared to the previous  year. Measures to boost revenue, reduce costs and  enhance the quality and efficiency of operations have  helped us maintain leading profitability levels among  top-tier global telecommunications operators. Profit  attributable to equity shareholders reached RMB106.6  billion or RMB5.21 per share, down by 9.5% year-onyear.  Our capital expenditure was RMB165.9 billion and  we maintained our free cash flow at a healthy level,  amounting to RMB81.7 billion.   The Board recommends a final dividend payment of  HK$1.723 per share for the year ended 31 December  2019. Together with the interim dividend payment of  HK$1.527 per share, the total dividend payment for the  2019 financial year amounted to HK$3.250 per share.   The Company attaches great importance to shareholder  returns, and will maintain a stable dividend per share for  the full year of 2020, after giving overall consideration to  its profitability and cash flow generation.   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.   FORGED COORDINATED  DEVELOPMENT OF CHBN  “FOUR GROWTH ENGINES”   In view of changes in the market landscape, we  transformed and upgraded our services beyond  telecommunications to the broader space of information  services, and kicked off at full speed the coordinated  development of our CHBN “four growth engines” – the  “customer”, “home”, “business” and “new” markets.  These strategic shifts have further enhanced our  revenue structure, infusing new growth momentum into  our business.   Considering the rapid growth in data traffic demand  and squeezed data value in the “customer” market,  we responded by further converging data access,  applications and customer benefits in our operations.  As a result, we gained solid growth in customers and  further strengthened our revenue base. With a net  addition of 25.21 million, the total number of mobile  customers reached 950 million in 2019. Handset data  traffic increased by 90.3% year-on-year and DOU (the  average handset data traffic per user per month) was   6.7 GB. We also managed to achieve an industry- leading mobile ARPU (average revenue per user per  month) of RMB49.1. We continued to upgrade our  products, including “GoTone”, and optimize our service  management mechanism. Customer satisfaction was  further enhanced.

 

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Annual Report 2019 17Chairman’s Statement 17Chairman’s Statement  With regard to the “home” market, we focused our  efforts on scale expansion, brand building, ecology  cultivation and value lifting, while delivering better one- stop marketing, installation, maintenance and customer  services. We further promoted smart family operations  and as a result, this business was able to deliver strong  growth. The number of household broadband customers  increased by 17.1% year-on-year and reached 172  million. Among them, our digital set-top box “Mobaihe”  registered a total of 122 million customers, representing  a penetration rate of 70.9%. Meanwhile, household  broadband blended ARPU reached RMB35.3.   The “business” market was our new growth engine  and we strove to nurture new growth points by  fully leveraging our cloud and network convergence  advantages, building on our DICT (data, information and  communications technology) infrastructure comprising  IDC, ICT, Mobile Cloud, big data and other corporate  applications and information services. Buoyed by our  active promotion of our “Network + Cloud + DICT”  smart services, customers and revenue recorded  rapid growth. As of the end of 2019, the number of   our corporate customers increased to 10.28 million,  representing year-on-year growth of 43.2%. Focusing  on key sectors such as industry, agriculture, education,  public administration, healthcare, transportation and  finance, we deepened go-to-market resources to  promote DICT solutions that cater to sector-specific  scenarios. This strategy has boosted DICT revenue  to RMB26.1 billion, or growth of 48.3% year-on-year,  contributing a larger portion of our overall revenue.   In the “new” market, we continued to grow four new  areas – international business, equity investment,  digital content and FinTech. Our increased efforts have  generated initial results. In 2019, our international  business gained traction with year-on-year revenue  growth of 31.4%. Centring on the principles of value  contribution, ecosystem formation and investment- derived sector synergy, we have increased efforts to  pursue equity investment, and income from equity  investment contributed 11.9% to our net profit. Monthly  active users for “MIGU Video” and the core functions of  “and-Wallet” increased by 46.4% and 58.9% year-onyear  respectively.

 

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China Mobile Limited18 Chairman’s Statement 18 Chairman’s Statement  PROMOTED CONVERGENCE,  INTEGRATION AND DIGITIZATION,  BUSINESS TRANSFORMATION AND  UPGRADE SHOWED EARLY SIGNS OF  SUCCESS   Leveraging our advantages of scale, we began to  establish a value-driven operating system focusing on  the three elements of convergence, integration and  digitization. We have seen positive initial results from  this transformative development and upgrade.   We expanded our market presence through the  convergence strategy. We launched more marketing and  sales initiatives under this strategy based on customer’s  profiles and consumption behaviours (such as their level  of loyalty, benefits and devices) to push products that  are tailored to customers’ individual content and traffic  demands. As a result, our full business bundling rate rose  by 33 percentage points year-on-year to reach 82.7%.  In the meantime, we accelerated “cloud reforms” by  optimizing our cloud resources and diversifying our  cloud network, cloud-based designated line and cloud  database offerings to build out our network-wide “Mobile  Cloud”. Full-year revenue generated from the Mobile  Cloud businesses increased by 59.3% year-on-year.   We created value through integration. By accelerating  channel integration and unleashing synergies from  online and offline, as well as business-to-business and  business-to-customer integration, the share of traditional  channel commission reduced by 11 percentage points  while online channel contribution to overall business  transactions reached 58.8%. Through the “Safeguard”  campaign, we gained 23.56 million high-value customers.  We also actively established a shared IT (information  technology) platform for all operating functions and  compatible capabilities. Across the network, 220,000  of our devices have run on the IT cloud platform and  our centralized big data platform has stored effectively  all data from our business, operation and management  support systems, releasing higher value through further  sharing.   We enhanced efficiency through digitization. We  continued to build up our smart mid-end platform and  promote the applications of various technologies such  as AI (artificial intelligence) and big data in order to  strengthen the provision of smart services for various  business areas, including network, markets, services,  security and management. In 2019, we made significant  progress in the development of NFV (Network Function  Virtualization) and fully implemented the SDN (Software  Defined Networking) technology, allowing one- stop subscription to our designated international and  corporate transmission network with flexible bandwidth.  Basic operating functions of our business in 31 provinces  were centralized on one single platform, significantly  enhancing efficiency in coordinating touch points,  evaluation and precise marketing. We upgraded our  customer service system with proprietary technology  and persistently strengthened smart customer service  capabilities. Our proprietary Jiutian AI Platform and AI  R&D (research and development) cloud have led to the  wider use of various AI applications, which have helped  us reduce cost and increase efficiency.   BOOSTED CAPABILITY,  COLLABORATION AND VITALITY AND  ACHIEVED BREAKTHROUGHS IN  REFORM AND INNOVATION   Capability, collaboration and organizational vitality formed  a strong foundation for us to forge full-blown reforms and  innovations. In this aspect, we have sped up progress in  establishing a synergetic and efficient operating system  across the organization.   We further optimized our operating system to support  market, corporate business and network operations,  and proceeded with a number of reforms including  cloudification of corporate services, development of smart  home business, construction of smart mid-end platforms  and acceleration of business internationalization. We  adjusted our organizational structure and streamlined  operating mechanisms to enhance efficiency and motivate  our employees. Our structure fully equipped headquarters  to command, the regions to compete and the specialized  businesses to provide supporting services, creating strong  synergetic dynamics and ensuring an organizational and  operating structure that adapts to the strategic needs of  the Company.

 

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Annual Report 2019 19Chairman’s Statement 19Chairman’s Statement  Elsewhere, our network capability continued to grow.  Forging the well-coordinated development of 4G and  5G, our 3.09 million 4G base stations served to support  traffic growth. We have commenced building the GB  broadband network, and prioritized completing the OLT  (Optical Line Terminal) facility upgrade for urban areas  and high-value zones, equipping around 80% of the  facilities in urban areas with the capabilities for the rapid  expansion of GB broadband business. We proactively  migrated our IT system, business platform and core  network elements to the cloud while the gradual  centralization of mobile could resources also helped  us formulate comprehensive plans to enhance our  cloud service capability. We have added the 25.9 Tbps  bandwidth option for our international and corporate  designated transmission network while boosting  our network capabilities, supported by international  submarine cables, cross-border terrestrial cables and  PoPs (points of presence).   We strengthened open collaboration. We established  or deepened strategic partnerships with 12 local  governments and 31 large enterprises and public  organizations covering areas such as 5G and other digital  services innovation. These complementary collaborations  combined the strengths and resources of these partners  to drive social and economic development. Our initiative  to establish a new 5G “friendly circle” mechanism  has progressed well, and we have taken measures  to collaborate with up- and down-stream businesses  within the sector, as well as technology and innovation  companies, tertiary institutes and research institutes. In  addition, we explored building a strategic and synergetic  ecosystem covering areas such as 5G, cloud computing,  digital content and network safety through capital  investment and capital cooperation.   We infused vitality into the Company. We initiated a  new round of our share option scheme, which is now  proceeding smoothly. In addition, we started to put  in place equity and bonus schemes in our technology  subsidiaries to gradually establish a mid- to long-term  incentive scheme that will nurture a culture of shared  interests and responsibilities. We have also furthered  the implementation of the “Double-hundred Action”,  an initiative for reforming state-owned enterprises that  benchmarks world-leading companies. Reforms in three  of our subsidiaries have made good progress. We also  took solid steps to build national level innovation and  entrepreneurship demo centres and joint laboratories  to strengthen our R&D capability on cross-sector  applications and the commercial conversion of research  results, as a way to contribute to the prosperous growth  of the innovation ecosystem. Elsewhere, we explored  grid operations, dividing base-level operations into units  and identifying people to take responsibility. With better- aligned responsibilities, authority and benefits, we aim  to fully motivate our staff and infuse vitality into our base  layers.   “5G+” ACHIEVED A GOOD START   We sped up the development of 5G and have been fully  implementing our “5G+” plan since June 2019, when  we were granted the 5G licence. These initiatives have  shown good initial results.   We actively participated in setting international  standards for 5G to drive technological development.  We led 61 key projects in relation to 5G international  standards setting and own more than 2,000 5G  patents. We also helped to continuously strengthen  the Standalone International Standards (SA). Our “6  international standards on 5G system architecture” and  “38 international standards including 5G NR (New Radio)  terminals and base station radio frequency” scooped  all the top prizes in the 2019 Science and Technology  Awards presented by the China Communications  Standards Association, demonstrating our leadership in  5G communications standards.

 

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China Mobile Limited20 Chairman’s Statement 20 Chairman’s Statement  At the same time, we accelerated the implementation  of “5G+” by formulating well-coordinated development  of 5G and 4G. We constructed and began operating  more than 50,000 5G base stations and launched  5G commercial services in 50 cities. We assimilated  emerging technologies such as AI, IoT (Internet of  Things), cloud computing, big data and edge computing  into 5G (5G+AICDE) and developed more than 200  critical capabilities, while making breakthroughs in over  100 5G joint projects. In terms of 5G+Eco, we aimed  to develop the ecosystem with other industry players.  Through our 5G Innovation Centre and 5G Industry  Digital Alliance, we attracted more than 1,900 partners.  We established the 5G Device Forerunner Initiative,  guiding manufacturers to launch 32 5G devices. The  level of maturity was basically the same between the 2.6  GHz and 3.5 GHz industry chains.   Benefiting from forward-looking planning and effective  execution, we expanded 5G+X, where “X” stands for  the wider application of 5G, in applications that have  been adopted by a plethora of industry sectors, as  well as the mass market. For the latter, we launched  exclusive plans for 5G customers and feature services  such as ultra-high definition videos, cloud-based games  and full-screen video connecting tones. As of the end  of February 2020, our 5G plans attracted 15.40 million  package customers – maintaining an industry-leading  position. In terms of vertical sector, we explored the  possibility of combining 5G with AICDE capabilities,  extending collaboration in the industry and deep- diving into classic manufacturing scenarios to develop  our leadership in 5G smart manufacturing, 5G remote  medical services and 5G automated mining, among  other sectors. We implemented a total of 50 group-level  demo application projects.   Looking ahead, 5G presents infinite possibilities. We  will continue to take a systematic approach to planning  and steadily implementing our “5G+” initiatives.  We will speed up technology, network, application,  operations and ecosystem upgrades, accelerate industry  transformation by converging technologies, integrate  data to strengthen information transmission in society,  and introduce digitized management to build the  foundation for digital society development. By doing so,  we will seek more extensive 5G deployment, covering  more sectors and creating greater efficiency and social  value.   CORPORATE GOVERNANCE   The Company always upholds the principles of integrity,  transparency, openness and efficiency and fully complies with all  applicable listing rules to ensure sound corporate governance.   We have been optimizing 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 further improvements to our  governance structure and decision-making mechanisms.   We are also committed to compliance. We continued  to enhance compliance management and ensure best  practices in our daily operations through initiatives such as the  “Safeguarding Compliance” program. We further improved  our compliance management structure and reinforced legal  accountability to ensure that the Company complies with  the laws. We were consistent in adopting the Company’s  compliance philosophy, which is “abide by the law, follow the  rules, observe commitments and uphold integrity”. Operating  according to the laws and regulations is a culture that we have  established across the board and we continued to enhance  our supervision system.

 

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Annual Report 2019 21Chairman’s Statement 21Chairman’s Statement  We are dedicated to enhancing our risk and internal  control systems, increasing the level of competence  in risk detection and management. We have further  strengthened our supervision over key issues such as  business performance and cost deployment. We also  strove to mitigate business risks and close any gaps  in our business management processes to ensure  sustainable and high-quality operations.   SOCIAL RESPONSIBILITY AND  ACCOLADES   The Company remained committed to leveraging our  expertise to reciprocate the society and satisfy the needs  of more people as they pursue a better life.   We contributed to the national strategy of building a  “Cyberpower” and spurred the development of the digital  economy. We continued to implement the “speed upgrade  and tariff reduction” requirement and fully launched the  “Mobile Number Portability” policy as scheduled, and we  continuously lowered the threshold for digital services  and promoted inclusive technology. At the same time, we  strove to build up an industry collaboration mechanism,  creating a healthy and orderly competitive environment to  promote high-quality development of the whole industry.   In addition, the Company proactively assumed its  responsibilities in the areas of contingency telecommunications,  information security, targeted poverty  alleviation, philanthropy, energy saving and emissions  reduction.   To help combat the novel coronavirus (COVID-19)  outbreak, we worked to safeguard communications and  services. Contributing to epidemic prevention and control  measures, we enhanced the communications network  in key areas and venues affected by the outbreak. We  also fully leveraged competitive edges brought about by  our online services, such as the China Mobile App, to  provide convenient services for customers around the  clock. During the epidemic, we provided our customers  with multiple products free of charge, including Cloud  Video Meeting and MIGU Video, to enrich our solutions  on remote working and home entertainment.   Regarding contingency communications and information  security, the Company successfully completed 6,800  contingency communications missions in 2019,  participating in coordinated disaster and emergency rescue  efforts and ensuring uninterrupted communications during  major incidents. We have also taken the initiative to combat  evolving telecommunications frauds and cybercrime, in  order to create a healthy and safe telecommunications  environment.   In terms of poverty alleviation and philanthropy, we  proactively launched tariff concession plans as part of  targeted poverty-alleviation efforts for people in need.  Our proprietary TPAS (Targeted Poverty Alleviation  System) has been deployed in 14 provinces and 92 cities  and counties across the country, covering 8.169 million  disadvantaged individuals. The “Blue Dream” education  project has provided professional training for a total of  127,338 primary and secondary school headmasters in  rural villages. Meanwhile, the “Heart Caring” campaign  has sponsored the surgery of an accumulative total  of 5,973 impoverished children with congenital heart  disease.

 

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China Mobile Limited22 Chairman’s Statement 22 Chairman’s Statement  Turning to energy saving and emissions reduction, the  Company continued to implement its “Green Action  Plan” to reduce our carbon footprint. In 2019, the overall  energy consumption per unit information flow fell by  43%, compared with the previous year. We advocated  environmental protection among our suppliers and  the rate of eco-friendly packaging usage on new main  equipment reached 69%.   Our achievements have received wide recognition. We  won the “Top Ten Model Brands of the Year” award at  the 2019 China Brand Power Grand Ceremony organized  by the China Media Group. In addition, we were a Gold  Award winner at The Asset ESG Corporate Awards 2019  and received the Asia’s Most Honoured Company award  from Institutional Investor, as well as Icon on Corporate  Governance and Best Investor Relations Company  award from Corporate Governance Asia.   At the same time, Moody’s and Standard & Poor’s  maintained our corporate credit ratings at the same level  as China’s sovereign ratings in 2019.   FUTURE OUTLOOK   At present, the social and economic landscapes are  undergoing four paradigm shifts. Economically, the  digital economy has become the major driving force  of growth. Technologically, emerging information  technology has become the core engine to spur industry  transformation and upgrades. With regard to business  competition, technological innovation forms the pillar of  companies’ competitive advantages. And, last but not  least, demand for a better digital life has pervaded the  whole of society.   These paradigm shifts will bring massive “Blue Ocean”  opportunities to the information telecommunications  industry. The accelerating development of 5G will  provide better infrastructure and more scenarios to  boost the scale application of AI, IoT, cloud computing,  big data, edge computing and blockchain, among other  technologies, promoting the digital transformation  of all industries and digital life. At the same time,  we will encounter disruptive changes brought forth  by digitization, challenging the existing network  and business models and giving rise to unforeseen  competition within the industry, as well as from cross- sector players. The novel coronavirus (COVID-19)  outbreak since early 2020 has posed certain impact  on the overall society and economy. Our business  development has been no exception.   Good strategists win in the market; long-term  strategic planning ensures sustainable prosperity.  Facing opportunities and challenges, we will speed up  “gear-changes” in three areas. In terms of business  development, we will extend our offerings beyond  telecommunications to information services; our market  focus will shift from the mobile market to the all- encompassing “four growth engines”; and finally, our  development model will transform from being resource- driven to innovation-driven.   We will uphold our strategy of becoming a world-class  enterprise by building a dynamic “Powerhouse”. We  will serve as a major force in the development of China  as a “Cyberpower”, digital nation and smart society.  Centred around our objective for high-quality growth,  we will focus on business transformation and upgrade  while giving impetus to reform and innovation. We will  place emphasis on implementing our “5G+” plans while  forging convergence, integration and digitization across  our operations and building capabilities, establishing  collaboration and infusing vitality in the organization. By  doing so, we will make great strides towards becoming  a top-tier global telecommunications operator and  continuously create greater value for our shareholders.

 

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Annual Report 2019 23Chairman’s Statement 23Chairman’s Statement  In 2020, we will strive to overcome the impact of the  novel coronavirus (COVID-19) outbreak on business  development and 5G network construction. The  epidemic has bolstered the growing trend of businesses  and customers going online and using more digital  and cloud-based services, among other opportunities  arisen. We will leverage these opportunities, as  well as the 5G network to further develop the  information and communications services market. With  concerted efforts, we will strive to maintain growth in  telecommunications services revenue and a stable level  of net profit. We will also strive to maintain an industry- leading customer satisfaction.   ACKNOWLEDGEMENT   Mr. Li Yue resigned from his position as Executive  Director and CEO in October 2019. Over the course  of his long service with the Company, Mr. Li made a  tremendous contribution, leading the remarkable journey  of China Mobile from 2G to 5G. On behalf of the Board,  I thank Mr. Li for his exceptional contribution to China  Mobile.   Finally, on behalf of the Board, I would like to take this  opportunity to express my heartfelt gratitude for the  support of our shareholders, customers and the general  public, and for the dedication and contribution of our  employees.    Yang Jie   Chairman   Hong Kong, 19 March 2020

 

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24   China Mobile Limited    Corporate Recognitions    INSTITUTIONAL INVESTOR ALL ASIA GOLD WINNER ARC AWARDS GOLD AWARD

 

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Institional invester cpa BEST CORPORATE GOVERNANCE AWARDS 2019 GOLD WINNER ASIAN EXCELLENCE AWARD 2019

 

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Corporate Recognitions Annual Report 2019   25   Big data lot

 

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+ AICDE  Integrated  Innovations  + AICDE  AI EDGE CLOUD Integrated  Innovations

 

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China Mobile Limited28 28  Business Review   The Group has geared concerted efforts towards becoming a world-class enterprise by building a dynamic  “Powerhouse”, which was an overarching mission central to its master plan for the year 2019. Specifically, it has  made an all-out endeavour to foster scale-based and value-oriented operating practices and promote the holistic  development of the CHBN “four growth engines” (the “customer”, “home”, “business” and “new” markets) in a  converged, integrated and coordinated manner. A special focus has also been placed on business transformation,  innovation and smart operations, in addition to the building up of core capabilities such as network, IT, research  and development and customer services. Following these efforts, the Group has obtained positive momentum in  operating performance and maintained market leadership, laying a strong foundation for sustainable growth in future.   KEY OPERATING DATA   2019 2018 Change %   Mobile Business   Customer Base (million) 950 925 2.7  Of Which: 4G Customer Base (million) 758 713 6.4  Net Additional Customers (million) 25 38 –33.4  Of Which: Net Additional 4G Customers (million) 45 63 –28.2  Average Minutes of Usage per User per Month (MOU)  (minutes/user/month) 287 320 –10.4  Average Handset Data Traffic per User per Month (DOU)  (GB/user/month) 6.7 3.6 85.5  Average Handset Data Traffic per 4G User per Month (DOU)  (GB/user/month) 7.7 4.3 78.6  Average Revenue per User per Month (ARPU)  (RMB/user/month) 49.1 53.1 –7.5   Broadband Business   Wireline Broadband Customer Base (million) 187 157 19.4  Of Which: Household Broadband Customer Base (million) 172 147 17.1  Wireline Broadband ARPU (RMB/user/month) 32.8 33.5 –2.0  Household Broadband Blended ARPU (RMB/user/month) 35.3 34.4 2.7  IoT (Internet of Things) Business  IoT Customer Base (million) 884 551 60.3

 

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Annual Report 2019 29Business Review 29Business Review  OPERATING PERFORMANCE   The Group continued to comfortably maintain market  leadership in 2019. Telecommunications services  revenue has successfully reversed its unfavourable  downward trajectory recorded in the first half of 2019  and managed to deliver positive growth for full-year  2019. The Group has achieved a further enhancement to  its revenue structure, where the respective proportions  of revenues from “home”, “business” and “new”  markets to total revenue have continuously increased.  New drivers such as DICT and international business  have also demonstrated sound growth momentum. 4G  customer base has recorded a net addition of 45.36  million to reach 758 million. Amongst them, the number  of VoLTE customers stood at 521 million. Handset DOU  increased by 85.5% year-on-year to 6.7GB. The Group’s  broadband business has also reported robust growth,  with the number of household broadband customers  increasing by 17.1% to reach 172 million. The Group’s  “business” market has played a key role in fostering  the Group’s overall revenue growth, with its corporate  customer base reaching 10.28 million subsequent to a   net addition of 3.1 million. In the meantime, the number  of IoT customers has registered a net addition of 333  million to reach 884 million.   CHBN “FOUR GROWTH ENGINES”  SHOWING EARLY SIGNS OF SUCCESS   The “Customer” Market   The Group has taken a multi-pronged approach to  cope with increasing competition arising from the  homogeneous nature of industry operators. It has  placed a special emphasis on customers and adopted  the three strategies of convergence, integration and  digitisation, making a concerted effort to devise a  holistic operations model by combining “data access +  applications + customer benefits”. It has also shifted  its focus from increasing customer and data traffic  market shares to nurturing loyalty of existing customers  and enhancing the value of full life cycle. In 2019, full  business bundling rate has increased by 33 percentage  points and customer satisfaction rate has gone up from  that of last year. In addition, the Group has upgraded the  three popular brands of “GoTone”, “M-zone” and “Easy

 

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China Mobile Limited30 Business Review 30 Business Review  Own”, rejuvenating them by providing new customer  benefits, content and services, amongst others. All  these efforts have resulted in a stronger sense of gain  amongst customers, and the retention rate of mid –  to high-end customers has been on a rise. Since the  official announcement of the commercial launch of 5G  packages, the Group has recorded an industry-leading  number of 15.4 million 5G package customers as of the  end of February 2020. The Group has also proactively  promoted the popularisation of 5G devices, taking a  number of promising sales and marketing measures to  attract early users.   The “Home” Market   The Group remained committed to achieving “scale  expansion, brand building, ecology cultivation and  value uplift” for the “home” market. To achieve these  goals, it has redoubled efforts to promote integrated  development and consistently explored ways to add  value to this business line. It has also stepped up  measures to strengthen customer experience and  continued to enhance broadband quality, creating a  brand image of premium quality. This business line  continued to demonstrate robust growth momentum,  with household broadband customer base recording  a net addition of 25.09 million to reach 172 million.  Amongst them, the proportion of customers subscribing  to products with bandwidth of 100Mbps or above has  increased by 21.1 percentage points year-on-year to  reach 88.1%. Driving further reforms on smart home  business, the Group has stepped up additional efforts  on TV content development and continuously enhanced  products such as “smart home network deployment”,  “Mobaihe” (a set-top box that provides high-definition  video-on-demand service), “and-Mu” (a family  surveillance camera). These initiatives, coupled with  the Group’s endeavours to promote the bundle sales of  “smart home network deployment” and home hardware  and the complete opening-up of the corresponding  service capabilities, have resulted in a significant boost  to network access value. Household broadband blended  ARPU has risen by 2.7% year-on-year to reach RMB35.3.   The “Business” Market   As the new driver of the Group’s revenue growth and  business transformation and upgrade, the “business”  market has stepped up a number of measures to  strengthen basic capacities and promote innovative  business practices. The Group has worked further on  the integrated development of “network+ cloud+ DICT”  for this business line, leading to a further enhancement  to market competitiveness and contribution to the  Group’s total revenue. DICT revenue has registered a  year-on-year increase of 48.3% to RMB26.1 billion. Of  which, mobile cloud revenue has propelled a year-onyear  increase of 59.3% to RMB2 billion. Revenues from  IDC and ICT have also recorded respective year-on-year  increases of 46.8% and 163.5%. Taking full advantage  of 5G, the Group has swiftly set up demonstrative  showcases of 5G application scenarios for the vertical  market, aiming at a number of industry sectors. As of  the end of 2019, it has implemented 50 Group-level  applications. The Group will continue to join hands with  industry partners, cultivating accommodative industry  ecology inclusive of the vertical market and building  three types of resource pools which gather resources  from industry partners providing devices, applications  and integrated services.   The “New” Market   The Group has scaled up efforts to develop the  international market and to seek more investment  cooperation opportunities. It has proactively promoted  a number of businesses including video aggregation  on the MIGU platform, ultra-high definition VR, video  connecting tones, cloud-based games, satisfying the  demands from 2C and 2H markets. The Group has  also worked further on integrating its core businesses  with financial services, building new, holistic business  ecology. As for international expansion, the Group has  maintained market leadership in LTE roaming coverage  and established three international business brands of  CMLink, iConnect and iSolutions. The “Hand-in-hand”  program has registered more than 2,900 million users  on a global scale. With respect to digital content and  Internet finance, the number of “video connecting tone”  users has recorded a year-on-year increase of 442%  and that of “cloud-based game” users has exceeded   17.57 million. At the same time, the number of monthly  active users of the core functions of “and-Wallet” has  increased by 58.9%, and the number of merchants has  increased by 49.5%.

 

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Annual Report 2019 31Business Review 31Business Review  CONTINUOUSLY STRENGTHENING  CUSTOMER SERVICES   Making every endeavour to promote high-quality  development, the Group has taken the lead amongst its  peers to achieve service and value upgrades. In 2019,  the Group continued to show unwavering devotion  to providing exceptional customer services and place  a relentless focus on its valued customers, further  increasing customer satisfaction and loyalty.   The Group has persistently taken measures to enhance  customer perception. Last year, by carefully looking into  major customer concerns, the Group has thoroughly  analysed the root causes of complaints and examined  key factors that undermined customer satisfaction and  network quality. It has also scaled up efforts to improve  the quality of mobile networks, home broadband,  corporate dedicated lines and service platforms and  launched thematic campaigns to protect customer  interests. As a result, overall customer satisfaction  has improved. As to the mobile market, handset data  tariff has dropped by 47.2% year-on-year. The Group  has fully implemented “Mobile Number Portability”  as scheduled and has maintained a stable customer  base overall. As to the broadband business, the Group  has ensured the quality of broadband installation and  maintenance services by introducing a service workflow  that streamlines and shortens the handling time of these  services, in addition to other initiatives that foster service  transparency and facilitate whole-process management  and control. Thanks to these efforts, the Group has  achieved an industry-leading customer satisfaction  rate in terms of household broadband installation and  maintenance services. As to the corporate business,  the Group has redoubled efforts to enhance end-to-end  service support, fostering a responsive and centralised  service delivery system that pools and coordinates  resources from the entire network. Handling time for  service inception has significantly shortened and the  number of complaints has continued to go down.   The Group has stepped up efforts to persistently  enhance products and services. Tariff plans presently  on-shelf has been largely simplified and rules were  made less complicated. The Group has put a focus on  customer value and experience, and incorporated new  service features into its business model by considering  new elements from its new 5G network service  capabilities and benefits provided by external partners.  On top of these were the Group’s initiatives on launching  the 5G personal packages and family packages and  implementing the “GoTone Through-Train” plan. It has  also comprehensively driven the upgrade of the three  major brands. In an effort to achieve a brand image with  “exceptional taste, quality and character”, it continued  to enhance benefits for GoTone customers, formulated  and implemented product communication strategies for  M-zone, and launched a new suite of services for Easy  Own regular customers. The Group has also scaled  up efforts to promote channel transformation, where  more traditional services are available from smart-based  channels and the Internet. Overall, the proportion of  transactions handled by online channels has gone up  to 58.8% year-on-year. By introducing new forms of  cooperation, the Group was able to obtain more than  1 million omni-channel retailers. The Group has also  proactively explored grid operations, where each grid  forms a separate base-layer business unit fulfilling  general sales duties to better satisfy customer needs  and make timely responses, thus injecting vigour into  the company at the base level.

 

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China Mobile Limited32 Business Review 32 Business Review  STRENGTHENING BUSINESS  TRANSFORMATION   5G has reached a new stage of development and  set new trends. The Group has kept abreast of the  times, making every correct move to firmly build up  capabilities for key areas and making good preparation  for sustainable growth.   The Group has been constantly raising the bar for  network capabilities. As of the end of 2019, it has  built a total of 4.48 million base stations for its mobile  networks, of which, 3.09 million were 4G base  stations. The Group has also obtained an industry- leading 4G Customer Net Promoter Score and 4G  network satisfaction. In respect of 5G, the Group has  proactively driven 5G network development, building  more than 50,000 5G base stations and providing 5G  commerical services in 50 cities. In these cities, the  Group has completed upgrades and transformation on  NSA in areas where both 4G and 5G networks were  simultaneously covered. By doing so, the Group was  able to meet network capacity needs during the initial  phase of 5G commericalisation. It has also promoted the  maturity of SA products and industry development, and  completed transformation of the 5G SA core network  for pre-commercialisation in Nanjing. In addition, the  Group has continued to strengthen broadband coverage  and quality. It has laid down a set of principles that give  priority to nurturing platform capabilities and deploy  ports based on market demands. Accordingly, the Group  has made suitable advance planning on building up  Gigabit network capabilities and aligned its construction  efforts with market development. Besides, the Group  has scaled up efforts to expedite the construction of  dedicated cloud-based networks and by leveraging  cloud-network synergy, it has managed to enhance  business competitiveness. The Group has also devised a  new three-pronged strategy that puts a special focus on  achieving global acessibility, global network construction  and global deployment. Following this strategy, the  Group has boosted its ongoing work to build up basic  network resources on a global scale, including laying  international submarine cables, cross-border terrestrial  cables and PoPs (points of present) especially in areas  covered by the “Belt and Road Initiative”.   The Group continued to bolster its own abilities and build  up a remarkable pool of proprietary resources. Besides  its an ongoing effort to promote the maturity of the 5G  standard, the Group has established a mechanism for  the commercial use of end-to-end technologies and,  following which, these technologies are able to speak  in sync with their international counterparts and meet  case implementation requirements. These initiatives  helped the Group deliver a well-developed suite of 5G  technologies. The Group has also scaled up research  efforts on the technical aspects of 5G security, taking  initiatives to complete China’s first 5G security standards  for the industry and formulating 5G security standards  for corporates. In addition, the Group continued to  enhance core competences with a special focus on  the requirements of cloud, launching the Big Cloud   5.0 Product Series. The Group has also launched the  Pioneer 300 Plan and formulated strategies for edge  computing technology. Amongst its peers, the Group  was the first operator to launch a proprietary cloud  platform using edge technology. This compact platform  is easy to operate and maintain and has already entered  the trial stage. Further, the Group has continously  enriched value-added offerings under the IoT OneNET  platform, supporting implementation of various industry  projects. The Group has also centralized its AI (Artificial  Intelligence) development platform, making it online  and available to all units within the Group. It has also  incubated a number of AI applications including smart  networks, smart audits, smart editing, industry quality  control and smart film diagnoses.

 

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Annual Report 2019 33Business Review 33Business Review  CONTINUOUSLY ENHANCING  INVESTMENT EFFICIENCY   Entering a crucial phase of business transformation and  5G network construction, the Group will focus on laying  a solid foundation for the integrated development of the  CHBN “four growth engines” and asserting ongoing 5G  market leadership over the next course of development.  It will also step up efforts to exercise strong investment  discipline and achieve a refined investment structure,  deploying resources to meet the demands arising from  evolving market competition in the most rational manner  and enhancing investment efficiency.   To provide strong support for business growth, the  Group has incurred an actual capital expenditure of  RMB165.9 billion for 2019. Capital expenditure to service  revenue ratio has fallen by 0.3 percentage points from  that of last year, demonstrating enhanced investment  efficiency. Capital expenditure was spent mainly on,  amongst other areas, strengthening 5G first-mover  advantage, supporting 4G data traffic growth, bettering  the deployment of cloud resources, promoting cloud- based network transformation, building up transmission  capability and boosting IT support.   The Group plans to spend total capital expenditure  of RMB179.8 billion for 2020. Capital expenditure  will serve for a variety of purposes which primarily  include the proactive build-out of the 5G network, the  construction of cloud-based infrastructure, support  for the all-rounded development of the “four growth  engines” and enhancements to smart operations. The  capital requirements under this capital expenditure  plan will be primarily sourced from the cash generated  from the Group’s operating activities. With a view to  satisfying business transformation needs and striving to  continuously lift resource utilisation efficiency, the Group  will continue to make scientific and rational allocation  and deployment of resources and make targeted  investments and construction considering the needs  arising from use cases.

 

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+ ECOLOGY  Collaborative  Cultivation  + ECOLOGY  Collaborative  Cultivation

 

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China Mobile Limited36 36  Financial Review    We were faced with a challenging and complicated operating environment in 2019 where the upside of data traffic  was rapidly diminishing and competition within the telecommunications industry and from cross-sector players was  becoming ever more intense. Coupled with this was the impact of government policies, including the continued  implementation of the “speed upgrade and tariff reduction”. Towards our ultimate goal of becoming a world-class  enterprise by building a dynamic “Powerhouse”, we deepened our reforms to organizational systems, promoted our  business transformation and insisted on creating value in our operations. We announced and implemented our “5G+”  plan, resulting in continuous growth in revenue, persistently good profitability and positive growth momentum.   2019 2018 Change  Operating revenue (RMB million) 745,917 736,819 1.2%  Revenue from telecommunications services (RMB million) 674,392 670,907 0.5%  Revenue from sales of products and others (RMB million) 71,525 65,912 8.5%  EBITDA (RMB million) 295,967 275,541 7.4%  EBITDA margin 39.7% 37.4% 2.3pp  Profit attributable to equity shareholders (RMB million) 106,641 117,781 –9.5%  Margin of profit attributable to equity shareholders 14.3% 16.0% –1.7pp  Basic earnings per share (RMB) 5.21 5.75 –9.5%

 

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Annual Report 2019 37Financial Review 37Financial Review  The Company persistently allocated its resources by ensuring a sufficient budget for areas essential to promote  growth while reducing and controlling expenses on certain selected areas, continuously stepped up measures to  reduce costs and enhance efficiency, and improved its efficiency in resource utilization. The Company’s operational  efficiency has remained favorable, thereby maintaining its profitability at a leading level among international first-class  telecommunications operators and continuously creating value for shareholders.   OPERATING REVENUE   In 2019, the Group’s operating revenue reached RMB745.9 billion, up by 1.2% compared to the previous year, of  which revenue from telecommunications services was RMB674.4 billion, up by 0.5% compared to the previous  year. With the Group’s acceleration of business transformation and adherence to high-quality development as well  as the gradual disappearance of the carryover effect resulting from the cancellation of data roaming charges in July  2018, revenue from telecommunications services saw a pleasing increase in the second half of 2019, achieving the  established goal of resuming year-on-year growth in the revenue from telecommunications services.   Revenue from Voice Services   The Group’s voice services business continued to decline, with the annual revenue from voice services being  RMB88.6 billion, down by 18.0% compared to the previous year. Total voice usage decreased by 7.5% compared to  the previous year.   Revenue from Data Services   Revenue from data services was RMB565.0 billion, up by 4.2% compared to the previous year, representing 83.8%  of revenue from telecommunications services, up by 3.0 percentage points compared to the previous year.   The Group insisted on creating value in its operations. The annual revenue from wireless data traffic was RMB385.0  billion, up by 0.4% compared to the previous year, and was a key driver for the turnaround of the growth in the  annual revenue from telecommunications services. Revenue from SMS/MMS services was RMB28.6 billion, down  by 0.5% compared to the previous year.   The Group maintained a strong growth in its broadband customer base, and at the same time launched quality  improvement actions on its household broadband and corporate dedicated lines and enhanced the quality of  supporting services, boosting overall household customer perception. Revenue from wireline broadband services  reached RMB68.8 billion, up by 26.8% compared to the previous year, continuously maintaining a relatively strong  growth momentum.   The Group continued to promote business transformation and nurture new revenue growth drivers, with its DICT,  video, Mobaihe and other businesses developing well. Meanwhile, with a focus on product quality and customer  experience, the customer activity and satisfaction levels of related businesses improved significantly. Revenue from  applications and information services was RMB82.5 billion, up by 9.0% compared to the previous year.

 

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China Mobile Limited38 Financial Review 38 Financial Review  Revenue from Sales of Products and Others   Driven by the sales of ICT equipment, IoT and other smart devices, revenue from the sales of products and others  was RMB71.5 billion, up by 8.5% compared to the previous year. The Group’s device sale business mainly serves to  facilitate the expansion of core telecommunications services, and hence its profit contribution is relatively low.   OPERATING EXPENSES   The Group has continued to actively promote its low-cost, high-efficiency operating model, thoroughly stepped  up measures to reduce costs and enhance efficiency, and comprehensively disposed of assets of low or no cost- effectiveness, thereby resulting in better cost control. Meanwhile, the Group will endeavour to strike a balance  between its short-term performance and long-term development in order to maintain its favourable profitability.   In 2019, the Group’s operating expenses were RMB632.8 billion, up by 2.8% compared to the previous year.  Operating expenses represented 84.8% of operating revenue.   2019 2018  RMB million RMB million Change   Operating expenses 632,768 615,432 2.8%  Network operation and support expenses 175,810 200,007 –12.1%  Depreciation and amortization 182,818 154,154 18.6%  Employee benefit and related expenses 102,518 93,939 9.1%  Selling expenses 52,813 60,326 –12.5%  Cost of products sold 72,565 66,231 9.6%  Other operating expenses 46,244 40,775 13.4%   Note: To better reflect our cost behavior, the Company has adjusted the presentation of line items relating to expenses for 2019, and has also reclassified  the comparable figures for 2018 for consistency and comparability.

 

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Annual Report 2019 39Financial Review 39Financial Review  Network Operation and Support Expenses   Network operation and support expenses were RMB175.8 billion, down by 12.1% compared to the previous  year and representing 23.6% of operating revenue. The decrease was partly due to the Group’s adoption of the  new accounting standard on leases which resulted in part of the leasing fee being recognized as depreciation and  amortization as well as finance costs. On a comparable basis with network operation and support expenses of 2019  recognized as if the new accounting standard on leases had not been adopted, the corresponding expenses were up  by 0.3% compared to the previous year. Tower leasing fee of 2019 on a comparable basis was RMB41.5 billion, up  by 6.5% compared to the previous year.   Depreciation and Amortization   Depreciation and amortization was RMB182.8 billion, up by 18.6% compared to the previous year and representing  24.5% of operating revenue, of which the depreciation of right-of-use assets was RMB22.8 billion. The increase  was partly due to the Group’s adoption of the new accounting standard on leases which resulted in part of the  network operation and support expenses being recognized as depreciation and amortization. On a comparable basis  with depreciation and amortization of 2019 recognized as if the new accounting standard on leases had not been  implemented, the corresponding expenses were up by 3.8% compared to the previous year.   Employee Benefit and Related Expenses   Employee benefit and related expenses were RMB102.5 billion, up by 9.1% compared to the previous year and  representing 13.7% of operating revenue. The Group continued to optimize its personnel structure and improve the  efficiency and effectiveness of its human resource management, providing strong personnel support for the Group’s  development.   Selling Expenses   Selling expenses were RMB52.8 billion, down by 12.5% compared to the previous year and representing 7.1% of  operating revenue. The Group actively promoted the transformation of its sales and marketing model and enhanced  its comprehensive sales and marketing service level, with the efficiency of its utilization of selling expenses  significantly improved.   Cost of Products Sold   Cost of products sold was RMB72.6 billion, up by 9.6% compared to the previous year and representing 9.7% of  operating revenue. The increase was mainly driven by the growth in revenue from sales of products.   Other Operating Expenses   Other operating expenses were RMB46.2 billion, up by 13.4% compared to the previous year and representing  6.2% of operating revenue. The increase was mainly due to a rise in asset retirement and write-off as well as credit  impairment loss; meanwhile, the Group increased its investments in innovation, resulting in a rise in R&D-related  expenses.

 

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China Mobile Limited40 Financial Review 40 Financial Review  Profitability   In 2019, the Group’s profitability continued to be industry-leading. Profit from operations was RMB131.1 billion,  down by 6.8% compared to the previous year. EBITDA was RMB296.0 billion, and EBITDA margin was 39.7%, up by   2.3 percentage points compared to the previous year. Impacted by the limited growth in revenue, the spending on  business transformation and the continuous rise in rigid expenditures, profit attributable to equity shareholders was  RMB106.6 billion and its margin was 14.3%.  2019 2018   RMB million RMB million Change  Profit from operations 113,149 121,387 –6.8%  Other gains 4,029 2,906 38.6%  Interest and other income 15,560 15,885 –2.0%  Finance costs 3,246 144 2154.2%  Income from investments accounted for using  the equity method 12,641 13,861 –8.8%  Taxation 35,342 35,944 –1.7%  Profit attributable to equity shareholders 106,641 117,781 –9.5%   CAPITAL STRUCTURE   The Group’s financial position continued to remain robust. As at the end of 2019, total assets and total liabilities were  RMB1,629.2 billion and RMB522.0 billion, respectively. The liabilities to assets ratio was 32.0%.   The Group consistently and firmly adhered to its prudent financial risk management policies and maintained sound  repayment capabilities. The effective interest coverage multiple was 40 times.   As at 31 As at 31  December 2019 December 2018   RMB million RMB million Change  Current assets 529,866 535,116 –1.0%  Non-current assets 1,099,374 1,000,794 9.9%  Total assets 1,629,240 1,535,910 6.1%  Current liabilities 462,067 474,398 –2.6%  Non-current liabilities 59,884 5,703 950.0%  Total liabilities 521,951 480,101 8.7%  Non-controlling interests 3,516 3,404 3.3%  Total equity attributable to shareholders 1,103,773 1,052,405 4.9%  Total equity 1,107,289 1,055,809 4.9%

 

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Annual Report 2019 41Financial Review 41Financial 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 2019, 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 RMB247.6 billion, RMB64.2 billion  and RMB64.9 billion, respectively. Free cash flow was RMB81.7 billion. After the adoption of the new accounting  standard on leases, the cash repayment of principal and interest of lease liabilities is reflected in the cash outflow  from financing activities instead of operating activities. As at the end of 2019, the Group’s cash and bank balances  were RMB317.2 billion, of which 96.5%, 1.3% and 2.1% were denominated in Renminbi, U.S. dollars and Hong  Kong dollars, respectively. The robust fund management and healthy cash flow provided a solid foundation for the  sustainable healthy development of the Group.   2019 2018   RMB million RMB million Change  Net cash inflow from operating activities 247,591 206,151 20.1%  Net cash outflow from investing activities 64,206 212,231 –69.7%  Net cash outflow from financing activities 64,901 57,820 12.2%  Free cash flow 81,713 39,076 109.1%   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.

 

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+ X  Wider Applications  + X  Wider Applications

 

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China Mobile Limited44 44  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 2019,  the Company has complied with all 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 for the following matters:   (i) the Company and its directors (including independent non-executive directors (“INEDs”)) have not entered into  any service contract with a specified term. All directors of our Company 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; and  (ii) Mr. LI Yue resigned from his positions as an Executive Director and the Chief Executive Officer of the Company  with effect from 11 October 2019, following which the position of Chief Executive Officer has remained vacant.  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 2019) are INEDs.   .  China Mobile discloses the interests of its 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.

 

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Annual Report 2019 45Corporate Governance Report 45Corporate Governance Report  .  China Mobile publishes a Sustainability Report along with its annual report for thirteen 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.   .  We give more than 20 working days’ notice for our AGMs.   .  Our principal executive and principal financial officers shall make annual written statements to the United  States Securities and Exchange Commission (“US SEC”), and our management shall make annual backup  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 2019, 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 2019, 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.

 

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46 China Mobile Limited 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.   Ordinary Special Total  Dividend Dividend Dividend  Financial Year Per Share Per Share Per Share  (HKD) (HKD) (HKD)   2019 final1 1,723 – 3.250  interim 1.527 –  2018 final 1.391 – 3.217  interim 1.826 –  2017 final 1.582 – 6.405  interim 1.623 3.2002  2016 final 1.243 – 2.732  interim 1.489 –  2015 final 1.196 – 2.721  interim 1.525 –   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.   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.

 

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Annual Report 2019 47Corporate Governance Report 47Corporate 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 2019, our management attended 21 investor conferences and 132 routine investor meetings, and met  with an aggregate of 1147 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 2019, we held our AGM on 22 May 2019 in the Ballroom, InterContinental Hong  Kong, 18 Salisbury Road, Kowloon, 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 2018 (99.9942%);  2. The declaration of a final dividend for the year ended 31 December 2018 (99.9983%);  3. The re-election of Mr. YANG Jie and Mr. DONG Xin as executive directors (98.8479% and 99.0505%);  4. The re-election of Dr. Moses CHENG Mo Chi and Dr. YANG Qiang as independent non-executive directors  (85.5337% and 99.7497%);  5. 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 (99.7631%);  6. 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 (99.9478%);  7. 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 (83.1135%);  8. 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 (83.3227%).  All resolutions were duly passed at the 2019 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.

 

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China Mobile Limited48 Corporate Governance Report 48 Corporate Governance Report  Shareholders’ Calendar   The following table sets out the tentative key dates for our shareholders for the financial year ending 31 December  2020. Such dates are subject to change pursuant to actual situations. Shareholders should note our announcements  issued from time to time.   FY 2020 Shareholders’ Calendar   19 March Announcement of final results and final dividend for the financial year ended 31 December  2019  14 April Upload of 2019 annual report on the websites of the Company and the HKEX  15 April Dispatch of 2019 annual reports to shareholders  20 May 2020 AGM  End of June Payment of final dividend for the financial year ended 31 December 2019  Mid-August Announcement of interim results and interim dividend for the six months ending 30 June  2020, if any  End of September Payment of interim dividend for the six months ending 30 June 2020, 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. WANG Yuhang and Mr. DONG  Xin (CFO) 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 6 to 9 of this annual report  and on our website.   Mr. LI Yue resigned from his positions as an Executive Director and CEO of the Company by reason of age with  effect from 11 October 2019. Mr. Li 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. Mr.  WANG Yuhang was appointed as an Executive Director of the Company with effect from 24 October 2019. The  Company has not entered into any service contract with Mr. Yang and Mr. Wang which provides for a specified  length of service. They both will be duly subject to retirement by rotation and re-election at the AGMs of the  Company in accordance with the Articles of Association of the Company.

 

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Corporate Governance Report Annual Report 2019 49   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. In 2019, none of the Directors were required to abstain from voting in these  circumstances.   During the financial year ended 31 December 2019, the Board met on five occasions and the directors’ attendances  at the meetings are as follows:   Board of Audit Remuneration Nomination  directors committee committee committee AGM  INEDs  Dr. Moses CHENG Mo Chi 5 5 4 1 1  Mr. Paul CHOW Man Yiu 5 5 4 2 1  Mr. Stephen YIU Kin Wah 5 5 4 2 1  Dr. YANG Qiang 4 4 – – 1  Executive Directors  Mr. SHANG Bing3 – – – – –  Mr. YANG Jie4 (Chairman) 5 – – – 1  Mr. LI Yue5 (CEO) 2 – – – 0  Mr. WANG Yuhang6 1 – – – –  Mr. DONG Xin (CFO) 5 – – – 1   3 With effect from 4 March 2019, Mr. Shang resigned from his position as an Executive Director and Chairman of the Company.  4 With effect from 21 March 2019, Mr. Yang was appointed as an Executive Director and the Chairman of the Company.  5 With effect from 11 October 2019, Mr. Li resigned from his position as an Executive director and CEO of the Company.  6 With effect from 24 October 2019, Mr. Wang was appointed as an Executive Director of the Company.   All board meetings and committee meetings were attended by the directors in person or by telephone conferencing.  In 2019, the Board has met and discussed the matters relating to the annual results, interim results, dividend,  continuing connected transactions, corporate strategic planning, annual investment status, acquisition of “Village  Connect”, adjustments to the composition of the Board and its committees, sustainability report, adoption of share  option scheme, compliance with the newly amended Corporate Governance and related Listing Rules provisions 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 2019, the Board met and discussed our 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.

 

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China Mobile Limited50 Corporate Governance Report 50 Corporate Governance Report  In 2019, the Board has adopted a Dividend Policy to set out the principles and guidelines that the Company intends  to apply in relation to the declaration, payment and distribution of dividends to the shareholders of the Company,  which includes, among others, in recommending or declaring dividends, the Company shall allow its shareholders  to participate in the Company’s profits whilst retaining adequate cash reserves for meeting its working capital  requirements and long-term sustainable development. The Company shall also take into account 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, etc.   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 on pages 6 to 9 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 2019, we provided all our directors  and management (including the newly-appointed director Mr. YANG Jie and Wang Yuhang) with trainings in relation  to business, technology and new directorship.   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 65  of this annual report, none of the directors had any other interest in the shares of the Company as of 31 December  2019. All directors have confirmed, following specific enquiry by the Company that they have complied with the  Model Code during the period between 1 January 2019 and 31 December 2019.   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 73 to 77 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.

 

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Annual Report 2019 51Corporate Governance Report 51Corporate 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.   Authorities and 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 2019   In 2019, the Audit Committee met on five occasions and the attendance of each member is disclosed on page 49 of  this annual report. In addition, the Audit Committee met with the external auditors for three times in 2019 and two of  such meeting was held without any executive directors being present.   In 2019, 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 2018;  .  reviewed and approved our 2018 Annual Report on Form 20-F, which was filed with the US SEC;  .  reviewed and approved the 2018 conflict mineral report to be filed with the US SEC;  .  reviewed and approved the interim results for the six months ended 30 June 2019;  .  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 2019 internal audit project plan and budget for external engagements;  .  reviewed and approved the 2019 risk assessment report;  .  reviewed and approved the 2018 evaluation report on accounting and financial reporting system;  .  reviewed and approved the continuing connected transactions;  .  reviewed and approved the report on compliance with relevant laws and regulations in 2018;  .  reviewed and approved various internal audit reports;  .  reviewed and approved the amendments of Terms of Reference of the Audit Committee; and  .  reviewed and approved ERP centralized system application control test report.  In 2019, 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.

 

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China Mobile Limited52 Corporate Governance Report 52 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 2019   In 2019, the Remuneration Committee met on four occasions, during which the committee:   .  considered and approved the remuneration package and other terms of appointment of the newly appointed  directors;   .  resolved to approve the target and realized amounts of annual appraisal indicators of senior management; and   .  resolved to approve the adoption of Share Option Scheme.   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 2019   In 2019, the Nomination Committee met twice, during which the committee:   .  resolved to approve the appointment of directors; and   .  resolved to approve the Director Nomination Policy.

 

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Annual Report 2019 53Corporate Governance Report 53Corporate 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  11 to the consolidated financial statements on page 111 of this annual report for directors’ and senior management’s  remuneration in 2019.   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.   The nomination and appointment of Mr. YANG Jie and Mr. WANG Yuhang in 2019 were conducted in accordance  with the relevant policy. As proposed by the Board, each of Mr. Yang and Mr. Wang will receive an annual director’s  fee of HK$180,000 as approved by the shareholders of the Company, which are payable on a time pro-rata basis for  any non-full year’s service. The remuneration of each of Mr. Yang and Mr. Wang has been determined by the Board  with reference to his duties, responsibilities, experience, prevailing market conditions and so forth. Mr. Yang and Mr.  Wang have voluntarily waived the above-mentioned fee.

 

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China Mobile Limited54 Corporate Governance Report 54 Corporate Governance Report  MANAGEMENT AND EMPLOYEES   The task of the management and employees is to implement the strategy and direction as determined by the Board,  to take care of day-to-day operations and functions of the Company, and to maintain the values and corporate culture  of China Mobile. The division of responsibilities among our principal executive officers and senior management is  set out in the biographies of directors and senior management on pages 6 to 11 of this annual report and on the  Company’s website.   The Company provides clear guiding principles for our management and employees to do what is right and obey all  laws and regulations. They are also subject to various trainings and continuous professional development, including  a variety of online learning and information sources, formal executive development programs and attendance at  executive briefings on relevant topics. These principles cover all aspects of our operations.   Code of Ethics   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.   Management Mechanism   The Company has established decision-making policies and implementation method. We keep refining our major  issue catalogue and criteria to prevent risks in decision-making. We have continuously 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’ interest protection.   The Company 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 2019, to  further improve our “Safeguarding Compliance” management mechanism, we conducted compliance review prior  to actions such as devising major marketing strategies and procurement planning, and entering into major contracts,  continued carrying out compliance risk prevention and control in key areas. In 2019, we complied the Intellectual  Property Compliance Guidelines and the Business Partnership Compliance Guidelines for our frontline personnel.  In addition to organizing trainings on compliance risk prevention within the Group, we also set up an online learning  zone on compliance in 2019. With respect to anti-corruption, we continued to improve our 4-in-1 anti-corruption  system combining education, prevention, punishment and accountability. We adjusted the performance evaluation  indicators of embedded prevention and control in 2019 to urge the responsible departments to discover their own  problems. 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 2019, we continued to carry out anti-corruption  education monthly activities, organized a total of 4,960 educational activities covering more than 90% employees.   For whistle blowing, the Company has set an Post Office Box, an e-mail account, a telephone hotline, work site,  CEO mailbox 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 protect the whistleblowers’  lawful rights and interests and keep the reported issues, the status of investigations and the relevant information of  whistleblowers strictly confidential. In 2019, a total of 1,730 cases were reported by whistleblowers, 393 corruption  cases were handled and an aggregation of 516 punishment settled.

 

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Annual Report 2019 55Corporate Governance Report 55Corporate Governance Report  INTERNAL AUDIT   The Internal Audit Department (the “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.   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 plans, the methods and the timing. It  regularly monitors the status of the implementation of the recommendations to ensure their completion.   In 2019, in order to promote our strategic measures be effectively implemented, we carried out audits focusing  on the operation and core tasks, and further strengthened audit and supervision on corporate services, household  business, customer rights, key costs and expenses, system management and control and others, to effectively  push its cost reduction and efficiency enhancement and prevent risks. We achieved greater results in creating a  smart audit cloud hub and a new remote + on-site holographic interactive smart audit to further improve our audit  rectification management mechanism and make the advantages of centralized audit and two-level audit synergy  more prominent.

 

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China Mobile Limited56 Corporate Governance Report 56 Corporate Governance Report  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 2019, 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 2020, the IA Dept. will concentrate on new tasks of strategic transformation, further the construction of our  holographic interactive smart audit system, expand the application scope of artificial intelligence technology in audit  and promote the large-scale application of our remote + on-site audit model, to improve our audit capacity and  efficiency, thoroughly identify issues and risks to plug loopholes in management. We will continue improving our  audit procedures and systems as well as enhancing the value of audit.   EXTERNAL AUDITORS   In 2019, 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 2019.   Apart from providing the above-mentioned audit services to the Group, the external auditors also provided other non- audit 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):   2018 2019  RMB million RMB million   Audit fees 7 108 111  Non-audit services fees 8 9 12   7 Including the fees rendered for the audit of internal control over financial reporting as required by section 404 of the SOX Act.   8 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.

 

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Annual Report 2019 57Corporate Governance Report 57Corporate Governance Report  ESG AND OTHER STAKEHOLDERS   The Board has overall responsibility for our ESG strategy and reporting, for evaluating and determining the ESG  related 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 2019 (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 2019.  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.   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 2019, 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 2019, 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.

 

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China Mobile Limited58 Corporate Governance Report 58 Corporate Governance Report  Based on the evaluation conducted by the management of the Company, the management believes that, as of 31  December 2019, 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 2019, the Company’s disclosure controls and procedures were effectively  executed at a reasonable assurance level.   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 principal executive and principal financial officers 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.

 

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Annual Report 2019 59Corporate Governance Report 59Corporate Governance Report  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.   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 2019, our Audit Committee comprising four INEDs  met twice 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.

 

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China Mobile Limited60 Corporate Governance Report 60 Corporate Governance Report  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  meet our shareholders’ expectations and ensure the long-term sustainable development of the Company.

 

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Annual Report 2019 61 61  Human Resources Development   In 2019, our human resources work was centered on China Mobile’s ultimate goal of becoming a world-class  enterprise by building a dynamic “Powerhouse”. Adhering to the guiding principles of mechanism optimization,  structural adjustment, capability enhancement and efficiency upgrade, we built a high-quality, professional and  young management team, created a workforce primarily made up of new digital talents and core backbone talents,  promoted organizational changes and human resource service model transformation, and upgraded our mechanism  flexibility, team capability and organizational vitality, in order to provide organizational safeguards and talent support  for the Company’s reform and innovation, integrated transformation as well as high-quality development.   We profoundly implemented the Company’s strategic transformation requirements in conjunction with our business  development. We effected personnel changes through technical means and promoted centralized management  reforms in traditional business areas. We proactively managed and condensed the size of the workforce and  strictly controlled the demand for manpower. We continued to increase the proportion of IT/CT/DC staff among  newly recruited employees. We persisted in prioritizing the assignment of talents to new technologies and new  business areas, further increased the human resource support and talent attraction intensity for key areas of digital  transformation including 5G + AICDE, and continuously optimized our workforce in terms of areas such as academic  qualifications and professional expertise. These measures led to a continuous rise in the number of employees  in charge of emerging areas as well as the proportion of new digital talents, effectively supporting our digital  transformation and business expansion in the vertical industries.   Striving to be market-oriented, the Company continuously optimized its total compensation allocation model,  strengthened the link between performance and compensation, and encouraged our subsidiaries to perform better.  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, we unleashed the synergies between remuneration and resources, and  formulated and implemented multiple incentive initiatives. For professional and technical personnel, we implemented  incentives on talents in “special zones”, commenced the establishment of the T-H-T (“ten hundred thousand”)  technical experts system, strengthened the selection of high-end core talents, and stimulated the innovative and  entrepreneurial vitality of technical personnel. For frontline employees, we pushed forward the implementation of  grid operations and encourage “more pay for more work”.   The Company enhanced its team capabilities across the system and coordinated the promotion of a package of  “new drivers capability enhancement” measures, thereby integrating online and offline channels and promoting  the implementation of a series of categorized training projects in a well-planned, step-by-step and well-paced  manner. In terms of “empowering” all our staff with knowledge, we carried out the “5G+ General Knowledge for  All Empowerment Action” for all technical personnel to systematically hone and update all employees’ essential  knowledge and know-how in “5G + AICDE”. In terms of “remodeling” core talents’ skills in light of “cloud reform”  and 5G core technologies, we established a specialty-based and rank-based capacity-building program to reinforce our  practical training and promote the cultivation of our own core talents with the help of skill maps, learning path maps  and skill certification. In terms of “promoting” frontline personnel’s capabilities, we strengthened our comprehensive  and systematic training for grid managers and self-operated store managers to improve their responsiveness to  market competition and their customer service capabilities. In 2019, the Company provided training to its employees  for 1.825 million person-times.

 

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China Mobile Limited62 62  Report of Directors   The directors take pleasure in submitting their annual report together with the audited financial statements for the  year ended 31 December 2019.   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  2019.   Purchases from the largest supplier for the year represented 12% of the Group’s total purchases. The five  largest suppliers accounted for an aggregate of 27% of the Group’s purchases in 2019. 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 2019 have the directors, their close associates or any shareholder  of the Company (which to the knowledge of the Board 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 2019 are set out in notes 20 and 21, 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 2019 and the financial conditions of the Company and the  Group as at that date are set out in the consolidated financial statements on pages 78 to 148.   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.

 

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Annual Report 2019 63Report of Directors 63Report of Directors  The Board recommends a final dividend payment of HK$1.723 per share for the year ended 31 December 2019.  Together with the interim dividend payment of HK$1.527 per share, the total dividend payment for the 2019 financial  year amounted to HK$3.250 per share. The Company attaches great importance to shareholder returns, and will  maintain a stable dividend per share for the full year of 2020, after giving overall consideration to its profitability and  cash flow generation. 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 RMB83,766,086 (2018: RMB82,242,686).   PROPERTY, PLANT AND EQUIPMENT   Changes to the property, plant and equipment of the Group during the year ended 31 December 2019 are set out in  note 15 to the consolidated financial statements.   SHARE CAPITAL   Details of the Company’s share capital are set out in note 34 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 34 to the consolidated financial  statements.   DIRECTORS   The directors of the Company during the financial year were:   Executive Directors:   SHANG Bing (former Chairman; resigned on 4 March 2019)  YANG Jie (Chairman; appointed on 21 March 2019)  LI Yue (resigned on 11 October 2019)  WANG Yuhang (appointed on 24 October 2019)  DONG Xin   Independent Non-Executive Directors:   Moses CHENG Mo Chi  Paul CHOW Man Yiu  Stephen YIU Kin Wah  YANG Qiang

 

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China Mobile Limited64 Report of Directors 64 Report of Directors  Pursuant to Article 99 of the Company’s Articles of Association, Mr. WANG Yuhang will hold office until the  forthcoming annual general meeting of the Company and will then be eligible for re-election. Besides, pursuant to  Article 95 of the Company’s Articles of Association, Mr. Paul CHOW Man Yiu and Mr. Stephen YIU Kin Wah 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 6 and 8 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. None of the Directors for Re-election  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  pro-rata basis for any non-full year’s service. Mr. WANG Yuhang has voluntarily waived his annual director’s fees.  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 11 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.

 

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Report of Directors Annual Report 2019 65   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 2019 are as follows:   Long Positions in the Shares and Underlying Shares of the Company   Percentage of  the total number  Director Capacity Ordinary shares held of issued shares*   Moses CHENG Mo Chi Beneficial owner 300,000 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  2019, and rounded off to two decimal places.  Apart from those disclosed herein, as at 31 December 2019, 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 2019 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 2019  amounting to 5% or more of the ordinary shares in issue:   Long Positions in the Shares and Underlying Shares of the Company   Percentage of  Ordinary shares held 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).   Apart from the foregoing, as at 31 December 2019, 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.

 

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China Mobile Limited66 Report of Directors 66 Report of Directors  CONNECTED TRANSACTIONS   Continuing Connected Transactions   Details of the continuing connected transactions are set out in note 36 to the consolidated financial statements.   For the financial year ended 31 December 2019, 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 telecommunications network operation assets by  the Company from CMCC did not exceed RMB5,000 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; and  (3) services charges received by the Group from CMCC for the provision of telecommunications services by the  Group to CMCC did not exceed RMB2,000 million. The provision of telecommunications services by the Group  to CMCC and its subsidiaries in respect of individual projects are subject to public tender process and the  pricing for the telecommunications services are primarily based on market rates as determined through the  public tender process and the relevant standards laid down in applicable regulations in the PRC. For individual  projects where the public tender process is not applicable, the selection criteria and price determination  mechanism are similar to that applied in a public tender process.  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 and has expired on 31 December 2019. The Company announced the entering into  of the 2020-2022 property leasing and management services agreement on 2 January 2020 to renew the 2017-2019  Property Leasing Agreement for a term of three years from 1 January 2020.   The transactions referred to in paragraph (2) 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 2 January 2020 for a term of one year from 1 January 2020.

 

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Annual Report 2019 67Report of Directors 67Report of Directors  The transactions referred to in paragraph (3) above were entered into pursuant to the telecommunications  services agreement between the Company and CMCC dated 9 August 2019 (the “Telecommunications Services  Agreement”). The entering into of the Telecommunications Services Agreement was announced by the Company  on 9 August 2019. The Telecommunications Services Agreement expired on 31 December 2019 and the Company  announced the entering into of the 2020 Telecommunication Facilities Construction Services Agreement with CMCC  on 2 January 2020 to renew the Telecommunications Services Agreement for a term of one year from 1 January  2020.   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 2019 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 2019.

 

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China Mobile Limited68 Report of Directors 68 Report of Directors  PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES   During the year ended 31 December 2019, neither the Company nor any of its subsidiaries purchased, sold or  redeemed any of the Company’s listed securities.   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 149 to 151 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 2019, 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 6 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.

 

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Annual Report 2019 69Report of Directors 69Report of Directors  OTHERS   The novel coronavirus (COVID-19) outbreak since early 2020 has posed certain impact on the overall society and  economy. The Company’s business development has been no exception. The Company will strive to overcome the  impact of the novel coronavirus (COVID-19) outbreak on business development and 5G network construction. The  epidemic has bolstered the growing trend of businesses and customers going online and using more digital and  cloud-based services, among other opportunities arisen. The Company will leverage these opportunities, as well as  the 5G network to further develop the information and communications services market.   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.   By order of the Board   Yang Jie   Chairman   Hong Kong, 19 March 2020

 

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China Mobile Limited70 70  Notice of the Annual General Meeting   Notice is hereby given that the Annual General Meeting of China Mobile Limited (the “Company”) will be held in  the Conference Room, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 20  May 2020 at 10:00 a.m. 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 2019.  2. To declare a final dividend for the year ended 31 December 2019.  3. To re-elect executive director.  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  Board of Directors of the Company (the “Board”) 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 Board 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 Board 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

 

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Annual Report 2019 71Notice of the Annual General Meeting 71Notice of the Annual General Meeting  (b) (if the Board 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 Board 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.”  9. “THAT conditional on the Stock Exchange granting approval of the listing of and permission to deal in shares  of the Company which fall to be allotted and issued (the “Option Shares”) pursuant to the exercise of any  share options granted (the “Share Options”) under the share option scheme proposed to be adopted by  the Company (the “Share Option Scheme”), the Share Option Scheme be and is hereby approved to be a  share option scheme for the Company and the Board (or a duly authorized committee thereof or such other  committee as the Board may authorize) be and is hereby authorized to do all such acts and to enter into all such  transactions, arrangements and agreements as may be necessary or desirable in order to give full effect to the  Share Option Scheme, including but not limited to:  (a) granting Share Options during the term of the Share Option Scheme and cancelling Share Options in  accordance with the terms of the Share Option Scheme;  (b) allotting and issuing Option Shares pursuant to the exercise of Share Options in accordance with the  terms of the Share Option Scheme;  (c) modifying and/or amending the Share Option Scheme from time to time provided that such modification  and/or amendment is effected in accordance with the terms of the Share Option Scheme relating to the  modification and/or amendment thereof and is subject to the requirements of the Rules Governing the  Listing of Securities on the Stock Exchange (the “Listing Rules”);  (d) applying at the appropriate time or times to the Stock Exchange for approval of the listing of and  permission to deal in all or part of the Option Shares; and  (e) acting as the executive body of the Share Option Scheme, and being responsible for its implementation  and administration.”  By Order of the Board   China Mobile Limited  Wong Wai Lan, Grace   Company Secretary   14 April 2020

 

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China Mobile Limited72 Notice of the Annual General Meeting 72 Notice of the Annual General Meeting  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 has recommended a final dividend of HK$1.723 per share for the year ended 31 December 2019 and, if such dividend is declared by  the members passing resolution number 2, it is expected to be paid on or about Tuesday, 23 June 2020 to those shareholders whose names  appear on the Company’s register of members on Friday, 29 May 2020. Shareholders should read the announcement issued by the Company  on 19 March 2020 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 2019 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 Thursday, 14 May 2020 to Wednesday, 20 May 2020 (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 Wednesday, 13 May 2020.  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 Wednesday, 27 May 2020 to Friday, 29 May 2020 (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 Tuesday, 26 May 2020.   5. Concerning resolution number 6 above, the Board wish to state that the Board 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 Listing Rules, is set out in a separate circular to be despatched to shareholders  together with the 2019 Annual Report.  6. Concerning resolution number 9 above, a summary of the principle terms of the Share Option Scheme and other information required by the  Listing Rules are set out in a separate circular titled “Proposed Adoption of Share Option Scheme” to be despatched to shareholders together  with the 2019 Annual Report.  7. In light of the epidemic situation of COVID-19 and to safeguard shareholders’ health and safety, shareholders may consider  appointing the chairman of the annual general meeting as his/her proxy to vote on the resolutions, instead of attending the annual  general meeting in person.

 

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Annual Report 2019 73 73  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 78 to 148, which comprise:   • the consolidated balance sheet as at 31 December 2019;  • 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 2019, 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.

 

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China Mobile Limited74 Independent Auditor’s Report 74 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  Key Audit Matter How our audit addressed the Key Audit Matter   Revenue recognition   Refer to Note 2 – Significant accounting policies   (r) 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 identification of distinct  performance obligations and the determination  of the stand-alone selling price for each single  performance obligation in the allocation of  transaction prices among various performance  obligations.   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;  • 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  adopted in revenue recognition for existing and new  revenue streams, including multiple performance obligation  arrangements, and the appropriateness of related  judgements made by management;  • examined management’s identification of distinct  performance obligations and the determination of the  stand-alone selling price for each single performance  obligation in the allocation of transaction prices among  various performance obligations, and tested the accuracy  of revenue recognized for each performance obligation, 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; and  • tested the balances of account receivables 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.  Based on the procedures performed, the revenue recognized  was supported by the audit evidence that we obtained and was  consistent with the accounting policies of the Group.

 

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Annual Report 2019 75Independent Auditor’s Report 75Independent Auditor’s Report  Key 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 21 – Investments accounted  for using the equity method and Note 40 –  Accounting estimates and judgements to the  consolidated financial statements.  The Group held interests in associates, which  were accounted for using the equity method of  accounting. 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 volatility of the capital market in  China, the Group identified that the carrying  amount of its investment in Shanghai Pudong  Development Bank Co., Ltd. (“SPD Bank”)  had exceeded its market value as at 31  December 2019. Hence, the Group performed  an impairment assessment on this investment  by assessing 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 in this investment made in  the associate.   We focused on this area because there were  significant judgements and estimates made by  the management in determining the recoverable  amount.   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 exercised in  the assessment;  • assessed the recoverable amount based on its value-inuse  as determined by the discounted cash flow model, and  examined documentation supporting the key judgements  and underlying assumptions adopted in projecting and  estimating future cash flows, including the growth rate, the  margin rate and the discount rate, with consideration of  external evidence and the degree of historical accuracy of  management’s assumptions and projections in achieving  the forecasts;  • reconciled input data to supporting evidence, such as  approved plans and budgets of SPD Bank;  • tested mathematical accuracy and considered the  appropriateness of the cash flows included in the  discounted cash flow model; and  • checked sensitivity analysis performed around the key  assumptions, to ascertain the extent to which adverse  changes, both individually or in aggregate, in those  assumptions adopted, 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.

 

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China Mobile Limited76 Independent Auditor’s Report 76 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.

 

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Annual Report 2019 77Independent Auditor’s Report 77Independent 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 Wilson W.Y. Chow.   PricewaterhouseCoopers   Certified Public Accountants   Hong Kong, 19 March 2020

 

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China Mobile Limited78 78  Consolidated Statement of Comprehensive Income   for the year ended 31 December 2019 (Expressed in Renminbi (“RMB”))  Note  2019  Million  2018  (Note 5)  Million   Operating revenue  Revenue from telecommunications services  Revenue from sales of products and others  4  674,392  71,525  670,907  65,912  745,917 736,819  Operating expenses  Network operation and support expenses  Depreciation and amortization  Employee benefit and related expenses  Selling expenses  Cost of products sold  Other operating expenses  5  6  7  175,810  182,818  102,518  52,813  72,565  46,244  200,007  154,154  93,939  60,326  66,231  40,775  632,768 615,432  Profit from operations  Other gains  Interest and other income  Finance costs  Income from investments accounted for using the equity method  8  9  10  113,149  4,029  15,560  (3,246)  12,641  121,387  2,906  15,885  (144)  13,861  Profit before taxation  Taxation 13(a)  142,133  (35,342)  153,895  (35,944)  PROFIT FOR THE YEAR 106,791 117,951  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  Share of other comprehensive income of investments accounted  for using the equity method  Items that may be subsequently reclassified to profit or loss  Currency translation differences  Share of other comprehensive income of investments accounted  for using the equity method  (75)  14  683  428  (168)  60  1,160  1,188  TOTAL COMPREHENSIVE INCOME FOR THE YEAR 107,841 120,191

 

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Annual Report 2019 79Consolidated Statement of Comprehensive Income 79Consolidated Statement of Comprehensive Income  Consolidated Statement of Comprehensive Income (Continued)   for the year ended 31 December 2019 (Expressed in RMB)   2019 2018  Note Million Million   Profit attributable to:  Equity shareholders of the Company  Non-controlling interests  106,641  150  117,781  170  PROFIT FOR THE YEAR 106,791 117,951  Total comprehensive income attributable to:  Equity shareholders of the Company  Non-controlling interests  107,691  150  120,021  170  TOTAL COMPREHENSIVE INCOME FOR THE YEAR 107,841 120,191  Earnings per share – Basic 14(a) RMB5.21 RMB5.75  Earnings per share – Diluted 14(b) RMB5.18 RMB5.75   The notes on pages 85 to 148 are an integral part of these consolidated financial statements.

 

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80 China Mobile Limited   Consolidated Balance Sheet   as at 31 December 2019 (Expressed in RMB)   As at As at  31 December 31 December  2019 2018  Note Million Million  Assets  Non-current assets  Property, plant and equipment 15 674,832 666,496  Right-of-use assets 16(a) 74,308 –  Construction in progress 17 67,978 72,180  Land use rights and others 18 27,455 27,778  Goodwill 19 35,343 35,343  Other intangible assets 3,475 2,620  Investments accounted for using the equity method 21 155,228 145,325  Deferred tax assets 22 32,628 29,654  Financial assets at fair value through other comprehensive income 23 513 587  Restricted bank deposits 24 10,063 12,369  Other non-current assets 4(a) 17,551 8,442  1,099,374 1,000,794  Current assets  Inventories 25 7,338 8,857  Contract assets 4(a) 5,003 5,022  Accounts receivable 26 32,694 26,540  Other receivables 27 34,133 39,543  Prepayments and other current assets 27 26,708 27,002  Amount due from ultimate holding company 28 1,350 570  Prepaid income tax 1,278 1,959  Financial assets at fair value through profit or loss 23 114,259 76,425  Restricted bank deposits 24 371 9  Bank deposits 29 130,799 291,887  Cash and cash equivalents 30 175,933 57,302  529,866 535,116  Total assets 1,629,240 1,535,910  Equity and liabilities  Liabilities  Current liabilities  Accounts payable 31 164,818 190,847  Bills payable 2,896 3,221  Deferred revenue 32 57,825 63,185  Accrued expenses and other payables 33 182,368 195,572  Amount due to ultimate holding company 28 21,677 11,020  Income tax payable 9,815 10,553  Lease liabilities 3 22,668 –  462,067 474,398

 

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Consolidated Balance Sheet Annual Report 2019 81   Consolidated Balance Sheet (Continued)   as at 31 December 2019 (Expressed in RMB)   Non-current liabilities  Lease liabilities – non-current  Deferred revenue – non-current  Deferred tax liabilities  Note  3  32  22  As at  31 December  2019  Million  51,635  6,861  1,388  As at  31 December  2018  Million  –  4,881  822  59,884 5,703  Total liabilities 521,951 480,101  Equity  Share capital  Reserves  34(a) 402,130  701,643  402,130  650,275  Total equity attributable to equity shareholders of the Company 1,103,773 1,052,405  Non-controlling interests 3,516 3,404  Total equity 1,107,289 1,055,809  Total equity and liabilities 1,629,240 1,535,910   The consolidated financial statements on pages 78 to 148 were approved by the Board of Directors on 19 March  2020 and were signed on its behalf.   Yang Jie   Name of Director   Dong Xin   Name of Director   The notes on pages 85 to 148 are an integral part of these consolidated financial statements.

 

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82 China Mobile Limited   Consolidated Statement of Changes in Equity   for the year ended 31 December 2019 (Expressed in RMB)   Attributable to equity shareholders of the Company   PRC  Statutory Non- Share Capital General Exchange and other Retained controlling Total  capital reserve reserve reserve reserves profits Total interests equity  Million Million Million Million Million Million Million Million Million  As at 1 January 2018 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 34(b)(ii)) – – – – – (27,060) (27,060) (10) (27,070)  Dividends declared in respect of current year  (note 34(b)(i)) – – – – – (32,870) (32,870) – (32,870)  Transfer to PRC statutory reserves (note 34(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  As at 31 December 2018 (As previously reported) 402,130 (264,723) 72 1,034 347,639 566,253 1,052,405 3,404 1,055,809  Changes in accounting policies (note 3) – – – – (336) (2,770) (3,106) – (3,106)  As at 1 January 2019 (As restated) 402,130 (264,723) 72 1,034 347,303 563,483 1,049,299 3,404 1,052,703  Changes in equity for 2019:  Profit for the year – – – – – 106,641 106,641 150 106,791  Changes in the fair value of financial assets at  fair value through other comprehensive income – (75) – – – – (75) – (75)  Currency translation differences – – – 683 – – 683 – 683  Share of other comprehensive income of  investments accounted for using the equity  method – 442 – – – – 442 – 442  Total comprehensive income for the year – 367 – 683 – 106,641 107,691 150 107,841  Dividends approved in respect of previous year  (note 34(b)(ii)) – – – – – (25,059) (25,059) (38) (25,097)  Dividends declared in respect of current year  (note 34(b)(i)) – – – – – (28,206) (28,206) – (28,206)  Transfer to PRC statutory reserves (note 34(d)(ii)) – – – – 1,929 (1,929) – – –  Others – – – – 48 – 48 – 48  As at 31 December 2019 402,130 (264,356) 72 1,717 349,280 614,930 1,103,773 3,516 1,107,289   The notes on pages 85 to 148 are an integral part of these consolidated financial statements.

 

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Annual Report 2019 83   Consolidated Statement of Cash Flows  for the year ended 31 December 2019 (Expressed in RMB)  2019 2018  Note Million Million  Operating activities  Profit before taxation 142,133 153,895  Adjustments for:  – Depreciation and amortization 182,818 154,621  – (Gain)/loss on disposal of property, plant and equipment 7 (64) 8  – Write-off and impairment of property, plant and equipment 7 2,975 1,250  – Credit impairment losses 7 5,761 4,635  – Write-down of inventories 7 171 155  – Interest and other income 9 (15,560) (15,885)  – Finance costs 10 3,246 144  – Dividend income from equity investments at fair value through  other comprehensive income (2) –  – Income from investments accounted for using the equity method (12,641) (13,861)  – Net exchange loss/(gain) 67 (46)  Operating cash flows before changes in working capital 308,904 284,916  Decrease in inventories 1,348 1,212  Increase in contract assets 4(a) (64) (874)  Increase in contract cost 4(a) (9,012) (2,021)  Increase in accounts receivable (11,981) (7,058)  (Increase)/decrease in other receivables (1,364) 1,784  Increase in prepayments and other current assets (3,075) (2,999)  Increase in amount due from ultimate holding company (780) (348)  Decrease/(increase) in deposited customer reserves 24 6,447 (4,835)  Decrease in accounts payable (3,334) (16,400)  Increase in bills payable 794 873  Decrease in deferred revenue 32 (3,380) (19,588)  Increase in accrued expenses and other payables 508 4,613  (Decrease)/increase in amount due to ultimate holding company (107) 112  Cash generated from operations 284,904 239,387  Tax paid  – PRC enterprise income tax paid (37,300) (33,003)  – Hong Kong profits tax paid (13) (233)  Net cash generated from operating activities 247,591 206,151

 

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84 China Mobile Limited Consolidated Statement of Cash Flows   Consolidated Statement of Cash Flows (Continued)   for the year ended 31 December 2019 (Expressed in RMB)   2019 2018  Note Million Million   Investing activities  Payment for property, plant and equipment  Payment for land use rights  Payment for other intangible assets  Proceeds from disposal of property, plant and equipment  Decrease/(increase) in bank deposits  Increase in restricted bank deposits  (excluding deposited customer reserves)  Interest received  Payment for investments accounted for using the equity method  Dividends received from investments accounted for using the equity  method  Purchase of financial assets at fair value through profit or loss  Maturity of financial assets at fair value through profit or loss  Purchase of financial assets at fair value through other comprehensive  income  Short-term loans granted by China Mobile Finance and payment for  other investments  Maturity of short-term loans granted by China Mobile Finance and  other investments  Others  24  21  23  23  23  (202,365)  (355)  (2,245)  423  157,709  (4,503)  11,550  (161)  2,299  (161,343)  129,505  –  (11,464)  16,810  (66)  (192,395)  (580)  (2,189)  8  (11,578)  (348)  11,810  (375)  691  (116,810)  110,087  (711)  (16,210)  6,367  2  Net cash used in investing activities (64,206) (212,231)  Financing activities  Interest paid in relation to short-term deposits placed by ultimate  holding company  Dividends paid to the Company’s equity shareholders  Dividends paid to non-controlling shareholders of subsidiaries  Short-term deposits placed by ultimate holding company  Repayment of short-term deposits placed by ultimate holding company  Repayment of principal and interest of lease liabilities  34(b)  36(a)  36(a)  (187)  (53,265)  (38)  21,637  (10,873)  (22,175)  (142)  (59,930)  (10)  10,873  (8,611)  –  Net cash used in financing activities (64,901) (57,820)  Net increase/(decrease) in cash and cash equivalents 118,484 (63,900)  Cash and cash equivalents at beginning of year 57,302 120,636  Effect of changes in foreign exchange rate 147 566  Cash and cash equivalents at end of year 30 175,933 57,302   Significant non-cash transactions   The Group recorded payables of RMB64,480 million (2018: RMB74,816 million) due to equipment suppliers as at 31  December 2019 for additions of construction in progress during the year then ended. In addition, the Group recorded  lease liabilities of RMB13,219 million (2018: nil) as at 31 December 2019 for additions of right-of-use assets 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 short- term deposits with ultimate holding company (note 28), the newly generated lease liabilities arising from the adoption  of IFRS/HKFRS 16 in current year and repayment of the related principal and interest associated with lease liabilities.   The notes on pages 85 to 148 are an integral part of these consolidated financial statements.

 

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Annual Report 2019 85 85  Notes to the Consolidated Financial Statements   (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 2019 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  2019 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.

 

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China Mobile Limited86 Notes to the Consolidated Financial Statements 86 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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 40.   (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 non- controlling 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.

 

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Annual Report 2019 87Notes to the Consolidated Financial Statements 87Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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 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 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.

 

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China Mobile Limited88 Notes to the Consolidated Financial Statements 88 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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 post- tax 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.

 

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Annual Report 2019 89Notes to the Consolidated Financial Statements 89Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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  depreciation and amortization 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.

 

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China Mobile Limited90 Notes to the Consolidated Financial Statements 90 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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.

 

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Annual Report 2019 91Notes to the Consolidated Financial Statements 91Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (i) Leases  (i) As lessee  Other than land use right, the Group primarily leases telecommunications towers, buildings and  premises and other network equipment. Lease contracts are typically made for fixed periods with  no extension options.   Recognition and measurement of lease liabilities   Lease liabilities are initially measured on the present value of unpaid lease payments at the  commencement date. Lease payments include the net present value of fixed payments, variable  lease payments that are based on an index or a rate, residual value guarantees payments, lease  payments to be made under reasonably certain extension options and payments of penalties for  terminating the lease.   As the interest rate implicit in the lease of the Group cannot be readily determined, the Group  uses incremental borrowing rate as the discounted rate for calculating the present value of lease  payments. When determine the incremental borrowing rate, the Group makes adjustments on risk- free interest based on lease term and credit risk for leases, as the Group does not have recent  third party financing. Lease payments are allocated between principal and finance cost. The Group  calculates lease liability interests based on a constant periodic rate, which is charged to profit or  loss as finance cost over the lease period.   Recognition and measurement of right-of-use asset   Right-of-use assets of the Group are measured at cost, comprising the amount of the initial  measurement of lease liabilities, any lease payments made at or before the commencement date,  initial direct costs and restoration costs etc.. Right-of-use assets are generally depreciated over the  shorter of the asset’s useful life and the lease term on a straight-line basis.   Other lease expenses   Payments associated with short-term leases and leases of low-value assets are recognized on a  straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of  12 months or less. Variable lease payments not based on an index or a rate are recognized in profit  or loss in the period in which the condition that triggers those payments occurs.   Classification of lease related cash flow   Short-term lease payments, payments for leases of low-value assets and variable lease payments  that are not included in the measurement of the lease liabilities of the Group are included in the  cash used in operating activities, repayment of principal and interest of lease liabilities of the Group is  included in the cash used in financing activities.   (ii) As lessor  Lease income from operating leases where the Group is a lessor is recognized in income on a  straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease  are added to the carrying amount of the lease asset and recognized as expense over the lease term  on the same basis as lease income. The respective leased assets are included in the balance sheet  based on their nature. The Group did not need to make any adjustments to the accounting for assets  held as lessor as a result of adopting the new leasing standard.

 

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China Mobile Limited92 Notes to the Consolidated Financial Statements 92 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (i) Leases (Continued)  Accounting policies applied until 31 December 2018   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.

 

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Notes to the Consolidated Financial Statements Annual Report 2019 93   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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;  – right-of-use assets;  – construction in progress;  – land use rights;  – investments in subsidiaries;  – goodwill; and  – other intangible assets with definite life.   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.

 

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94 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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.

 

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Annual Report 2019 95Notes to the Consolidated Financial Statements 95Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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   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.

 

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China Mobile Limited96 Notes to the Consolidated Financial Statements 96 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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.   (m) Accounts receivable and other receivables  Accounts receivable are initially recognized at the amount of consideration that is unconditional and other  receivables are initially recognized at fair value. Considering the discounting impact is immaterial, both of  them are thereafter stated at cost less related loss allowance for impairment (see note 2(l)).   (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. Considering the discounting  impact is immaterial, both of them are thereafter stated at cost.   (p) Deferred revenue  Deferred revenue consists primarily of contract liability which is from the excess of the cumulative  recognized 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.

 

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Annual Report 2019 97Notes to the Consolidated Financial Statements 97Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (r) Revenue recognition from contracts with customers  The Group mainly provides voice, data and other telecommunications services 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. The Group also sells telecommunication  related products to its customers.   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.   When control of a service or product is transferred to a customer, revenue is generally recognized 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 the 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. If a stand-alone selling  price is not directly observable, the Group consider all information that is reasonably available and  maximise the use of observable inputs to estimate the stand-alone 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 is  transferred 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.

 

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China Mobile Limited98 Notes to the Consolidated Financial Statements 98 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (r) Revenue recognition from contracts with customers (Continued)  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/receivable 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 a systemic basis that is consistent with the transfer to the customer  of the goods or services to which the costs incurred to obtain a customer contract relates over the  expected duration of the contract and recorded in selling expense, if it is expected to be recovered.  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  on a systemic basis that is consistent with the transfer to the customer of the goods or services to which  the costs incurred to fulfil a customer contract relates over the expected duration of the contract and  recorded as network operation and support expenses, if it is expected to be recovered. Capitalized cost  incurred to fulfil a contract is recorded as other non-current assets based on its amortization period.   (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.

 

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Notes to the Consolidated Financial Statements Annual Report 2019 99   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (t) Income tax (Continued)  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.   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.

 

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China Mobile Limited100 Notes to the Consolidated Financial Statements 100 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (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.   (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 post- employment benefits of staff other than the contributions described above.

 

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Annual Report 2019 101Notes to the Consolidated Financial Statements 101Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (v) Employee benefits (Continued)  (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.   (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.

 

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China Mobile Limited102 Notes to the Consolidated Financial Statements 102 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (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.   (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.

 

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Annual Report 2019 103 Notes to the Consolidated Financial Statements 103 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   (y) Related parties (Continued)  (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.

 

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China Mobile Limited104 Notes to the Consolidated Financial Statements 104 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   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 2019 and are applicable for the Group:   IFRS/HKFRS 16 “Leases”  IFRIC/HK(IFRIC) – Int 23 “Uncertainty over income tax treatments”  Amendments to IAS/HKAS 28 “Investments in associates and joint ventures”  Annual Improvements to IFRS/HKFRS Standards 2015-2017 Cycle  Amendments to IAS/HKAS 19 “Employee benefits”  Amendments to IFRS/HKFRS 9 “Financial instruments”   New or amendments to IFRS/HKFRS effective for the financial year beginning on 1 January 2019 do not have a  material impact on the Group other than IFRS/HKFRS 16, details of which are set out in note 3(a).   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 2020 and have not  been early adopted by the Group (see note 41). 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.   (a) IFRS/HKFRS 16 “Leases”  (i) Initial application  The Group applied the IFRS/HKFRS 16 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 sheet.   As at 1 January 2019, right-of-use assets of the Group are measured on transition as if IFRS/  HKFRS 16 have had always been applied. Lease liabilities were measured at the present value of  the remaining lease payments, discounted using the lessee’s incremental borrowing rate as at 1  January 2019, which was within the range between 3.5% and 4.0%.   In applying IFRS/HKFRS 16, the Group has used the practical expedients permitted by the  standard, including: applying a single discount rate to a portfolio of leases with reasonably similar  characteristics; accounting for leases with a remaining lease term of less than 12 months as  at 1 January 2019 in the same way as short-term leases; excluding initial direct costs for the  measurement of the right-of-use asset at the date of initial application and using hindsight in  determining the lease term where the contract contains options to extend or terminate the lease.   The Group considers that the assets and liabilities arising from the lease are generated in a single  transaction, therefore, the Group applies IAS/HKAS 12 “Income Taxes” requirements to the leasing  transaction as a whole. Temporary differences relating to right-of-use assets and lease liabilities are  assessed on a net basis.

 

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Annual Report 2019 105 Notes to the Consolidated Financial Statements 105 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   CHANGES IN ACCOUNTING POLICIES (CONTINUED)   (a) IFRS/HKFRS 16 “Leases” (Continued)  (ii) The reconciliation between the operating lease commitments disclosed as at 31 December  2018 and the lease liabilities recognized as at 1 January 2019 is as follows:  Note Million   Operating lease commitments disclosed as at 31 December 2018 220,301  Discounted using the lessee’s incremental borrowing rate at the date of  initial application 202,651  Less: Short-term leases and low-value leases recognized on a   straight-line basis as expense (5,827)  Contracts reassessed as service arrangement (i) (90,520)  Variable lease payments not recognized as lease liabilities (ii) (26,097)   Lease liabilities recognized as at 1 January 2019 80,207   Of which:  Current portion 19,917  Non-current portion 60,290   Note:   (i) Contracts reassessed as service arrangement primarily comprise non-lease component of lease contracts of  telecommunications towers and related assets, lines and network assets, etc..  (ii) Variable lease payments not recognized as lease liabilities primarily comprise variable lease payments not based on an  index or a rate of lease contracts of telecommunications towers and related assets.

 

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106 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   CHANGES IN ACCOUNTING POLICIES (CONTINUED)   (a) IFRS/HKFRS 16 “Leases” (Continued)  (iii) Summary of effects arising from initial application of IFRS/HKFRS 16  The following table shows the impact from the adoption of IFRS/HKFRS 16 on certain impacted  financial statement line items in the Group’s consolidated balance sheet as at 31 December 2018.  Line items that were not affected by the changes have not been included.   Consolidated Balance Sheet (Extracted)  31 December  2018  (As previously  reported)  Million  Changes in  accounting  policy – IFRS/  HKFRS 16  Million  1 January  2019  (As restated)  Million   Assets  Non-current assets   Right-of-use assets – 84,289 84,289  Land use rights and others 27,778 (4,665) 23,113  Investments accounted for using the   equity method 145,325 (1,216) 144,109  Deferred tax assets 29,654 488 30,142   Current assets   Prepayments and other current assets 27,002 (1,811) 25,191   Equity and liabilities  Liabilities  Current liabilities   Lease liabilities – 19,917 19,917   Non-current liabilities   Lease liabilities – non-current – 60,290 60,290  Deferred tax liabilities 822 (16) 806   Equity   Reserves 650,275 (3,106) 647,169   To ensure the consistency of the accounting policies adopted by the Group and its associates  and joint ventures, the opening balance of investment accounted for using the equity method,  the opening retained profits and PRC statutory reserves of the Group as at 1 January 2019 were  reduced by RMB1,216 million, RMB1,202 million and RMB14 million, respectively upon the  adoption of IFRS/HKFRS 16, which were included in the table above.

 

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Annual Report 2019 107 Notes to the Consolidated Financial Statements 107 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   OPERATING REVENUE   2019 2018  Million Million   Revenue from telecommunications services  Voice services 88,624 108,083  Data services  – SMS & MMS 28,648 28,800  – Wireless data traffic 384,999 383,297  – Wireline broadband 68,835 54,285  – Applications and information services 82,543 75,701  Others 20,743 20,741  674,392 670,907  Revenue from sales of products and others 71,525 65,912  745,917 736,819   The majority of the Group’s operating revenue is from contracts with customers, the remaining is not material.   (a) Assets related to contracts with customers  The Group has recognized the following assets related to contract with customers:  Note  As at  31 December 31 December  2019  Million  As at  2018  Million   Contract assets  Less: current portion  (i) 6,567  (5,003)  6,489  (5,022)  Non-current portion recorded in other non-current assets  Contract costs recorded in other non-current assets (ii)  1,564  15,987  1,467  6,975  Other non-current assets 17,551 8,442

 

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108 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   OPERATING REVENUE (CONTINUED)   (a) Assets related to contracts with customers (Continued)  Note:   (i) Changes in contract assets:  Contract assets   Gross amount Loss allowance  Million Million   As at 1 January 2019 6,831 (342)  Increase resulting from satisfaction of performance obligation 6,886 –  Reclassified to accounts receivable (6,834) –  Net impairment loss of contract assets –   As at 31 December 2019 6,883 (316)   (ii) Changes in contract costs  Contract costs  2019 2018  Million Million   As at 1 January 6,975 4,954   Addition 24,149 9,711  Amortization for the year (15,137) (7,690)   As at 31 December 15,987 6,975   Contract costs primarily include sales commissions payable to third party agents and costs related to connecting a customer to  the Group’s network for the provision of telecommunications services. The increase of contract costs was mainly due to the  Group’s continuing investment in the industrial informatization and household market.   (b) Details of contract liabilities  Contract liabilities are presented in deferred revenue in the consolidated balance sheet. Changes in  contract liabilities are as follows:   Contract liabilities  2019 2018  Million Million   As at 1 January 62,812 81,147   Opening balance recognized in the consolidated statement of   comprehensive income for the year (56,409) (66,370)  Other changes for the year 51,028 48,035   As at 31 December 57,431 62,812   (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 “Revenue from Contracts with Customers”, therefore, the  information about the remaining performance obligations were not disclosed.

 

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Annual Report 2019 109 Notes to the Consolidated Financial Statements 109 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   NETWORK OPERATION AND SUPPORT EXPENSES   For the year ended 31 December 2019, to better reflect the cost structure, the Group optimized the  presentation of operating expenses. The changes in presentation has no effect on reported operating revenue,  operating expenses or net profits for any of the years/periods presented. The comparative figures have been  reclassified to conform to current year’s presentation.   The new presentation classifies operating expenses into network operation and support expenses, depreciation  and amortization, employee benefit and related expenses, selling expenses, cost of products sold and other  operating expenses.   Details of network operation and support expenses are as follows:   2019 2018  Note Million Million   Maintenance 53,216 54,569  Power and utilities expenses 32,837 32,032  Operation support and related expenses 39,764 41,087  Charges for use of tower assets (i) 25,518 38,981  Charges for use of lines and network assets (ii) 7,715 8,489  Charges for use of other assets (ii) 7,492 16,102  Others 9,268 8,747   175,810 200,007   Note:   (i) For the year ended 31 December 2019, charges for use of tower assets included the non-lease component charges (maintenance,  utility connection and telecommunications equipment room and related support services) and the lease component charges of variable  lease payments not based on an index or a rate, which are recorded in profit or loss as incurred.  (ii) For the year ended 31 December 2019, charges for use of lines and network assets and other assets mainly included the non-lease  components charges and the lease components charges, such as short-term leases payments, leases payments of low-value assets  and variable leases payments not based on an index or a rate, which are recorded in profit or loss as incurred.  (iii) For the year ended 31 December 2019, short-term leases payments and leases payments of low-value assets amounted to RMB6,757  million, and variable leases payments not based on an index or a rate, which are recorded in profit or loss as incurred, amounted to  RMB8,186 million.  EMPLOYEE BENEFIT AND RELATED EXPENSES   2019 2018  Million Million   Salaries, wages, labor service expenses and other benefits 86,610 81,843  Retirement costs: contributions to defined contribution retirement plans 15,908 12,096   102,518 93,939

 

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China Mobile Limited110 Notes to the Consolidated Financial Statements 110 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   OTHER OPERATING EXPENSES   2019 2018  (Note 5)  Note Million Million   Interconnection 21,037 20,692  Credit impairment losses 5,761 4,635  Write-down of inventories 171 155  (Gain)/loss on disposal of property, plant and equipment (64) 8  Write-off and impairment of property, plant and equipment 2,975 1,250  Auditors’ remuneration   – audit services (i) 111 108  – tax services 2 3  – other services 10 6  Others (ii) 16,241 13,918   46,244 40,775   Note:   (i) Audit services include reporting on the Group’s internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley  Act of the United States of America at a service fee of RMB22 million (2018: RMB22 million).  (ii) Others consist of administrative expenses, taxes and surcharges, and other miscellaneous expenses.  OTHER GAINS   2019 2018  Million Million   Compensation income 915 1,184  Others 3,114 1,722   4,029 2,906   INTEREST AND OTHER INCOME   2019 2018  Million Million   Interest income 10,065 11,443  Fair value gains recognized, net 5,495 4,442   15,560 15,885

 

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Notes to the Consolidated Financial Statements Annual Report 2019 111   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   10 FINANCE COSTS   2019 2018  Million Million  Interest for lease liabilities 3,052 –  Interest on short-term deposits received (note 36(a)) 187 142  Others 7 2  3,246 144  11 DIRECTORS’ AND SENIOR MANAGEMENT’S REMUNERATION  Directors’ remuneration during 2019 is as follows:  Contributions  relating to  social insurance,  Salaries, housing fund and  Directors’ allowances retirement 2019  fees and bonuses scheme Total  ’000 ’000 ’000 ’000  Executive directors (Expressed in RMB)  YANG Jie* – 461 169 630  SHANG Bing** – 1,354 89 1,443  LI Yue*** – 1,585 187 1,772  WANG Yuhang**** – 415 163 578  DONG Xin – 1,469 195 1,664  – 5,284 803 6,087   Independent non-executive directors   (Expressed in Hong Kong dollar)  CHENG Mo Chi, Moses 460 – –460  CHOW Man Yiu, Paul 455 – –455  YIU Kin Wah, Stephen 470 – –470  YANG Qiang# ––––   1,385 – – 1,385

 

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112 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   11 DIRECTORS’ AND SENIOR MANAGEMENT’S REMUNERATION (CONTINUED)   Directors’ remuneration during 2018 is as follows:   Contributions  relating to  social insurance,  Salaries, housing fund and   Directors’ allowances retirement 2018  fees and bonuses scheme Total   ’000 ’000 ’000 ’000  Executive directors (Expressed in RMB)  YANG Jie* – – – –  SHANG Bing** – 867 134 1,001  LI Yue*** – 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   * Mr. YANG Jie was appointed as an executive director and the chairman of the Company with effect from 21 March 2019.  ** Mr. SHANG Bing resigned from his position as an executive director and the chairman of the Company with effect from 4 March 2019.  *** Mr. LI Yue resigned from his position as an executive director and chief executive officer of the Company with effect from 11 October  2019.  **** Mr. WANG Yuhang was appointed as an executive director of the Company with effect from 24 October 2019.   ***** Mr. SHA Yuejia resigned from his position as executive director of the Company with effect from 17 May 2018.   # 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 and he voluntarily waived his director’s fees.   ## Mr. Frank WONG Kwong Shing resigned from the role of independent non-executive director of the Company with effect from 17 May  2018.   In 2019 and 2018, executive directors of the Company voluntarily waived their directors’ fees.   The unpaid portion of executive directors’ performance related bonuses for 2019 will be determined based  on the evaluation conducted in 2020, 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 2019 included directors’ performance related bonuses and additional bonuses related  to their term of service for previous years determined and paid during the year.   The Company’s senior management’s remuneration level during 2019, including basic remuneration for the  year, performance related bonuses for prior year and additional bonuses related to their three-year term of  service, was within the range between RMB1,500,000 to RMB2,000,000.

 

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Annual Report 2019 113 Notes to the Consolidated Financial Statements 113 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   12 INDIVIDUALS WITH HIGHEST EMOLUMENTS   For the year ended 31 December 2019 and 2018, none of the five individuals with the highest emoluments in  the Group are directors or senior management. The emoluments payable to the five individuals with highest  emoluments during 2019 and 2018 are as follows:   2019 2018  ’000 ’000   Salaries, allowances and benefits in kind 6,592 6,579  Performance related bonuses 4,314 4,208  Retirement scheme contributions 187 156   11,093 10,943   The emoluments fell within the following bands:   2019 2018  Number of Number of  individuals individuals   Emolument bands  2,000,001–2,500,000 5   13 TAXATION   (a) Taxation in the consolidated statement of comprehensive income represents:  2019 2018  Note Million Million   Current tax   Provision for the PRC enterprise income tax on the estimated   taxable profits for the year (i) 36,989 34,395  Provision for Hong Kong profits tax on the estimated   assessable profits for the year (ii) 269 275   37,258 34,670   Deferred tax   Origination and reversal of  temporary differences, net (note 22) (1,916) 1,274   35,342 35,944   Note:   (i) The provision for the PRC enterprise income tax is based on the statutory tax rate of 25% (2018: 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  2019. Certain subsidiaries of the Company enjoy the preferential tax rate of 15% (2018: 15%).  (ii) The provision for Hong Kong profits tax is calculated at 16.5% (2018: 16.5%) of the estimated assessable profits for the year  ended 31 December 2019.  (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.

 

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114 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   13 TAXATION (CONTINUED)   (b) Reconciliation between income tax expense and accounting profit at applicable tax  rates:  2019 2018  Million Million   Profit before taxation 142,133 153,895   Notional tax on profit before tax, calculated at the PRC’s statutory tax   rate of 25% (Note) 35,533 38,474  Tax effect of non-taxable items   – Income from investments accounted for using the equity method (3,160) (3,465)  – Interest and other income (75) (131)  Tax effect of non-deductible expenses on the PRC operations 1,211 604  Tax effect of non-deductible expenses on Hong Kong operations 114 85  Rate differential of certain PRC operations (note 13(a)(i)) (930) (1,835)  Rate differential of Hong Kong operations (note 13(a)(ii)) (177) (189)  Tax effect of deductible temporary difference for which no deferred tax  asset was recognized 668 1,414  Tax effect of deductible tax loss for which no deferred tax asset was  recognized 2,019 1,267  Others 139 (280)   Taxation 35,342 35,944   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 relating to components of other comprehensive income is as  follows:  2019 2018  Before tax Tax charged After tax Before tax Tax credited After tax  Million Million Million Million Million Million   Changes in value of financial assets at FVOCI (74) (1) (75) (168) – (168)  Currency translation differences 683 – 683 1,160 – 1,160  Share of other comprehensive income of   investments accounted for using the equity   method 442 – 442 1,248 – 1,248   Other comprehensive income/(loss) 1,051 (1) 1,050 2,240 – 2,240   Current tax – –  Deferred tax (1) –   (1) –

 

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Notes to the Consolidated Financial Statements Annual Report 2019 115   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   14 EARNINGS PER SHARE   (a) Basic 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 RMB106,641 million (2018: RMB117,781 million) and the weighted  average number of 20,475,482,897 shares (2018: 20,475,482,897 shares) in issue during the year.   (b) Diluted earnings per share  The calculation of diluted earnings per share for the year is based on the profit attributable to equity  shareholders of the Company which is used in calculating diluted earnings per share, calculated as  follows, of RMB106,050 million (2018: RMB117,781 million) and the weighted average number of  20,475,482,897 shares (2018: 20,475,482,897 shares) in issue during the year.   2019 2018  Million Million   Profit attributable to equity shareholders of the Company  used in calculating basic earnings per share 106,641 117,781  Add: Dilution impact on share of profit of investment in an associate  due to the associate’s convertible bonds (note 23) 41 –  Less: Fair value gain on the associate’s convertible bonds held by the  Group, net of tax (632) –   Profit attributable to equity shareholders of the Company  used in calculating diluted earnings per share 106,050 117,781

 

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116 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   15 PROPERTY, PLANT AND EQUIPMENT   Buildings  Million   Telecommunications  transceivers,  switching centers,  transmission and  other network  equipment  Million   Office equipment,  furniture,  fixtures  and others Total  Million Million   Cost:  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)  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  As at 1 January 2019 155,451 1,548,851 25,301 1,729,603  Transferred from construction in progress 6,251 159,098 2,165 167,514  Other additions 539 1,235 911 2,685  Disposals – (28) (19) (47)  Written-off (822) (100,962) (2,450) (104,234)  Exchange differences 71 161 9 241  As at 31 December 2019 161,490 1,608,355 25,917 1,795,762  Accumulated depreciation and impairment:  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)  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  As at 1 January 2019 52,158 994,803 16,146 1,063,107  Charge for the year 5,983 150,243 1,817 158,043  Written back on disposals – (13) (14) (27)  Written-off (33) (99,027) (1,192) (100,252)  Exchange differences 9 49 1 59  As at 31 December 2019 58,117 1,046,055 16,758 1,120,930  Net book value:  As at 31 December 2019 103,373 562,300 9,159 674,832  As at 31 December 2018 103,293 554,048 9,155 666,496

 

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Notes to the Consolidated Financial Statements Annual Report 2019 117   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   16 LEASES   This note provides lease information about the Group as a lessee.   (a) Right-of-use assets  Telecommunications  Towers and  related assets  Million  Buildings and  premises  Million  Others  Million  Total  Million   Cost:   As at 1 January 2019 75,169 35,790 3,545 114,504   Additions 5,696 9,135 1,139 15,970  Early termination and modification of   lease contracts (1,890) (1,620) (567) (4,077)  Exchange gains and losses –22 –22   As at 31 December 2019 78,975 43,327 4,117 126,419   Accumulated amortization and  impairment:   As at 1 January 2019 15,299 12,409 2,507 30,215   Charge for the year 14,738 7,675 338 22,751  Early termination of lease contracts (276) (435) (151) (862)  Exchange gains and losses –7–7   As at 31 December 2019 29,761 19,656 2,694 52,111   Net book value:  As at 31 December 2019 49,214 23,671 1,423 74,308   As at 1 January 2019 59,870 23,381 1,038 84,289   (b) Amounts recognized in the consolidated statement of comprehensive income  For the year ended 31 December 2019, the depreciation charge of right-of-use assets recognized in  the consolidated statement of comprehensive income amounted to RMB22,751 million. Other than  the depreciation charge of right-of-use assets, the amounts recognized in the consolidated statement  of comprehensive income in relation to interest expense of lease liabilities, and expenses related to  short-term lease, low-value lease which is not recorded as short-term lease and variable lease payment  are disclosed in Note 5 and Note 10, respectively.

 

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China Mobile Limited118 Notes to the Consolidated Financial Statements 118 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   17 CONSTRUCTION IN PROGRESS   2019 2018  Million Million   As at 1 January 72,180 78,112  Additions 163,312 163,962  Transferred to property, plant and equipment (167,514) (169,894)  As at 31 December 67,978 72,180   As at 31 December 2019, construction in progress primarily comprises expenditure incurred on the network  expansion projects but not yet completed.   18 LAND USE RIGHTS AND OTHERS   As at 31 December 2019, total land use rights amounted to RMB16,489 million (as at 31 December 2018:  RMB16,593 million). For the year ended 31 December 2019, the amortization of land use rights expensed in  the profit or loss amounted to approximately RMB462 million (2018: approximately RMB467 million).   In addition to the land use rights, this item also comprise long-term prepaid expenses and financial assets.   19 GOODWILL   2019 2018  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 2019, 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 2024 and the projected perpetual cash flows after the fifth year. For the five years  ending 31 December 2024, the average growth rate is assumed 1.5% while for the years beyond 31 December  2024, 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.

 

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Notes to the Consolidated Financial Statements Annual Report 2019 119   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   20 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.   Place of Proportion of  incorporation/ ownership interest  establishment Particulars of issued Held by the Held by a  Name of company* and operation and paid up capital Company subsidiary Principal activity   China Mobile Communication British Virgin HK$1 100% – Investment holding company  (BVI) Limited Islands (“BVI”)  China Mobile Communication Mainland China RMB1,641,848,326 – 100% Network and business  Co., Ltd. (“CMC”)** coordination center  China Mobile Group Mainland China RMB5,594,840,700 – 100% Telecommunications  Guangdong Co., Ltd. operator  (“Guangdong Mobile”)  China Mobile Group Mainland China RMB2,117,790,000 – 100% Telecommunications  Zhejiang Co., Ltd. operator  China Mobile Group Mainland China RMB2,800,000,000 – 100% Telecommunications  Jiangsu Co., Ltd. operator  China Mobile Group Mainland China RMB5,247,480,000 – 100% Telecommunications  Fujian Co., Ltd. operator  China Mobile Group Mainland China RMB4,367,733,641 – 100% Telecommunications  Henan Co., Ltd. operator  China Mobile Group Mainland China RMB643,000,000 – 100% Telecommunications  Hainan Co., Ltd. operator  China Mobile Group Mainland China RMB6,124,696,053 – 100% Telecommunications  Beijing Co., Ltd. operator  China Mobile Group Mainland China RMB6,038,667,706 – 100% Telecommunications  Shanghai Co., Ltd. operator  China Mobile Group Mainland China RMB2,151,035,483 – 100% Telecommunications  Tianjin Co., Ltd. operator  China Mobile Group Mainland China RMB4,314,668,531 – 100% Telecommunications  Hebei Co., Ltd. operator  China Mobile Group Mainland China RMB5,140,126,680 – 100% Telecommunications  Liaoning Co., Ltd. operator  China Mobile Group Mainland China RMB6,341,851,146 – 100% Telecommunications  Shandong Co., Ltd. operator

 

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120 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)  (Expressed in RMB unless otherwise indicated)  20 SUBSIDIARIES (CONTINUED)  Place of Proportion of  incorporation/ ownership interest  establishment Particulars of issued Held by the Held by a  Name of company* and operation and paid up capital Company subsidiary Principal activity  China Mobile Group Mainland China RMB2,340,750,100 – 100% Telecommunications  Guangxi Co., Ltd. operator  China Mobile Group Mainland China RMB4,099,495,494 – 100% Telecommunications  Anhui Co., Ltd. operator  China Mobile Group Mainland China RMB2,932,824,234 – 100% Telecommunications  Jiangxi Co., Ltd. operator  China Mobile Group Mainland China RMB3,029,645,401 – 100% Telecommunications  Chongqing Co., Ltd. operator  China Mobile Group Mainland China RMB7,483,625,572 – 100% Telecommunications  Sichuan Co., Ltd. operator  China Mobile Group Mainland China RMB3,961,279,556 – 100% Telecommunications  Hubei Co., Ltd. operator  China Mobile Group Mainland China RMB4,015,668,593 – 100% Telecommunications  Hunan Co., Ltd. operator  China Mobile Group Mainland China RMB3,171,267,431 – 100% Telecommunications  Shaanxi Co., Ltd. operator  China Mobile Group Mainland China RMB2,773,448,313 – 100% Telecommunications  Shanxi Co., Ltd. operator  China Mobile Group Mainland China RMB2,862,621,870 – 100% Telecommunications  Neimenggu Co., Ltd. operator  China Mobile Group Mainland China RMB3,277,579,314 – 100% Telecommunications  Jilin Co., Ltd. operator  China Mobile Group Mainland China RMB4,500,508,035 – 100% Telecommunications  Heilongjiang Co., Ltd. operator  China Mobile Group Mainland China RMB2,541,981,749 – 100% Telecommunications  Guizhou Co., Ltd. operator  China Mobile Group Mainland China RMB4,137,130,733 – 100% Telecommunications  Yunnan Co., Ltd. operator  China Mobile Group Mainland China RMB848,643,686 – 100% Telecommunications  Xizang Co., Ltd. operator   China Mobile Group Mainland China RMB1,702,599,589 – 100% Telecommunications  Gansu Co., Ltd. operator

 

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Notes to the Consolidated Financial Statements Annual Report 2019 121   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   20 SUBSIDIARIES (CONTINUED)  Name of company*  Place of  incorporation/  establishment  and operation  Particulars of issued  and paid up capital  Proportion of  ownership interest  Held by the Held by a  Company subsidiary Principal activity   China Mobile Group Mainland China RMB902,564,911 – 100% Telecommunications  Qinghai Co., Ltd. operator  China Mobile Group Mainland China RMB740,447,232 – 100% Telecommunications  Ningxia Co., Ltd. operator  China Mobile Group Mainland China RMB2,581,599,639 – 100% Telecommunications  Xinjiang Co., Ltd. operator  China Mobile Group Mainland China RMB160,232,547 – 100% Provision of  Design Institute Co., Ltd. telecommunications  network planning  design and consulting  services  China Mobile Holding Mainland China US$30,000,000 100% – Investment  Company Limited** holding company  China Mobile Information Mainland China US$7,633,000 – 100% Provision of roaming  Technology Co., Ltd.** 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 Mainland China US$10,000,000 – 100% Development, services  (Shenzhen) Limited**# and maintenance of  industry value-added  platform  Aspire Information Network Mainland China US$5,000,000 – 100% Provision of mobile data  (Shenzhen) Limited**# solutions, system integration  and development  Aspire Information Mainland China US$5,000,000 – 100% Operation support and  Technologies (Beijing) capability service of digital  Limited**# content  Fujian FUNO Mobile Mainland China RMB60,000,000 – 51% Network construction and  Communication Technology maintenance, network  Company Limited*** planning and optimizing,  training and communication  services   Advanced Roaming & Clearing BVI US$2 100% – Provision of roaming clearance  House Limited services

 

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122 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)  (Expressed in RMB unless otherwise indicated)  20 SUBSIDIARIES (CONTINUED)  Place of Proportion of  incorporation/ ownership interest  establishment Particulars of issued Held by the Held by a  Name of company* and operation and paid up capital Company subsidiary Principal activity  Fit Best Limited BVI US$1 100% – Investment holding company  China Mobile Hong Kong Hong Kong HK$951,046,930 – 100% Provision of  Company Limited telecommunications and  related services  China Mobile International Hong Kong HK$19,319,810,000 100% – Investment holding company  Holdings Limited  China Mobile International Hong Kong HK$8,100,000,000 – 100% Provision of voice and roaming  Limited clearance services, Internet  services and value-added  services  China Mobile Group Device Mainland China RMB6,200,000,000 – 99.97% Provision of electronic  Co., Ltd. communication products  design services and sale of  related products  China Mobile Group Mainland China RMB11,627,783,669 – 92% Provision of non-banking  Finance Co., Ltd. financial services  (“China Mobile Finance”)  China Mobile IoT Mainland China RMB3,000,000,000 – 100% Provision of network services  Company Limited  China Mobile (Suzhou) Software Mainland China RMB980,000,000 – 100% Provision of Mobile Cloud  Technology Co., Ltd. research and development  and operation support  services  China Mobile Mainland China RMB500,000,000 – 100% Provision of e-payment,  E-Commerce Co., Ltd. e-commerce and Internet  (“China Mobile E-Commerce”) finance services  China Mobile (Hangzhou) Mainland China RMB1,250,000,000 – 100% Provision of family information  Information Technology products, capability research  Co., Ltd. and development services  China Mobile Online Services Mainland China RMB2,000,000,000 – 100% Provision of call center and  Co., Ltd. internet information services  MIGU Company Limited Mainland China RMB7,000,000,000 – 100% Provision of mobile Internet  digital content services

 

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Notes to the Consolidated Financial Statements Annual Report 2019 123   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   20 SUBSIDIARIES (CONTINUED)  Name of company*  Place of  incorporation/  establishment  and operation  Particulars of issued  and paid up capital  Proportion of  ownership interest  Held by the Held by a  Company subsidiary Principal activity   China Mobile TieTong Mainland China RMB31,880,000,000 – 100% Provision of engineering,  Company Limited maintenance, sales and  telecommunications  services  China Mobile Internet Mainland China RMB2,900,000,000 – 100% Provision of Internet related  Company Limited services  China Mobile Investment Mainland China RMB975,920,000 – 100% Investment holding company  Holdings Company Limited  China Mobile Quantong Mainland China RMB550,000,000 – 100% Provision of computer system  System Integration integration, construction,  Co., Ltd. maintenance and related  technology development  services  China Mobile (Chengdu) Mainland China RMB300,000,000 – 100% Provision of Information  ICT Co., Ltd. technology products and  technology research and  development services  China Mobile (Shanghai) Mainland China RMB200,000,000 – 100% Provision of Information  ICT Co., Ltd. technology products and  technology research and  development services  China Mobile Financial Mainland China RMB500,000,000 – 100% Provision of e-payment,  Technology Co., Ltd. e-commerce and Internet  finance services  China Mobile Xiong’an Mainland China RMB150,000,000 – 100% Provision of Information  Information & technology products and  Telecommunication technology research and  Technology Company development services  Limited  Zhongyidong Information Mainland China RMB1,000,000,000 – 100% Provision of  Technology Co., Ltd. IT solutions including digital  technology   * The nature of all the legal entities established in Mainland China is limited liability company.  ** Companies registered as wholly owned foreign enterprises in Mainland China.  *** Company registered as a sino-foreign equity joint venture in Mainland China.  # Effective interest held by the Group is 66.41%.

 

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China Mobile Limited124 Notes to the Consolidated Financial Statements 124 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   21 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD  The amounts recognized in the consolidated balance sheet are as follows:  As at  31 December  2019  Million  As at  1 January 2019  (As restated)  (Note 3)  Million  As at  31 December  2018  (As previously  reported)  Million   Associates  Joint ventures  154,004  1,224  142,843  1,266  144,059  1,266  155,228 144,109 145,325  Details of principal associates, all of which are listed on exchanges, are as follows:  Proportion of  Place of ownership  incorporation/ interest held  establishment by the Company  Name of associate Note and operation or its subsidiary  Principal  activity   Shanghai Pudong Development Bank (a) PRC 18% Provision of banking services  Co., Ltd. (“SPD Bank”)   China Tower Corporation Limited (b) PRC 28% Construction, maintenance and  (“China Tower”) operation of telecommunications  towers   IFLYTEK Co., Ltd. (“IFLYTEK”) (a) PRC 13% Provision of intelligent voice and  artificial intelligence products and  services   True Corporation Public Company Limited Thailand 18% Provision of telecommunications  (“True Corporation”) services   Note:   (a) Up to the approval date of these financial statements, SPD Bank and IFLYTEK have not yet disclosed their annual financial statements  for the year ended 31 December 2019. The numbers presented in the table below are extracted from financial information which was  released and publicly disclosed by SPD Bank and IFLYTEK, with some information such as total liabilities and total equity not being  disclosed.  (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.

 

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Notes to the Consolidated Financial Statements Annual Report 2019 125   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   21 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)   (i) Summary financial information on principal associates:  SPD Bank  As at 31 December  2019 2018  Million Million   Total assets 7,004,796 6,289,606  Total liabilities – 5,811,226  Total equity – 478,380   Total equity attributable to ordinary equity shareholders 493,809 441,642  Percentage of ownership of the Group 18% 18%   Total equity attributable to the Group 89,774 80,291  The impact of fair value adjustments at the time of acquisition,   goodwill and others 6,084 6,660   Interest in associates 95,858 86,951   China Tower IFLYTEK True Corporation  As at 31 December As at 31 December As at 31 December  2019 2018 2019 2018 2019 2018  Million Million Million Million Million Million   Total current assets 40,995 31,799 – 7,762 31,298 26,309  Total non-current assets 297,072 283,565 – 7,540 90,680 78,251  Total current liabilities 128,364 114,759 – 5,813 35,186 43,097  Total non-current liabilities 27,142 20,103 – 1,278 57,457 33,215  Total equity 182,561 180,502 – 8,211 29,335 28,248   Total equity attributable to   equity shareholders 182,559 180,502 11,636 7,971 29,184 28,123  Percentage of ownership   of the Group 28% 28% 13% 13% 18% 18%   Total equity attributable to   the Group 51,281 50,414 1,465 1,075 5,253 5,062  The impact of fair value   adjustments at the time   of acquisition, goodwill   and others – – 810 812 1,834 2,851  Elimination of unrealized   profits resulting   from the transfer of   Tower Assets and its   realization (2,543) (3,115) – – – –   Interest in associates 48,738 47,299 2,275 1,887 7,087 7,913

 

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126 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   21 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)   (i) Summary financial information on principal associates (Continued):  SPD Bank  2019  Million  2018  Million  China Tower  2019  Million  2018  Million   Revenue 190,688 170,865 76,428 71,819  Profit before taxation 69,817 65,284 6,837 3,475  Profit attributable to ordinary equity   shareholders 57,186 54,189 5,222 2,650  Other comprehensive income   attributable to ordinary equity   shareholders – 6,979 – –  Total comprehensive income   attributable to ordinary equity   shareholders – 61,168 5,222 2,650  Dividends received from associates 1,867 533 111 –   IFLYTEK True Corporation  2019 2018 2019 2018  Million Million Million Million   Revenue 10,089 7,917 31,423 33,214  Profit before taxation 978 659 1,727 2,662  Profit attributable to ordinary equity   shareholders 788 542 1,256 1,444  Other comprehensive income/(loss)   attributable to ordinary equity   shareholders – 1 (186) (46)  Total comprehensive income   attributable to ordinary equity   shareholders – 543 1,070 1,398  Dividends received from associates 27 18 117 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 2019 As at 31 December 2018  Carrying Carrying  amount Fair value amount Fair value  Million Million Million Million   SPD Bank 95,858 65,993 86,951 52,282  China Tower 48,738 75,729 47,299 63,738  IFLYTEK 2,275 9,268 1,887 6,623  True Corporation 7,087 6,432 7,913 6,589

 

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Annual Report 2019 127Notes to the Consolidated Financial Statements 127Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   21 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 2019, the fair value of investment in SPD Bank was RMB65,993 million (as at 31  December 2018: RMB52,282 million) based on its quoted market price, which was below its carrying  amount by approximately 31.2% (as at 31 December 2018: approximately 39.9%). Management of  the Group performed an impairment test and determined the respective recoverable amount of the  investment based on its VIU. The calculation has considered pre-tax cash flow projections of SPD Bank  for the five years ending 31 December 2024 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 2019.   As at 31 December 2019, the fair value of investment in True Corporation was RMB6,432 million (as at  31 December 2018: RMB6,589 million) based on its quoted market price, which was below its carrying  amount by approximately 9.2% (as at 31 December 2018: approximately 16.7%). 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 2019.   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 2019 and 2018.   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, which represents 50% of the equity interest of the  Fund. As at 31 December 2019, CMC had contributed RMB1,256 million (as at 31 December 2018: RMB1,134  million) to the Fund with an outstanding commitment to further invest RMB244 million (as at 31 December  2018: RMB366 million) to the Fund upon request to be lodged by the Fund. There were no contingent liabilities  relating to the Group’s interest in this joint venture as at 31 December 2019.

 

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128 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   22 DEFERRED TAX ASSETS AND LIABILITIES   The analysis of deferred tax assets and liabilities are as follows:   As at As at  31 December 31 December  2019 2018  Million Million   Deferred tax assets:   – Deferred tax asset to be recovered after 12 months 3,519 2,982  – Deferred tax asset to be recovered within 12 months 29,109 26,672  32,628 29,654   Deferred tax liabilities:   – Deferred tax liabilities to be settled after 12 months (857) (598)  – Deferred tax liabilities to be settled within 12 months (531) (224)  (1,388) (822)   Deferred tax assets and liabilities recognized and the movements during 2019   As at 31 Changes   December in As at 1 Charged   2018 accounting January (Charged)/ to other As at   (As previously policies 2019 credited to comprehensive Exchange 31 December   reported) (Note 3) (As restated) profit or loss income differences 2019   Million Million Million Million Million Million Million   Net deferred tax assets after offsetting:  Write-down of obsolete inventories 75 – 75 (62) – – 13  Depreciation, write-off and impairment of   property, plant and equipment 5,289 – 5,289 833 – – 6,122  Accrued expenses and others 17,715 – 17,715 1,003 – – 18,718  Deferred revenue from Reward Program 5,784 – 5,784 (299) – – 5,485  Credit impairment losses 1,458 – 1,458 179 – – 1,637  Recognition of right-of-use assets and lease   liabilities – 488488281 – –769  Change in value of financial assets at FVOCI (6) – (6) – (1) – (7)  Contract asset, contract liability and contract   cost relating to customer contract (661) – (661) 552 – – (109)   29,654 488 30,142 2,487 (1) – 32,628   Net deferred tax liabilities after offsetting:  Depreciation of property, plant and equipment (1,117) – (1,117) (1,152) – (13) (2,282)  Recognition of right-of-use assets and lease   liabilities – 161645 – –61  Deferred revenue from Reward Program 157 – 157 109 – – 266  Accrued expenses and others 138 – 138 427 – 2 567   (822) 16 (806) (571) – (11) (1,388)   Total 28,832 504 29,336 1,916 (1) (11) 31,240

 

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Notes to the Consolidated Financial Statements Annual Report 2019 129   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   22 DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)   Deferred tax assets and liabilities recognized and the movements during 2018   Charged  As at 1 (Charged)/ to other As at 31  January credited to comprehensive Exchange December  2018 profit or loss income differences 2018   Million Million Million Million Million   Net deferred tax assets after offsetting:   Write-down of obsolete inventories 120 (45) – – 75  Depreciation, write-off and impairment of property, plant   and equipment 7,082 (1,793) – – 5,289  Accrued expenses and others 18,934 (1,219) – – 17,715  Deferred revenue from Reward Program 5,943 (159) – – 5,784  Credit impairment losses 1,294 164 – – 1,458  Change in value of financial assets at FVOCI (6) – – – (6)  Contract asset, contract liability and contract cost   relating to customer contract (2,879) 2,218 – – (661)   30,488 (834) – – 29,654   Net deferred tax liabilities after offsetting:   Depreciation of property, plant and equipment (362) (736) – (19) (1,117)  Others – 296 – (1) 295   (362) (440) – (20) (822)   Total 30,126 (1,274) – (20) 28,832   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 RMB8,677 million (2018: RMB6,476  million) in respect of deductible temporary differences and tax losses amounting to RMB42,469 million (2018:  RMB29,026 million) that can be carried forward against future taxable income as at 31 December 2019. The  deductible tax losses are allowed to be carried forward within next five years against the future taxable profits,  while those of high-tech enterprises are allowed to be within next ten years.

 

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130 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)  (Expressed in RMB unless otherwise indicated)  23 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS  Financial assets  at fair value Financial assets  through other at fair value  comprehensive through  income profit or loss  (“FVOCI”)(i) (“FVPL”)(ii)  Million Million   As at 31 December 2018  – Current portion – 76,425  – Non-current portion 587 501   587 76,926   Addition – 161,343  Maturity – (129,505)  Fair value gains recognized in profit or loss – 5,495  Fair value losses recognized in other comprehensive income,   before tax (74) –   As at 31 December 2019 513 114,259  Less: Current portion – (114,259)  Non-current portion 513 –   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 2019 and 2018.  (ii) The category of FVPL mainly comprises wealth management products (“WMPs”) offered by various financial institutions in China  amounting to RMB103,328 million and the Group’s investment in the convertible bonds issued by SPD Bank (“CB”) amounting to  RMB9,928 million. All the WMPs will mature within one year with variable return rates indexed to the performance of underlying assets.  As at 31 December 2019 and 2018, they were measured at fair values (level 3: inputs for the assets or liabilities that are not based on  observable market data (that is unobservable inputs)). The fair values were determined based on cash flow discounted assuming the  expected return will be obtained upon maturity. The CB was acquired by Guangdong Mobile, a wholly-owned subsidiary of the Company  in October 2019 at a purchase consideration of RMB9,085 million upon SPD Bank publicly issued the instruments. The CB have been  listed for trading and can be converted into equity shares of SPD Bank from 4 May 2020 to 27 October 2025. The CB were measured at  the fair value as level 1 of fair value hierarchy.  There were no transfers between the levels of fair value hierarchy for the year ended 31 December 2019 and  2018.

 

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Notes to the Consolidated Financial Statements Annual Report 2019 131   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   24 RESTRICTED BANK DEPOSITS   As at 31 December 2019 As at 31 December 2018   Non-current  assets  Million  Current  assets  Million  Total  Million  Non-current  assets  Million  Current  assets  Million  Total  Million  Restricted bank deposits  – Statutory deposit  reserves (Note) 8,586  – Deposited customer  reserves (Note) 1,435  – Pledged bank deposits 42  –  –  371  8,586  1,435  413  4,486  7,882  1  –  –  9  4,486  7,882  10  10,063 371 10,434 12,369 9 12,378   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, 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.  25 INVENTORIES  As at As at  31 December 31 December  2019 2018  Million Million  Handsets, SIM cards and other terminals  Other consumables  26 ACCOUNTS RECEIVABLE  (a) Aging analysis  Aging analysis of accounts receivable, net of loss allowance iWithin 30 days  31–60 days  61–90 days  90 days–1 year  Over 1 year  5,205 6,939  2,133 1,918  7,338 8,857  s as follows:  As at As at  31 December 31 December  2019 2018  Million Million  14,353 11,160  3,789 3,680  3,035 2,358  9,575 7,649  1,942 1,693  32,694 26,540   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.

 

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China Mobile Limited132 Notes to the Consolidated Financial Statements 132 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   26 ACCOUNTS RECEIVABLE (CONTINUED)   (b) Impairment loss allowance of accounts receivable  The following table summarizes the changes in impairment loss allowance of accounts receivable:   2019 2018  Million Million   As at 1 January 7,269 5,863  Credit loss recognized 5,833 4,480  Accounts receivable written off (3,545) (3,074)  As at 31 December 9,557 7,269   27 OTHER RECEIVABLES, PREPAYMENTS AND OTHER CURRENT ASSETS   Other receivables, which are measured at amortized cost, are expected to be recovered within one year. They  primarily include interest receivable from banks, utilities deposits, rental deposits, short-term loans and short- term debt investments; Among which, short-term loans granted to China Tower through China Mobile Finance  was RMB7,450 million (as at 31 December 2018: RMB11,000 million), and other short-term loans granted to  banks and other financial institutions as well as short-term debt investments purchased through China Mobile  Finance was RMB11,464 million (as at 31 December 2018: RMB13,260 million). 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 maintenance prepayments, power and utilities  prepayments and input value-added tax to be deducted.   As at 31 December 2019 and 2018, there were no significant overdue amounts for other receivables.   28 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 2019, amount due to ultimate holding company comprises the short-term deposits of  CMCC and its subsidiaries excluding the Group (“CMCC Group”) in China Mobile Finance amounting to  RMB21,637 million (as at 31 December 2018: RMB10,873 million) and the corresponding interest payable  arising from the deposits. The deposits are unsecured and carry interest at prevailing market rate.   29 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.

 

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Annual Report 2019 133Notes to the Consolidated Financial Statements 133Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   30 CASH AND CASH EQUIVALENTS   As at As at  31 December 31 December  2019 2018  Million Million   Bank deposits with original maturity within three months 8,959 3,470  Cash at banks and on hand 166,974 53,832   175,933 57,302   31 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  2019  Million  As at  31 December  2018  Million   Payable in the periods below:  Within 1 month or on demand 139,856 164,081  After 1 month but within 3 months 6,270 8,902  After 3 months but within 6 months 4,839 7,349  After 6 months but within 9 months 4,569 3,411  After 9 months but within 12 months 9,284 7,104  164,818 190,847   All of the accounts payable are expected to be settled within one year or are repayable on demand.

 

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China Mobile Limited134 Notes to the Consolidated Financial Statements 134 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   32 DEFERRED REVENUE   Deferred revenue primarily includes prepaid service fees received from customers and unredeemed point  rewards.   2019 2018  Million Million   As at 1 January  – Current portion  – Non-current portion  63,185  4,881  84,897  2,888  68,066 87,785  Additions during the year  Recognized in the consolidated statement of comprehensive income  256,432  (259,812)  299,383  (319,102)  As at 31 December 64,686 68,066  Less: Current portion (57,825) (63,185)  Non-current portion 6,861 4,881  33 ACCRUED EXPENSES AND OTHER PAYABLES  Receipts-in-advance  Other payables  Accrued salaries, wages and other benefits  Accrued expenses  As at  31 December  2019  Million  69,421  28,962  7,213  76,772  As at  31 December  2018  Million  69,629  31,990  6,950  87,003  182,368 195,572

 

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Annual Report 2019 135Notes to the Consolidated Financial Statements 135Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   34 CAPITAL, RESERVES AND DIVIDENDS   (a) Share capital  Ordinary shares, issued and fully paid:   Number HK$ Equivalent  of shares Million RMB Million   As at 1 January and 31 December 2019 and 2018 20,475,482,897 382,263 402,130   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:  2019 2018  Million Million   Ordinary interim dividend declared and paid of   HK$1.527 (equivalent to approximately RMB1.343)   (2018: HK$1.826 (equivalent to approximately RMB1.540))   per share 28,206 32,870  Ordinary final dividend proposed after the balance sheet date of   HK$1.723 (equivalent to approximately RMB1.543)   (2018: HK$1.391 (equivalent to approximately RMB1.219))   per share 31,602 24,955   59,808 57,825   The proposed ordinary final dividend, which is declared in Hong Kong dollar is translated into  RMB with reference to the rate HK$1 = RMB0.89578, being the rate announced by the State  Administration of Foreign Exchange in the PRC on 31 December 2019. As the ordinary final dividend  was declared after the balance sheet date, such dividend is not recognized as liability as at 31  December 2019.   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:  2019 2018  Million Million   Ordinary final dividend in respect of the previous financial year,   approved and paid during the year, of HK$1.391   (equivalent to approximately RMB1.219) (2018: HK$1.582   (equivalent to approximately RMB1.322)) per share 25,059 27,060

 

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136 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   34 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 General Retained  capital reserve profits Total  Million Million Million Million   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 34(b)(ii)) – – (27,060) (27,060)  Dividends declared in respect of   current year (note 34(b)(i)) – – (32,870) (32,870)   As at 31 December 2018 402,130 72 87,452 489,654  As at 1 January 2019 402,130 72 87,452 489,654  Changes in equity for 2019:  Profit for the year – – 53,511 53,511   Total comprehensive income for  the year – – 53,511 53,511   Dividends approved in respect of   previous year (note 34(b)(ii)) – – (25,059) (25,059)  Dividends declared in respect of   current year (note 34(b)(i)) – – (28,206) (28,206)   As at 31 December 2019 402,130 72 87,698 489,900   (d) Nature and purpose of different 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;

 

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Notes to the Consolidated Financial Statements Annual Report 2019 137   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   34 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)   (d) Nature and purpose of different reserves (Continued)  (i) Capital reserve (Continued)  – The changes in fair value of financial assets at FVOCI, net of tax, until the financial assets are  derecognized; and  – The difference between the consideration and the carrying amounts of net assets of acquired  business 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 foreign currency translation differences arising from the  translation of foreign currency denominated financial statements of overseas enterprises. 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 2019 and 2018, the Group’s total debt-to-book capitalization ratio was nil.   Except for China Mobile Finance that is subject to certain capital requirements imposed by China Banking  and Insurance Regulatory Commission, the Company and its other subsidiaries are not subject to  externally imposed capital requirements.

 

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138 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)  (Expressed in RMB unless otherwise indicated)  35 BALANCE SHEET OF THE COMPANY  As at As at  31 December 31 December  2019 2018  Note Million Million  Assets  Non-current assets  Investments in subsidiaries 492,759 491,748  492,759 491,748  Current assets  Amounts due from subsidiaries 1,346 1,346  Other receivables 3 5  Bank deposits 603 1,018  Cash and cash equivalents 310 245  2,262 2,614  Total assets 495,021 494,362  Equity and liabilities  Liabilities  Current liabilities  Amount due to a subsidiary 5,094 4,610  Accrued expenses and other payables 18 98  Income tax payable 9 –  5,121 4,708  Total liabilities 5,121 4,708  Equity  Share capital 34(a) 402,130 402,130  Reserves 34(c) 87,770 87,524  Total equity 489,900 489,654  Total equity and liabilities 495,021 494,362   The balance sheet of the Company was approved by the Board of Directors on 19 March 2020 and was signed  on its behalf.   Yang Jie   Name of Director   Dong Xin   Name of Director

 

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Notes to the Consolidated Financial Statements Annual Report 2019 139   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   36 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 2019 and 2018. 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.   2019 2018  Note Million Million   Telecommunications services revenue (i) 495 71  Property leasing and management services revenue (ii) 197 226  Telecommunications services charges (i) 103 –  Property leasing and management services charges (ii) 1,129 1,009  Charges for use of network assets (iii) 1,448 2,308  Charges of use of network capacity (iii) 30 402  Interest expenses (iv) 187 142  Short-term bank deposits received (iv) 21,637 10,873  Short-term bank deposits repaid (iv) 10,873 8,611  Consideration of assets transferred (v) 873 –   The outstanding balances related to transactions with CMCC Group are included in the following accounts   captions summarized as follows:  Note  As at  31 December  2019  Million  As at  31 December  2018  Million   Accounts receivable 630 282  Other receivables 277 145  Prepayments and other current assets 2 5  Amounts due from ultimate holding company 1,350 570  Right-of-use assets 399 –  Lease liabilities 468 –  Accounts payable 6,741 5,825  Accrued expenses and other payables 90 80  Amounts due to ultimate holding company (iv) 21,677 11,020   These amounts arise in the ordinary course of business and with terms determined through mutual  negotiation.   Note:   (i) The amounts represent telecommunications services settlement received/receivable or paid/payable 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 amounts represent the charges of property leasing and management fees received/receivable from or paid/payable to  CMCC Group in respect of offices, retail outlets and warehouses. For the year ended 31 December 2019, the amounts included  the depreciation of right-of-use assets recognized in relation to the property leasing agreements and the finance cost associated  with the lease liabilities.  (iii) The amounts represent the charges for use of network assets and the TD-SCDMA network capacity charges paid/payable to  CMCC Group.  (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.  (v) On 9 August 2019, the Group completed an acquisition of assets related to the “Village Connect” project, at a total consideration  of RMB873 million.

 

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140 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   36 RELATED PARTY TRANSACTIONS (CONTINUED)   (b) Principal transactions with associates and joint ventures of the Group  The following is a summary of principal related party transactions entered into by the Group with the  associates and joint ventures of the Group for the year ended 31 December 2019 and 2018.   2019 2018  Note Million Million  Telecommunications services revenue (i) 535 604  Property leasing and management services revenue (ii) 30 40  Interest and other income (iii) 6,130 4,083  Dividend income 2,299 691  Related costs for use of tower assets (iv) 39,843 37,837   The outstanding balances related to transactions with the associates and joint ventures of the Group are   included in the following accounts captions summarized as follows:  Note  As at  31 December  2019  Million  As at  31 December  2018  Million   Accounts receivable (i) 225 240  Interest receivable (iii) 831 829  Right-of-use assets (iv) 40,316 –  Other receivables (v) 9,545 12,518  Financial assets at FVPL (vi) 54,490 41,128  Bank deposits (vii) 59,205 44,955  Prepayments and other current assets 36 160  Lease liabilities (iv) 43,142 –  Accounts payable (iv) 4,708 3,252  Bills payable (iv) 356 135  Accrued expenses and other payables (iv) 6,511 7,301   Note:   (i) The amounts represent the telecommunications services revenue received/receivable from the Group’s associates and joint  ventures.  (ii) The amounts represent the property leasing revenue received/receivable from China Tower.  (iii) The amounts primarily represent interest received/receivable from deposits placed with SPD Bank, placements with SPD Bank  and short-term loans granted to China Tower; and they also include income derived from WMP purchased from SPD Bank and  the income from the CB publicly issued by SPD Bank as mentioned in Note 23.  (iv) The amounts primarily represent the right-of-use assets and lease liabilities recognized and the amount paid/payable to China  Tower for the use of telecommunications towers. Related costs for use of tower assets include charges for use of tower assets,  the depreciation of the right-of-use assets, and the finance cost associated with the lease liabilities.  (v) Other receivables primarily represent the short-term loans granted to China Tower and placements with SPD Bank and  withholding power and utilities expenses and lease charges payable on behalf of China Tower, etc. The interest rates of short- term loans are mutually agreed among both parties with reference to the market interest rates.  (vi) The amounts represent the WMP purchased from SPD Bank and the CB publicly issued by SPD Bank. The return rates of WMP  are determined with reference to market conditions and the fair values of CB are based on quoted market prices (level 1).  (vii) The amounts represent the deposits placed with SPD Bank, the interest rate of which is determined in accordance with the  benchmark interest rate published by PBOC.

 

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Notes to the Consolidated Financial Statements Annual Report 2019 141   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   36 RELATED PARTY TRANSACTIONS (CONTINUED)   (c) Transactions with associates and joint ventures of CMCC Group  In addition, the Group has entered into transactions with associates and joint ventures of CMCC Group  during the ordinary course of the Group’s business based on terms comparable to terms of transactions  enacted with other entities, the amounts of such transactions and related outstanding balances were not  material.   (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 28 and 36(a)), associates and joint venture (note 36(b))  and the transaction to increase contribution to the Fund (note 21), 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 all 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 11.  37 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, WMPs (recorded in FVPL), CB (recorded in FVPL), accounts receivable and  other 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. CB are bonds with AAA credit rating bonds issued by SPD Bank, with a  low level of credit risks.

 

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142 China Mobile Limited Notes to the Consolidated Financial Statements   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   37 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  acceptable.   (ii) Impairment of financial assets  The Group has 3 types of assets that are subject to expected credit loss model:   – Accounts receivable  – Contract assets  – Other financial assets at amortized cost  Accounts receivable and contract assets   The Group applies the 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 2019 and 2018 was determined as follows for each  customers group of accounts receivable due from individual customers and corporate customers,  respectively:   Individual customers  Expected loss rate  Within  30 days  2%  31 days to  90 days  20%  91 days to  1 year  80%  Over  1 year  100%  Corporate customers  Expected loss rate  Within  180 days  2%  181 days to  1 year  20%  1 year to  2 years  60%  2 years to  3 years  80%  Over  3 years  100%   Receivables from other customers are of lower risk, and the expected credit loss is insignificant.   Credit impairment losses on accounts receivable and contract assets are presented within other  operating expenses. Subsequent recoveries of amounts previously written off are credited against  the same line item. Individual receivables which were known to be uncollectible were written off by  reducing the carrying amount directly.

 

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Notes to the Consolidated Financial Statements Annual Report 2019 143   Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   37 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED)   (a) Credit risk and concentration risk (Continued)  (ii) Impairment of financial assets (Continued)  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 loss allowance 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, payments for short-term deposits  of CMCC Group received by China Mobile Finance, 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:  Total More than More than  contractual Within 1 years but 3 years but  Carrying undiscounted 1 years or less than less than More than  amount cash flow on demand 3 years 5 years 5 years   Million Million Million Million Million Million  As at 31 December 2019  Accounts payable 164,818 164,818 164,818 – – –  Bills payable 2,896 2,896 2,896 – – –  Accrued expenses and other payables 182,368 182,368 182,368 – – –  Amount due to ultimate holding  company 21,677 21,677 21,677 – – –  Lease liabilities 74,303 80,973 23,814 39,791 9,662 7,706  446,062 452,732 395,573 39,791 9,662 7,706  Total More than More than  contractual Within 1 years but 3 years but  Carrying undiscounted 1 years or less than less than More than  amount cash flow on demand 3 years 5 years 5 years  Million Million Million Million Million Million  As at 31 December 2018  Accounts payable 190,847 190,847 190,847 – – –  Bills payable 3,221 3,221 3,221 – – –  Accrued expenses and other payables 195,572 195,572 195,572 – – –  Amount due to ultimate holding  company 11,020 11,020 11,020 – – –  400,660 400,660 400,660 – – –

 

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China Mobile Limited144 Notes to the Consolidated Financial Statements 144 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   37 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 2019, the Group did not have any interest- bearing borrowings at variable rates, but had RMB21,637 million of short-term bank deposits placed by  CMCC (2018: RMB10,873 million), which were 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 2019, total cash and bank balances of the Group amounted to RMB317,166 million  (2018: RMB361,567 million), interest-bearing receivables amounted to RMB18,914 million (2018:  RMB24,260 million) and WMPs amounted to RMB103,328 million (2018: RMB76,425 million). The  interest and other income generated by the assets mentioned above for 2019 was RMB14,408 million  (2018: RMB15,885 million) and the average interest rate was 3.17% (2018: 3.33%). 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 RMB3,334 million (2018: RMB3,480 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 that is different from the functional currency of  the respective group entities. As the amount of the Group’s foreign currency cash and deposits with  banks represented 3.5% (2018: 3.3%) 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.

 

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Annual Report 2019 145Notes to the Consolidated Financial Statements 145Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   38 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:   2019 2018  Million Million   Land and buildings 7,430 9,327  Telecommunications equipment and others 34,463 44,174   41,893 53,501   (b) Operating lease commitments  The Group leases certain land and buildings, leased lines and network assets, motor vehicles, computer  and other office equipment.   From 1 January 2019, in accordance with IFRS/HKFRS 16, the Group has recognized right-of-use assets  for these leases, except for short-term leases, leases of low-value assets, variable payment leases which  are recorded in profit or loss as incurred and contracts reassessed as service arrangements, see note 3(a)  and note 16 for further information.   The portfolio of the majority short-term leases which were committed by the Group as at 31 December  2019 was similar to the portfolio of short-term leases which were recorded in the profit or loss as incurred  during 2019. Therefore, there is no need to disclose short-term lease commitments separately.   The total future minimum lease payments under non-cancellable operating leases as at 31 December  2018 were as follows:   Leased lines  Land and and network  buildings 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   (c) Investment commitments  The Group has an investment commitment to a joint venture (see note 21).

 

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China Mobile Limited146 Notes to the Consolidated Financial Statements 146 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   39 POST BALANCE SHEET EVENT   After the balance sheet date, the Board of Directors proposed a final dividend for the year ended 31 December  2019. Further details are disclosed in note 34(b)(i).   On 23 January 2020, the Company announced that it had resolved to propose the adoption of the share option  scheme (the “Scheme”) to further improve the governance structure of the Company and to effectively attract,  motivate and retain the core backbone employees of the Company, which has been approved by the State- owned Assets Supervision and Administration Commission of the State Council (the “SASAC”), and is still  subject to the obtaining of the approval from the shareholders of the Company. As at the approval date of the  consolidated financial statements, the Company has not granted any share options under the Scheme.   The Group’s 4G and 5G networks are expected to co-exist for a long time in 2020 and beyond, and the  technologies in relation to its 4G wireless assets (mainly comprising base station main equipment, base station  extension equipment and antenna feed lines) are relatively stable and have not experienced any major upgrade  since investment in such assets. After the Group’s assessment of the actual state of use of its 4G wireless  assets, the Company has resolved to adjust the depreciable life of the Group’s 4G wireless assets from 5 years to  7 years with effect from 1 January 2020. The adjusted depreciable life of the Group’s 4G wireless assets is the  same as the depreciable life of its 5G wireless assets, which the Company considers to be a more reasonable  reflection of the expected useful life of such type of assets. The aforesaid changes in accounting estimates will  be made using the prospective application method with no need for any retrospective adjustment, and hence  the Group’s financial reports for 2019 and earlier years will not be affected. According to the Company’s static  calculation based on currently available information, the aforesaid changes are expected to impact the Group’s  depreciation by a decrease of approximately RMB18.3 billion for the year ending 31 December 2020.   After the outbreak of Coronavirus Disease 2019 (“COVID-19 outbreak”) in early 2020, a series of precautionary  and control measures have been implemented across the country. The pandemic has impacted the business  development of the Group to some extent, and the Group will pay close attention to the development of the  COVID-19 outbreak and continuously evaluate its impact on the financial position and operating results of the  Group.   40 ACCOUNTING ESTIMATES AND JUDGEMENTS   Key sources of estimation uncertainty   Key sources of estimation uncertainty are as follows:   Impairment losses of accounts receivable   The impairment loss allowance of 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.   Amortization of contract cost   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 duration of the customer contract, which is consistent with the recognition of  revenue from the products and services to which the assets relate. The amortization period is updated if there is  a significant change in the Group’s expected duration of the customer contract.

 

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Annual Report 2019 147Notes to the Consolidated Financial Statements 147Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   40 ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)   Key sources of estimation uncertainty (Continued)   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, right-of-use assets, 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, right-of-use assets, 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 15, 19 and 21, respectively.

 

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China Mobile Limited148 Notes to the Consolidated Financial Statements 148 Notes to the Consolidated Financial Statements  Notes to the Consolidated Financial Statements (Continued)   (Expressed in RMB unless otherwise indicated)   41 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS, INTERPRETATIONS  AND DISCLOSURES ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED  31 DECEMBER 2019   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 2019 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 17 “Insurance Contracts” 1 January 2021  Amendments to IAS/HKAS 1 “Presentation of Financial Statements” and IAS/HKAS 8  “Accounting Policies, Changes in Accounting Estimates and Errors” 1 January 2020  Amendments to IFRS/HKFRS 3 “Business Combinations” – “Definition of a Business” 1 January 2020  Revised Conceptual Framework for Financial Reporting 1 January 2020  Amendment to IFRS/HKFRS 9 “Financial Instruments” and IFRS/HKFRS 7 “Financial  Instruments: Disclosures” – interest rate benchmark reform 1 January 2020  Amendments to IFRS/HKFRS 10 “Consolidated Financial Statements” and IAS/HKAS 28  “Investments in associates and joint ventures” To be determined   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.

 

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Annual Report 2019 149   Financial Summary  (Expressed in RMB)  RESULTS  2019 2018 2017 2016 2015  Million Million Million Million Million  Operating revenue  Revenue from telecommunications services 674,392 670,907 668,351 623,422 584,089  Revenue from sales of products and others 71,525 65,912 72,163 84,999 84,246  745,917 736,819 740,514 708,421 668,335  Operating expenses  Network operation and support expenses 175,810 200,007 192,340 176,956 154,851  Depreciation and amortization 182,818 154,154 150,295 138,589 137,106  Employee benefit and related expenses 102,518 93,939 85,513 79,463 74,805  Selling expenses 52,813 60,326 61,086 57,493 59,850  Cost of products sold 72,565 66,231 73,668 87,352 89,297  Other operating expenses 46,244 40,775 57,486 50,480 49,504  632,768 615,432 620,388 590,333 565,413  Profit from operations 113,149 121,387 120,126 118,088 102,922  Gain on the transfer of Tower Assets – – – – 15,525  Other gains 4,029 2,906 2,389 1,968 1,800  Interest and other income 15,560 15,885 15,883 16,005 15,852  Finance costs (3,246) (144) (210) (235) (455)  Income from investments accounted for  using the equity method 12,641 13,861 9,949 8,636 8,090  Profit before taxation 142,133 153,895 148,137 144,462 143,734  Taxation (35,342) (35,944) (33,723) (35,623) (35,079)  PROFIT FOR THE YEAR 106,791 117,951 114,414 108,839 108,655

 

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150 China Mobile Limited Financial Summary   Financial Summary (Continued)   (Expressed in RMB)   RESULTS (CONTINUED)   2019 2018 2017 2016 2015  Million Million Million Million Million   Other comprehensive income/(loss) for  the year, net of tax:  Item 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  Share of other comprehensive income/  (loss) of investments accounted for  using the equity method  (75)  14  (168)  60  –  –  –  (16)  –  –  Items that may be subsequently  reclassified to profit or loss  Change in value of available-for-sale  financial assets  Currency translation differences  Share of other comprehensive income/  (loss) of investments accounted for  using the equity method  –  683  428  –  1,160  1,188  (5)  (735)  (1,038)  24  774  (1,043)  –  603  901  TOTAL COMPREHENSIVE INCOME FOR  THE YEAR 107,841 120,191 112,636 108,578 110,159  Profit attributable to:  Equity shareholders of the Company  Non-controlling interests  106,641  150  117,781  170  114,279  135  108,741  98  108,539  116  PROFIT FOR THE YEAR 106,791 117,951 114,414 108,839 108,655  Total comprehensive income  attributable to:  Equity shareholders of the Company  Non-controlling interests  107,691  150  120,021  170  112,501  135  108,480  98  110,043  116  TOTAL COMPREHENSIVE INCOME FOR  THE YEAR 107,841 120,191 112,636 108,578 110,159

 

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Financial Summary Annual Report 2019 151   Financial Summary (Continued)   (Expressed in RMB)   ASSETS AND LIABILITIES   As at As at As at As at As at   31 December 31 December 31 December 31 December 31 December  2019 2018 2017 2016 2015   Million Million Million Million Million  Property, plant and equipment 674,832 666,496 648,029 622,356 585,631  Right-of-use assets 74,308 – – – –  Construction in progress 67,978 72,180 78,112 89,853 88,012  Land use rights and others 27,455 27,778 28,322 26,720 26,773  Goodwill 35,343 35,343 35,343 35,343 35,343  Other intangible assets 3,475 2,620 1,721 1,708 768  Investments accounted for using the  equity method 155,228 145,325 132,499 124,039 115,933  Deferred tax assets 32,628 29,654 33,343 29,767 25,423  Financial assets at fair value through  other comprehensive income 513 587 – – –  Available-for-sale financial assets – – 44 35 3  Proceeds receivable for the transfer of  Tower Assets – – – – 56,737  Restricted bank deposits 10,063 12,369 6,504 4,528 4,575  Other non-current assets 17,551 8,442 – – –  Current assets 529,866 535,116 558,196 586,645 488,697  Total assets 1,629,240 1,535,910 1,522,113 1,520,994 1,427,895  Current liabilities 462,067 474,398 529,982 536,389 501,038  Interest-bearing borrowings  – non-current – – – – 4,995  Lease liabilities  – non-current 51,635 – – – –  Deferred revenue  – non-current 6,861 4,881 2,888 2,175 1,291  Deferred tax liabilities 1,388 822 362 292 203  Total liabilities 521,951 480,101 533,232 538,856 507,527  Total equity 1,107,289 1,055,809 988,881 982,138 920,368

 

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China Mobile Limited152 152  Corporate Information   BOARD OF DIRECTORS   Executive Directors   Mr. YANG Jie  (Executive Director & Chairman)  Mr. WANG Yuhang  (Executive Director)   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   Registered Public Interest  Entity Auditor   PricewaterhouseCoopers  Zhong Tian LLP   Recognised Public Interest  Entity Auditor   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: [email protected]  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

 

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China Mobile Limited  60/F., The Center, 99 Queens 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

 

Exhibit 2.1

 

 

5g+ 2019 Infinite Future  Sustainability Report  China Mobile Limited

 

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02  04  06  08  10  12  15  18  22  26  28  30  35  37  42  44  46 48 51  53 56 60 62 63  Chairman’s Statement  China Mobile: Establishing a World-class Enterprise  Feature: 5G is Here  Sustainability Strategy  Jointly Building the Engine of a Smart Society  Helping Win the Fight against COVID-19 in the Spirit of Solidarity  Building Digital Infrastructure  Leading Innovative Digital Ecosystem  Empowering Construction of a Smart Society  Ensuring Trusted Digital Consumption  Summary of Our Key Performances  Jointly Creating an Inclusive Good Life for All  ”Blue Dream”, Innovating on Education for Poverty Alleviation  Supporting Poverty Alleviation and Public Welfare  Promoting Coordinated Regional Development  Growing Together with Employees  Summary of Our Key Performances  Jointly Shaping a Harmonious Ecology  Safeguarding Lucid Waters and Lush Mountains with Smart Applications  Developing Innovative Green Solutions  Promoting Low Carbon, Circular Development  Summary of Our Key Performances  Feature: Responsible Operations  Sustainability Management  Independent Assurance Report  About This Report  Report Disclosure Indexes  Contents

 

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2 March 2020  5G+, Opening a New Chapter of an Intelligent Era  President Xi Jinping has highlighted sustainable development  as a “golden key” to solving global problems. In 2019, 5G  commercial services were launched in China. As an information  artery of society, an accelerator of industry transformation and  upgrade, and a new cornerstone for building a digital society,  5G is bringing us a brand-new era of digital economy, providing  new solutions to challenges faced by all mankind in the pursuit  of sustainable development, and creating a new frontier for  value creation. Following its strategy of becoming a worldclass  enterprise by building a dynamic “Powerhouse”, China  Mobile is committed to becoming a major force in building a  “Cyberpower”, digital nation and smart society and strives to  fully implement its “5G+” plan to support the nation’s highquality  development, help address the problems of unbalanced  and inadequate development, and meet people’s needs for a  better life. This is being achieved by promoting the convergence,  integration and digitization of 5G in every aspect of both the  national economy and people's daily life, thereby making  concrete efforts to contribute to the realization of the United  Nations Sustainable Development Goals (SDGs).  Empowering the digital economy to jointly build the engine  of a smart society. We are committed to building worldclass  intelligent infrastructure, continuously improving our  independent innovation capabilities in 5G, and accelerating its  integration with related fields, including artificial intelligence  (AI), internet of things (IoT), cloud computing, big data and edge  computing. We aim to strengthen the open cooperation with  upstream and downstream partners in more areas and at higher  levels. We strive to promote sustainable economic development  by integrating 5G into every industry and every walk of life  and fully releasing the magnification, superimposition and  multiplication effects of 5G technology on the empowerment  of economic and social development. As of the end of 2019,  we were serving 950 million mobile customers, 172 million  household broadband customers and 10.28 million corporate  customers, put over 50,000 5G base stations in operation, and  officially launched 5G commercial services in 50 cities in China.  Meanwhile, our mobile authentication platform processed 1.2  billion times of authentication per day on average, and our  OneNET IoT platform brought together 11,825 enterprise users  and empowered nearly 150,000 developers. We also carried out  5G innovation pilot projects and collaborated with our partners  to promote innovative applications in various fields, such as  medical care, education, energy and manufacturing, supporting  the digital transformation and upgrade of the relevant industries.  Adhering to a people-oriented approach to jointly create  an inclusive good life for all. We insist on a people-centered  development philosophy and strive to promote the sustainable  development of society by leveraging our information technology  advantages to implement the Telecommunications Universal  Service Project and promote “speed upgrade and tariff  reduction”, ensuring equal opportunities for less developed areas  and disadvantaged groups with innovative approaches, working  with our parent company to intensify support for designated  areas and targeted poverty alleviation programs, continuing  our brand public welfare programs, and providing all-out  support for China’s coordinated regional development strategy  and the Belt and Road Initiative. We continued to implement  the Telecommunications Universal Service Project, and have  Chairman’s Statement  provided broadband access to a total of 43,000 administrative  villages, among which 38,000 villages were covered by wireline  broadband and 4,564 villages were covered by 4G network. We  have provided free surgical treatment for nearly 6,000 children  from low-income families diagnosed with congenital heart  disease with our Heart Caring program, and helped train more  than 127,000 rural primary and secondary school principals from  central and western China with our Blue Dream Education Aid  Plan. Our parent company received the top recognition in the  targeted poverty alleviation assessment of central enterprises,  as well as the 2019 National Poverty Alleviation Award -  Contribution Award.  Promoting green development to jointly shape a harmonious  ecology. Adhering to the belief that “lucid waters and lush  mountains are invaluable assets”, we have been implementing  the Green Action Plan for 13 consecutive years to promote  environmental sustainability by researching and developing of  energy-saving technologies, enhancing our climate resilience,  implementing green operation and management, and driving  energy conservation and emission reduction of our supply chain.  We have actively developed and promoted environmental ICT  solutions that support real-time collection and efficient processing  of massive, multi-dimensional environmental data, and our “Blue  Guardian” application provided informatization support for air  pollution prevention and control in 300 regions at county level  or above, helping fight the battle against pollution. In 2019, we  invested RMB160 million in the Green Action Plan and achieved  remarkable energy conservation and emission reduction results,  reducing our overall energy consumption per unit of information  flow by 43% compared with the previous year.  In the spring of 2020, the battle against the COVID-19 epidemic  was raging. The prevention and control of the epidemic is not  only directly related to China’s future but also to the common  future of humanity. “The safety and health of the people are  always the first priority. Epidemic prevention and control is the  most important task at the moment.” China Mobile plays an  active role to ensure network and service coverage, and fulfils  its epidemic prevention and control responsibilities, going all  out for winning the battle against the epidemic and minimizing  its impact. It is worth mentioning that 5G has manifested its  technological and operational strengths in the fight against  the epidemic. A variety of applications including 5G-based  telecommuting, remote medical services and distance education  provide novel solutions to help people return to work and resume  normal life, showing great potential to create value for society.  Right now, 5G has just started to demonstrate its potential in  social value innovation. China Mobile is committed to serving  as a leader in 5G network construction, a promoter of industry  application of 5G technology and a pioneer in providing  5G services to the public. To support society’s high-quality  development and improve people’s quality of life, we will waste  no time and spare no effort in working together with innovators  from different industries to jointly explore and promote 5G  intelligent solutions, thereby creating an intelligent and better  future for all.  2

 

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3 China Mobile Limited  Chairman  Yang Jie  3

 

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4  China Mobile: Establishing a World-class Enterprise  Incorporated on September 3, 1997 in Hong Kong, China Mobile Limited (”China Mobile”, ”the Company” or ”we”) is the largest telecommunications  service provider in Mainland China. The Company 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.  The Company provides full communications services in all 31 provinces, autonomous regions and directly-administered municipalities  throughout Mainland China and in the Hong Kong Special Administrative Region. Its businesses primarily consist of mobile voice and  data business, wireline broadband and other information and communications services. The Company’s ultimate controlling shareholder  is China Mobile Communications Group Co., Ltd. (“our parent company”), which, as of December 31, 2019, indirectly held 72.72% of  the total number of issued shares of the Company, while the remaining approximately 27.28% was held by public investors. For more  information about the Company’s governance structure and the organizational structure, please refer to China Mobile Limited’s 2019  Annual Report.  Ranked 27th in the 2019 Forbes ”Global 2000 – The World’s Largest Public Companies” list  The ”China Mobile” brand was included in the ”BrandZ™ Top 100 Most Valuable Global Brands” list published by  Millward Brown and Financial Times for the 14th consecutive year, ranking 27th globally  Listed in the ”Top Ten Model Brands of 2019” at China Media Group’s 2019 China Brand Power Grand Ceremony  Won the Gold Award in ”The Asset ESG Corporate Awards 2019” held by financial magazine The Asset  Awarded the accolades of ”Sustainability and Social Responsibility Reporting Awards” in the H-share Companies and  Other Mainland Enterprises Category in the Hong Kong Institute of Certified Public Accountants’ 20th annual ”Best  Corporate Governance Awards”  Awarded the accolades of “Asia’s Most Honored Companies” in the “2019 All Asia Executive Team Poll” held by  Institutional Investor  Awarded the accolades of the Best of Asia – “Icon on Corporate Governance” in the “15th Corporate Governance  Asia Recognition Awards 2019” held by Corporate Governance Asia  Operating revenue Taxation  Number of household broadband customers  172million  Number of mobile customers  950 million  Number of corporate customers  10.28 million  Number of employees  456,239  Number of IoT customers  884 million  RMB745.9billion RMB 35.3billion

 

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5  China Mobile: Establishing a World-class Enterprise  In 2019, China Mobile’s parent company  was selected by the State-owned Assets  Supervision and Administration Commission  of the State Council (“SASAC”) as  one of the ten world-class demonstration  enterprises. With this historic status, we  have developed a strategy for China Mobile  to become a world-class enterprise  by building a dynamic “Powerhouse”,  which summarizes the overall roadmap  for our transformation and upgrade in  the next stage.  The “Powerhouse” strategy: Aiming at becoming a major force in building a  “Cyberpower”, digital nation and smart society, and focusing on achieving  high-quality development with transformation and upgrade as well as reform  and innovation, we strive to build a scale-based value creation system with  convergence, integration and digitization as well as an efficient and coordinated  system of organization and operation with capability, collaboration and vitality.  To lay a solid foundation for becoming a world-class enterprise, we will further  implement the “5G+” plan, drive our business beyond communication services  towards the broader information services, shift our focus from the mobile market  to the CHBN “four growth engines” of the customer, home, business and  new markets, and transform and upgrade our development model from being  resource-driven to being innovation-driven.  We are fully aware that a world-class enterprise requires world-class social responsibility. As a telecommunications operator, we are  obliged to provide inclusive and high-quality information and communication services for the widest group of people; as a corporate  citizen, we are obliged to become a major force in turning China into a smart society; and as a member of the community with a shared  future for mankind, we are obliged to innovate on the “China Plan” and contribute to the realization of the United Nations Sustainable  Development Goals. The three roles and their corresponding responsibilities are both the starting point and the foothold for China Mobile  to fulfil its social responsibilities.  Adhering to the people-centered development philosophy, we strive to become a world-class enterprise and a model of sustainability by  leveraging our business expertise and resource endowment, and promoting the integration of sustainability into our business strategy,  contributing to creating a better life for mankind with our tireless efforts.  Building a Dynamic ”Powerhouse” to Become a World-class Enterprise  Reforms and innovation  Synergetic and efficient operations system  Transformation and upgrade  Scale-based and value-oriented operations system  High-quality development  Build a world-class enterprise  Become a major force in building  a cyberpower, a digital China and a smart society  Convergence  Integration  Digitization  Capability  Collaboration  Vitality  “Customer” market (C) “Home” market (H) “Business” market (B) “New” market (N)  Scale up connection base Strengthen connection applications Provide premium connection services  Fully implement the 5G+plan, maintain a leading position  and facilitate economic and social development

 

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6  Feature: 5G is Here  Currently, the development of the global digital economy has entered a new stage featured by cross-sectoral integration and  systematic innovation and driven by intelligence. The new generation of information technology represented by 5G is rapidly  catalyzing systematic, revolutionary and collective technological breakthroughs and industry changes. While injecting new vitality  into economic development, 5G has also opened up vast space for China Mobile to fulfil its social responsibility and create social  value. The features of 5G – ultra-high speed, ultra-low latency and ultra-wide connection – provide more ideas and solutions  for helping all mankind jointly tackle the challenges of sustainable development. In order to materialize the infinite possibilities  brought about by 5G, the Company has launched the “5G+” plan to speed up the integration of 5G into every industry and  every walk of life. We aim to drive the gradual but in-depth integration of the ubiquitous intelligent 5G-based infrastructure  with people’s pursuit of a better life, industry transformation and upgrade as well as social governance innovation, among other  aspects, to contribute to the delivery of more inclusive 5G services accessible to all sectors of society.  China Mobile ”5G+” Plan  5G+4G  Coordinated  Development  5G+AICDE  Integrated &  Joint  Innovations  Standard Headed the development of  61 ITU (International Telecommunication  Union) and 3GPP (3rd Generation Partnership  Project) international standards,  ranking 1st among global telecom operators  Network Deployed over 50,000 5G base  stations, and officially launched 5G commercial  services in 50 cities  Industry Conducted large-scale 5G network  trials, pursued a comparable level of  maturity in the 2.6GHz and 3.5GHz industry  chains, and promoted the development of  SA (Standalone) end-to-end industry  A (Artificial Intelligence) Officially released the first  self-developed AI platform (JIUTIAN) in China, integrating  42 self-developed and external AI capabilities  I (Internet of Things) Upgraded OneNET & OneLink platforms’  connectivity, with 160 million OneNET connections  and more than 600 million OneLink connections  C (Cloud Computing) Planned to build the “N+31+X”  nationwide mobile cloud resource pool and deploy 4 centralized  IDCs (Internet Data Centers) and 45 provincial-level  large-scale IDCs  D (Big Data) Processed over 1,100 TB of data per day on  the big data platform, and provided comprehensive and  agile storage, data and tool opening capabilities  E (Edge Computing) Built a hierarchical edge computing  system, introduced edge cloud products and developed  edge computing service capabilities, and built the largest  CDN (Content Delivery Network) in the world and increased  the number of distribution websites to 93,000 6

 

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Feature: 5G is Here  5G+Ecology  Collaborative  Ecology  Cultivation  5G+X  Wider  Applications  June 6, 2019  June 25, 2019  October 31, 2019  November 15, 2019  February 29, 2020  The Ministry of Industry and Information Technology (MIIT) of China issued the “Fifth Generation  Digital Cellular Mobile Communication Service” basic telecom operating permits to four companies  including China Mobile  China Mobile proposed five upgrades at the Global Partners Conference, namely deepening intelligent  upgrade of network capabilities, facilitating industry transformation and upgrade, promoting the  upgrade of information consumption experience, accelerating the upgrade of full-range user services,  and achieving the upgrade of the open cooperation ecosystem  China Mobile officially released ”5G+” plan in Shanghai  China Mobile officially launched 5G commercial services, with 5G commercial plans introduced simultaneously  The number of China Mobile 5G package customers reached 15.4 million, maintaining an industryleading  position  Tariffs and Devices Released 5G ToC (customer) and  ToH (home) tariff packages (including benefits), as well  as 32 5G devices such as 5G smart phones, modules,  chips and AR (Augmented Reality)/VR (Virtual Reality)  devices  Customer service Set up 5G user service seats to  provide one-stop convenient service without changing  SIMs or numbers and without further registration  Public application Carried out large-scale application  of 5G Ultra high-definition (HD) real 4K/8K live broadcasting,  offering over 30 new industry-pioneering applications  Industry application Promoted about 50 5G industry  demonstration applications, many of which were the  first in their respective industries  5G Joint Innovation Center Constructed 25 open  labs with over 500 vertical industry partners  China Mobile 5G Device Forerunner Industry Alliance  Brought together more than 110 partners, covering  fields such as mobile devices, chips, applications, solutions,  etc.  China Mobile IoT Alliance Attracted more than  1,400 members from 26 industry fields and eight major  segments of the IoT industry chain  China Mobile 5G Industry Digital Alliance Gathered  more than 100 strategic partners, and hosted  more than 1,000 product promotion events nationwide  5G Smart Education Alliance, 5G Industry IoT Alliance,  5G+Video CRBT (Coloring Ring Back Tone)  Industry Alliance, 5G Energy Internet Alliance, 5G  Agricultural Digital Alliance, 5G Precise Positioning  Alliance 7

 

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8  Sustainability Strategy  Since the first mobile phone system was created in 1987, China’s information and communications technology (ICT) sector has made  enormous strides. China Mobile has been a witness, participant and builder of this development that has undergone “blankness in 1G,  following in 2G, making breakthroughs in 3G, keeping pace in 4G, and striving for leadership in 5G”. Always bearing in mind the corporate  mission and founding aspiration to “Communicate a Boundless World and Construct an Information Society”, China Mobile aims  to become a world-class enterprise and pledges to drive and lead the upgrade and development of China’s ICT sector, in order to continuously  meet people’s growing digital needs and become a model for advancing human civilization.  Back in 2006, China Mobile established  its corporate responsibility philosophy:  “With perfect sincerity and integrity,  we will strive to fulfil our triple-sided  responsibilities: our economic responsibility,  our social responsibility and  our environmental responsibility”.  The Company fully incorporates the  requirements for fulfilling its social  responsibility into its strategy and action  plan for developing into a worldclass  company, and builds on the role  of information and communications  technologies to connect and empower,  thereby enabling all stakeholders to  play to their strengths.  The focus of China Mobile social responsibility  efforts goes as follows:  empowering stakeholders with ICT to  achieve all-win in economic, social and  environmental sustainability. Specifically,  there are three layers: “Compliance”  (the roots), “Competence” (the trunk),  and “Coexistence” (the leaves). Interconnected  and progressive, these three  layers form the China Mobile “Tree of  Responsibility”, which embodies the  conceptual core and behavioral logic  of China Mobile’s social responsibility  efforts.  China Mobile “Tree of Responsibility”  Coexistence  Competence  Compliance  To comply with laws  and regulations, operate  with integrity, and  earnestly fulfil product  and operation responsibilities  To draw on the Company’s  expertise, provide  sustainable products  and services, and  maximize the empowerment  of stakeholders  to jointly create rich  social value  To facilitate the provision  of equal development  opportunities  for a wider group of  people and the harmonious  coexistence of  mankind and nature  1G - Blankness  Wireless communication  becoming a  reality  Constructed the world’s  largest mobile network,  cultivating local  manufacturers  From mainstream to  leading, achieving  full global leadership  in the development  of technology, standards,  industry and  cross-sectoral application  of 5G  Becoming a major force  in building a “Cyberpower”,  digital nation  and smart society  From marginal to mainstream,  TD-LTE leading  the industry to realize  group breakthroughs  Leading the course of  TDD development and  realizing the vision  of ”mobile changing  life”  From nothing to something,  filling the void  in industries like chip  and instrument  The world’s only operator  of TD-SCDMA network  Achieving the goal of  “taking up 1/3 of the  market” in China  2G - Following  3G - Making  breakthroughs  4G - Keeping  pace  5G - Striving for  leadership  1980s  Analogue voice  1990s  Digital voice  Low-speed data  2000s  Digital voice  Mid- and high-speed  data  2010s  All-IP voice  Mobile broadband  2020s  Internet of  Intellignet Things

 

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As 5G opens up massive opportunities, the Company is set to fully unlock its vast potential for supporting high-quality economic and social development. We will join hands with various industries and seek to combine 5G with emerging technologies such as AI, IoT, cloud computing, big data and edge computing to help build an inclusive digital economy where everyone benefits and enjoys a better, sustainable digital life. Taking “Responsible Operations & High-quality Development” as our foothold, we will strive to fully fulfil our responsibilities in economic, social and environmental dimensions. Striking out in the three directions of “Jointly Building the Engine of a Smart Society”, “Jointly Creating an Inclusive Good Life for All”, and “Jointly Shaping a Harmonious Ecology”, we will push forward the nine key sustainability actions on all fronts and contribute to the realization of the United Nations Sustainable Development Goals. China Mobile “139” Sustainability Action Model the Engine of a Smart Society Jointly Building Building Digital Infrastructure Leading Innovative Digital Ecosystem Empowering Construction of a Smart Society 22 Ensuring Trusted Digital Consumption 18 15 12 Continue to embrace harmony between mankind and nature, closely study and assess the potential impact of business development on the environment, and take effective measures to manage environmental footprint; continue to develop innovative information-based green solutions, drive energy conservation and emission reduction along the upstream and downstream value chains, and spread ideas of sustainable consumption and manufacturing to the whole society. 1 Anchor 3 Areas of Responsibility 9 Actions Responsible Operations High-quality Development Jointly Building the Engine of a Smart Society Jointly Creating an Inclusive Good Life for All Jointly Shaping a Harmonious Ecology Economic Responsibility Environmental Social Responsibility Responsibility Continue to extend connection boundary, increase connectivity and empower vertical industries; make an all-out effort to make 5G the new impetus to integrated innovation and information consumption, and the new engine of industry upgrade and continued economic growth. Continue to embrace a people-centered development philosophy and explore the “China Mobile Solution” to address the unbalanced and inadequate development in China based on new technologies like 5G to meet society’s needs and create social value; strive to be a good corporate citizen in the new era, shoulder new responsibilities and create a better life with stakeholders. 1. Building Digital Infrastructure 2. Leading Innovative Digital Ecosystem 3. Empowering Construction of a Smart Society 4. Ensuring Trusted Digital Consumption 5. Supporting Poverty Alleviation and Public Welfare 6. Promoting Coordinated Regional Development 7. Growing Together with Employees 8. Developing Innovative Green Solutions 9. Promoting Low Carbon, Circular Development 9

 

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Sustainability Context Every technological advancement in the information and communications sector produces a strong boost to economic and social development. The advent of 5G will make digital information a key factor of production. The attributes of digital information, namely duplicability, shareability, unlimited growth and free flow, break the constraints of the limited supply of natural resources on growth and augment the internal driving forces and external space of economic growth, thereby laying the foundation for continuous growth and sustainable development. In 2019, 5G commercial services were officially launched in China, providing crucial support for strengthening the role of 5G in driving the integration and application of areas such as industry development, information consumption and public services. As the development of 5G takes the fast lane, its impact on economic growth, industry innovation, and the construction of sustainable cities and communities will also be further accentuated. China Mobile thoroughly implements the ”5G+” plan. From daily activities to industrial manufacturing and from healthcare to the Internet of Everything, we are poised to join hands with industry partners to integrate 5G into all aspects of people’s life and work and put well-developed 5G networks to good use, thereby fueling the development of a smart society together. Helping Win the Fight against COVID-19 in the Spirit of Solidarity In spring 2020, a battle against the COVID-19 epidemic has taken place across China. In the face of the first “big test” in the 5G era, China Mobile quickly launched the Level 1 emergency response and formed the China Mobile Steering Group for Responding to COVID-19 Outbreak. The Group was tasked with comprehensive coordination work to ensure reliable information support for the prevention and control of the epidemic, such as ensuring reliable communication coverage and services, and providing communication support for disease prevention and control. Reliable Communication Support Strengthened shift arrangements for emergency support, heightened the support level of base stations in key areas to the highest level, strengthened the monitoring and inspection of the network operation status, and continuously optimized network experience, thereby ensuring the network remained stable, reliable and uninterrupted. Cooperated with local governments and promptly provided full 2G/4G/5G network coverage for Huoshenshan Hospital and Leishenshan Hospital in Wuhan, fully supported the network construction at temporary hospitals in Wuhan and other cities, and provided 5G high-definition live broadcast of the construction of the Huoshenshan Hospital and Leishenshan Hospital through MIGU video which was viewed by over 490 million times. As of March 16, 2020, the Company had deployed emergency support personnel for over 1.24 million person-times and emergency vehicles for over 350,000 vehicle-times. Ensured prioritized supply of protective gears for key epidemic prevention and control areas and front-line employees, strengthened the epidemic monitoring, prevention and control of returned employees, devised flexible work arrangements with telecommuting and flexitime, and ensured employees on shifts were properly compensated with allowances and shift arrangements. Disinfected and ventilated stores, canteens and equipment rooms to avoid cluster and group infections. Activated its customer service response plan to provide tariff reduction and waivers for medical staff engaged in the epidemic prevention and control efforts in Hubei; exempted epidemic prevention and control command and dispatch steering groups, frontline medical staff, and users in key epidemic or quarantine zones from service suspension; and collaborated with other telecom operators to provide each frontline medical staff in Hubei with RMB1,000 of prepaid mobile account credit for free. Adjusted the business hours of stores, required all service personnel to wear masks and carry out disinfection regularly, and provided walk-in customers with temperature checks and hand sanitizer. Expanded the service capabilities of electronic channels and disseminated over 50 billion epidemic control public announcements for government agencies; optimized online services processes such as SIM card application and broadband installation application, and integrated key operations and inquiries into a new “Convenience Service” section online, to ensure that customers could have their business needs served without leaving home; and launched new services through electronic channels such as broadband self-service troubleshooting and epidemic information inquiry, covering about 70 million customers. Leveraged advantages in 5G and AICDE fields to develop innovative applications to enable scientific and accurate prevention and control of the epidemic, such as applications for epidemic monitoring and analysis, infection tracing and patient tracking; and offered a variety of information services to meet customers’ needs during the epidemic, such as telecommuting, remote learning and entertainment. Uninterrupted Service Support Comprehensive Epidemic Control Support

 

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Mounting New Defense against the Epidemic by Leveraging Strengths Early detection, early quarantine and early treatment are crucial to the prevention and control of the epidemic. We worked together with partners and applied 5G+ smart medical solutions to the “battlefront” of the fight against the epidemic. Facilitating Normal Functioning of Society by Sharing Resources To help maintain normal day-to-day functioning of society, the Company launched a variety of solutions for working, studying and living at home, thereby supporting people’s efforts to return to work and contributing to epidemic control. Apart from that, we also launched the “Warm Spring” initiative to help our 500,000 channel partners resume work and reduce loss by offering special assistance, ensuring channel availability and empowering innovation, etc. 5G Thermal Imaging Temperature Measurement System 5G online outpatient consultation 5G intelligent medical robots With the support of 5G networks, a number of service robots and disinfection and cleaning robots went on duty in hospitals in Hubei, Zhejiang, Shanghai and other places, where they provided assistance to medical personnel, disseminated knowledge on epidemic prevention, and carried out tasks such as disinfection and cleaning as well as medicine distribution and delivery. The use of those robots greatly reduced the possibility of cross-infection among medical staff in the wards and improved the quality of quarantine management. In response to the risk of the epidemic further spreading due to the peak travel period following the Spring Festival, we launched the 5G Thermal Imaging Temperature Measurement System in Zhejiang, Shanghai, Guangdong, Jiangsu, Sichuan, Guangxi and other places. The technology provided high-precision, safe and continuous temperature screening in places with dense crowds, effectively reducing the risk of cross-infection caused by contact temperature measurement. The Sun Yat-sen Memorial Hospital of Sun Yat-Sen University in Guangdong province provided online doctor consultation based on the 5G online outpatient solution to reduce the risk of cross-infection.5G remote medical services system We built a 5G remote medical services system for designated hospitals for treating COVID-19 including the Beijing 301 Hospital and Taikang Tongji Wuhan Hospital to realize “face-to-face” communication between medical personnel in Beijing and Hubei and enable greater expertise in patient treatment. In addition, the application of technologies such as “5G remote medical services cart” and “5G+VR remote observation” has also made diagnosis more convenient and efficient.Telecommuting The Company provided free services for enterprises including remote conference, multi-party call, Fetion (instant messaging), voice notifications, etc. It also offered users telecommuting services available across all networks to meet the need to work anytime and anywhere, thereby enabling employees to work during the quarantine period. Smart education The Company launched the “National Primary and Secondary School Network Cloud Platform” in cooperation with the Ministry of Education to meet the need of 190 million primary and secondary school students nationwide to study at home and ensure that schooling continued while schools stayed closed. Utilizing its strengths in information and content distribution, the Company facilitated differentiated online education in different places by providing three modes including multi-screen interaction, big-class live broadcast and small-class interaction as well as various forms such as on-demand videos and live broadcast. As of March 5, 2020, the Company has started 690,000 online classes, covering a total participation of 387 million person-times.Meanwhile, the Company actively responded to the needs of students in remote areas for internet connection to study online by setting up base stations and broadband equipment. Online entertainment The Company offered users services such as MIGU video, Mobile Box and MIGU Reading to allow them to embark on highquality spiritual journeys without leaving home. Smart epidemic prevention and control The Company launched a smart epidemic prevention and control platform in provinces including Zhejiang, Henan, Shanxi, Fujian and Guangdong, providing enterprises with functions such as epidemic prevention inspection, visitor registration, employee health tracking and employee daily health check; and offered products like “And-Easy Report” and “Easy Epidemic Statistics”, satisfying epidemic prevention and control needs such as data collection, counting and analysis. Sale of agricultural products The Company used the China Mobile 12582 Agricultural Information Network to support the sale of agricultural products and help rural population secure employment by collecting and distributing information on unsold agricultural products and employment opportunities through channels such as free text messaging service, video ringback tones and the 12582 service hotline.Helping Win the Fight against COVID-19 in the Spirit of Solidarity

 

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01 Building Digital Infrastructure Acting on the strategy of building a world-class enterprise, China Mobile is committed to developing high-speed, safe, ubiquitous and smart infrastructure of the highest standard and continuing to improve network quality so as to bolster the connectivity foundation of a smart society. Bolstering Connectivity Foundation Taking Roots in Southern Tip of China to Make Sansha More Digitally Advanced The Company fully implemented the “Double GB Plan” by intensifying the construction of cloud computing infrastructure, accelerating the development of network capacity and the construction of novel information infrastructure, converging different infrastructure into next-generation information and communications technologies, and driving the effective transmission and integration of all kinds of information in the digital world. We continued to narrow the digital divide in 2019, providing broadband access to 43,000 administrative villages through the Telecommunications Universal Service Project that had cumulatively finished installing wireline broadband in 38,000 administrative villages and 4G network in 4,564 administrative villages; and launched special projects on the daily maintenance of rural networks and the guarantee of normal network functioning for users to enjoy the same networks and same speed in rural and urban areas. Sansha City is the southernmost prefecture-level city in China. It administers Xisha, Zhongsha, Nansha Islands and their territorial waters. Despite its strategically important location, Sansha experiences harsh natural conditions, leading to difficulty in network construction and scarcity of telecommunications supplies. Overcoming the challenges in transportation, construction and other aspects, China Mobile has managed to provide residents on the islands with the same high-quality telecommunications network enjoyed by mainland residents by switching on 2G and 4G services over the years. Those efforts have helped put the Nansha territorial waters on the “information fast lane”. 2019 saw us actively push forward 5G construction in Sansha City as the Company built 5G base stations in Xisha and Nansha. We then introduced information-based applications that took advantage of the high speed and low latency of 5G networks such as remote medical services and HD videos. By doing so, we provided local island residents with customized services, laying a solid foundation for the development of a smart Sansha. Launching 5G network along the Guangzhou-Shenzhen-Hong Kong Express Rail Link on November 20, 2019 Putting up fiber optic cables across the Dulongjiang River in Nujiang, Yunnan Built over 50,000 5G base stations and offer 5G commercial services in 50 cities; to deliver 5G network coverage in all urban areas at the prefecture/city level or above by 2020. Commenced building the GB broadband network, equipping around 80% of the facilities in urban areas with the capabilities for the rapid expansion of GB broadband business. GB 5G Mobile Network GB Fiber Broadband Netwo

 

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Building Digital Infrastructure 13 October 1, 2019 marked the 70th anniversary of the People’s Republic of China. To provide communication support for the celebration events, China Mobile had kicked off relevant network planning and construction at the beginning of the year. We increased the capacity of nearly 600 base stations, 100 transmission nodes as well as content and Internet TV systems, and built 43 new base stations. We developed the “One Emergency Plan at One Place” and “One Emergency Plan at One Site” measures in key support areas to ensure the smooth running of networks in the Tian’anmen area. We deployed five emergency vehicles and temporary base stations such as lightstand base stations and small emergency stations in the core viewing areas in Tian’anmen. We increased our network capacity to 3.5 times and, for the first time in the world, realized 2G/4G/5G full-spectrum, fully compatible network capacity support in open areas with the highest unit density. Based on all those pioneering and original technologies, we maximized the network capacity and provided reliable network services for China Mobile users who spectated at Tian’anmen Square on the National Day. To deliver the “TV in Every Village” project to relocated families in Chaya County of Changdu City, Xizang, China Mobile set up the “Thousand Households Action” team and formulated the Home Broadband Program Plan and the Network Design, Survey and Pre-coverage Plan for Poverty-alleviation Relocation Sites in Chaya. We deployed construction supplies in advance and appointed staff to take care of user-side setting-out, all in an effort to guarantee the quality of the project. As of the end of 2019, the ”Thousand Households Action” initiative had finished pre-coverage of home broadband in 1,761 relocated households, providing them with access to convenient and stable broadband services. Communication Support for a Series of Events for China’s 70th Anniversary Enabling Digital Access for Relocated Families in Chaya County During the support time, we dispatched a support team of almost 2,000 members who worked around the clock to complete all support tasks with high quality. 2019 has been a highly challenging year loaded with heavy support tasks. China Mobile further expanded the scope of our emergency communication management and developed an agile and highly efficient emergency communication support system, attaining the goal of ”zero major network failure, zero major network security incident, and zero major complaint from customers”. Supporting Emergency Communication Communication support service commando for China’s 70th anniversary celebration events Devised a comprehensive emergency plan fully covering the customer, home, business and new markets. Emergency Plan Deployed high-altitude drone base stations to enable fast low-altitude communication coverage and to meet the capacity needs and public communication coverage needs in times of extreme disasters. Equipment Upgrade Conducted management and maintenance of emergency plans, drills, resources, personnel and events through emergency management platforms. Innovative Approach Held emergency contest for five consecutive years and organized rehearsals and drills in greater administrative area, thus continuously enhancing quick response and reporting abilities. Personnel Deployment

 

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14 China Mobile actively applies new technologies to innovate emergency communication support measures in light of the actual conditions of different regions. The tectonically complex Sichuan Province located in southwestern China has one of the country’s highest frequencies of geological disasters. The Company developed a new disaster relief management model accordingly, prioritizing the protection of homes and people’s safety in its emergency support efforts. Developing New Disaster Relief Models Using New Technologies Under this management model, the Company dispatched personnel and supplies quickly in response to the fire in Muli County of Liangshan in 2019, becoming the first telecom operator to repair networks and reactivate services in the affected area. We dispatched nine drones including a high-altitude drone base station, unmanned aerial vehicles (UAVs) and firefighting drones. With a coverage of around 30 square kilometers, the high-altitude drone base station provided nearly 1,000 on-site rescuers with allround communication services; the UAVs and firefighting drones offered data support for delivering accurate rescue directions and effective rescue efforts. Our well-developed management model continued to allow us to provide affected people in ensuing natural disasters with timely communication support, such as the storm and mudslide in Wenchuan and earthquake in Changning, Yibin. High-altitude drone base station put to use during Muli forest fire Rescue personnel generating electricity for communication equipment after Changning earthquake Communication support at the 14th Guizhou Tourism Development Conference Communication support during Typhoon Lekima Strong Support Team Complete Emergency Plan Advanced Technologies Formed a disaster relief command center comprising provincial, city-level and county-level leaders, taking charge remotely or on-site in disaster relief efforts Employees stepped forward to be volunteers, amplifying the relief efforts Before disaster: Intensify drills and related education During disaster: Activate communication “lifelines” and deliver the swiftest relief efforts After disaster: Provide affected people with life supplies and help them rebuild homes Developed the first earthquake early warning system together with Sichuan Earthquake Administration Used drones for disaster relief Provided emergency medical support for patients through China’s first 5G emergency medical system, with the 5G ambulance that was jointly developed by our Sichuan subsidiary, Chengdu Industry Research Institute and Sichuan Provincial People’s Hospital

 

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02 Leading Innovative Digital Ecosystem 15 Deepening Open Cooperation Thanks to the help of industry partners, China Mobile has developed into the world’s largest telecom operator in terms of network scale and customer base in the past 20 years. In response to the vast opportunities made possible by 5G, we have continuously optimized our strategic cooperation plans and enriched the fruits of our partnerships, thereby laying a solid foundation for the use of 5G technology to propel economic and social development. Every Cooperation is Possible Optimize cooperation mechanism and develop specialized subsidiaries into the driver and builder of ecological cooperation Embrace greater openness and deliver better services to partners through the all-network concentrated matching mechanism and procedure Provide partners with business models of billing by the number of connections, rate or usage to accommodate their different needs for monetization Implement the 5G Leadership Plan, accelerating the scale-up of 5G customers, services and devices Implement the Double 10-billion Plan, including investing RMB10 billion to introduce ecological customer privileges, household smart devices, and content for large screens, and sharing RMB10 billion of new values with partners in the fields of mobile cloud, DICT integration and application, and industry intelligent hardware Product cooperation – open up the largest 5G product market Brand cooperation – create the largest customer privilege cooperation platform Share 600,000 physical channels and create the largest ecological product direct-sales system Share more than 1 billion customers and develop platform economy We stay open and embrace cooperation. We strive to work closely with industry chain partners from around the world to carry out indepth implementation of ecological cooperation plans. We have signed strategic partnership agreements with many provincial local governments, national departments, key cities and national-level new areas. We have implemented nearly 100 key cooperation projects in areas such as regional development, new types of infrastructure, smart society, digital services and 5G innovation, effectively catalyzing the transformation and upgrade of local economies. Focusing on the two directions of “empowerment platform” and “vertical applications”, we have entered into strategic partnerships with many enterprises in the six key areas of 5G, IoT, big data, customer market, smart home and vertical industries. The partnerships have produced sound cooperation value in various aspects such as leveraging advantageous resources, making up for lack of key capabilities, and leading industry ecosystems. Since we entered into a strategic cooperation framework agreement with NTT DOCOMO of Japan and KT of South Korea in 2011, a cooperation organization mechanism involving top management of all three parties has been established. Over 190 cooperative projects have been conducted in key areas such as 5G and international roaming, boosting the development of the industry globally. Through strategic partnerships with renowned universities such as Tsinghua University, Sichuan University and Nanjing University, we have been actively and deeply engaged in the R&D of next-generation information technologies, commercialization of scientific research findings, construction of scientific research platforms, joint talent cultivation and other areas, facilitating the coordinated innovation efforts among companies, universities, research institutes and the market. Government Agencies Large Enterprises International Telecom Operators Universities and Colleges Everything can be Customized Everything can be Shared Everything is Done for the Benefit of Customers Leading Innovative Digital Ecosystem 02

 

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Promoting Technological Innovation Deeply implementing the innovation-driven development strategy, China Mobile convened the second Technology Innovation Conference- cum-China Mobile Science and Technology Association Inauguration Ceremony in 2019, further expanding innovation plans, enriching innovation models and boosting innovation capabilities, thereby constantly fueling the Company’s digital transformation. The Company has won a multitude of national awards for technological advancement, and our standardized work places us among the world’s top rank. In terms of patent capabilities, we are becoming stronger and have cultivated a number of influential technology industry leaders. Putting together the list of breakthroughs in core technologies in key fields: We have clarified key technologies and paths based on the R&D capabilities map, and worked with upstream and downstream industry chain partners to step up resolving ”bottleneck” problems. Establishing an application-oriented basic research system: Focusing on seven directions, namely new mobile communication, new basic network, next-generation information technology, next-generation AI, new types of information processing, future safety intelligence and new energy materials, and with the localization of core chips, devices and basic software (operating system), we intensify pioneering technological innovations with collaboration among companies, universities, research institutes and the market. Giving out technological awards: We give out on-thejob innovation awards to stimulate the innovative vitality of frontline staff, and commercialization awards to boost innovation effectiveness. Founding Science and Technology Association: The association has over 70,000 registered members and has held a series of brand events such as science and technology publicity campaigns, academic forums and thesis collection to spur a stronger cultural atmosphere of cultivation. Refining talent support mechanism for core technological breakthroughs in key fields: We hold company-level “Chief Scientists” and “Chief Experts” elections based on the Company’s technical expert system to build a high-caliber team of talents. Building up a pool of core talents: We match application- oriented basic research with R&D resources, and build stronger connections with and continue to introduce high-caliber talents and experts from around the world, in order to build the core capabilities required by key areas in the future. Achievements of China Mobile Scientific and Technological Innovations Capacity Building Patent Application Standardization Leadership International Influence 11,000 full-time R&D employees 6 national labs Ranked among the top telecom operators in terms of patent applications numbers Provided patent licensing for 60+ overseas companies, including companies from Japan, the US and European countries 19,000+ patent applications cumulatively, with 2,000+ being 5G related No.1 among all telecom operators in terms of the number of 3GPP standardization project initiations 45,000 person-times of technological awards covered No.1 among all telecom operators in terms of the number of proposals regarding 5G network 30+ leadership positions in key international standard organizations Headed the establishment of the world-leading open source networking project ONAP and contributed 470,000+ lines of codes, ranking second in the world Initiated the GTI (Global TD-LTE Initiative); being the 1st China-led international cooperation platform in the telecom sector 16

 

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Leading Innovative Digital Ecosystem In keeping with the national strategic planning of “mass innovation and entrepreneurship”, China Mobile continued building the national- level Entrepreneurship and Innovation Demonstration Bases as we worked towards the goal of constructing an “And-Innovation Ecosystem”. We strive to fully unleash the internal potential in innovation of all our employees and actively explore the Entrepreneurship and Innovation model where large enterprises can engage small- and medium-sized enterprises (SMEs), resources are shared, and integrated development is enabled, in order to gradually foster an industry ecosystem that thrives on cooperation and all-win. Cultivating Innovation Ecosystem and Distinctive Entrepreneurship and Innovation Diversified platforms for innovation and entrepreneurship Well-established procedures and mechanisms Online: On the basis of the “R&D Cloud” platform, we have introduced development tools and resources suitable for innovation teams to meet the incubation management and resource needs for Entrepreneurship and Innovation. Offline: We have set up nine “And-Creation” Spaces in such professional fields as digital home, smart city, IoT and digital content to provide a full suite of integrated incubation and cooperation services. Over 40 projects have been incubated in our “And-Creation” Spaces. We have built 25 5G open labs providing 5G-oriented innovation R&D and test services. Through cooperation with universities and leading enterprises, we are dedicated to setting up a hundred joint labs with universities, a hundred industry demonstration bases and a hundred joint labs with enterprises as carriers of innovation. We have established the “crowd innovation, crowd sourcing, crowd funding and crowd evaluation” innovation model, constructed the “entry, incubation, exit and commercialization” end-to-end channel. We have established crowd sourcing models like “major propositions”, “minor propositions” and “promotional propositions”, and put in place a reward system to mobilize the collective wisdom of different units to solve practical challenges in operations. We have established the off-the-job incubation and shared benefits and risks models and mechanisms such as fault-tolerant incubation, personnel flow and intellectual property rights management to integrate various aspects of the incubation process and safeguard the rights and interests of the Entrepreneurship and Innovation members. We have established a “unit, cross-unit and multi-unit” multi-channel commercialization mechanism that is convenient and highly efficient and a quantitative evaluation system that assesses the comprehensive value of research findings, guaranteeing maximum commercialization effectiveness with just and objective evaluation of incubation results. Internally: We have held the Self-development Contest for five consecutive years that covers all our lines of business, with a total of 15,000 employees participating, embedding all-involved innovation throughout our corporate culture. Externally: We have held the China Mobile Hackathon for four consecutive years. Our contests covered eight major themes in 2019, and we compiled the 2,817 innovation projects submitted into the Outstanding Hackathon Projects List and had them pilot-run across all network. Rich competitions and events In 2019, China Mobile Entrepreneurship and Innovation demonstration bases were included in the 100 National Best Cases of Entrepreneurship and Innovation Demonstration Bases and won the first prize for corporate management modernization of the telecom industry. With the advent of 5G, we have launched an ecology cooperation plan for deepening Entrepreneurship and Innovation – the Star Plan. We will bring together multiple stakeholders along the industry chain, including upstream and downstream companies, innovation capital, incubators, universities and scientific research institutes, and empower our internal innovation teams, SMEs and innovators in society to boost the rapid growth of the innovation teams and the Company. Progressively, we will build up a star cooperation ecosystem that accommodates full-range service scenarios with booming and varied industry applications and integrated industry innovations. “Regardless of which company it is or which geographical region it belongs to, innovation can only bear fruits and create value when applied to address real problems. That’s also what makes our work meaningful.” —— Gold Medal Project “I-link – Smart-link Sensing” Team at the 2019 Self-development Contest 2019 Self-development Contest 2019 China Mobile Hackathon 17

 

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03 18 In step with users’ changing information consumption needs, China Mobile has been promoting its distinctive 5G applications with a view to engaging users in a ”novel, immersive entertainment experience” and facilitating an upgraded information consumption experience. In terms of products, the Company has introduced our proprietary innovative 5G commercial products – the 5G Smart Hub “Pioneer No.1” and the 5G cellphone “Pioneer X1”. Both are examples of our exploration in the new application of 5G on devices. The 5G Smart Hub “Pioneer No.1” won the “2019 Red Dot Design Award” of Germany, the “5G Device Innovation Leadership Award” presented by the People’s Posts and Telecommunications News (PPTN), and the “Best 5G Commercial Solution We have launched 5G HD video CRBT products to provide users with a new window to showcase their personalities. Users of this product can select featured content from the China Mobile short video library or custom-make a video CRBT with their own videos. When a call comes in, the caller can watch this personalized short video and like or share it in real time, making the wait more engaging and fun. As of the end of 2019, 5G HD video CRBT had been officially put to commercial use in 29 provinces, played over 1.2 billion times per month. Serving the General Public Award 2019” presented by the Communications World. The 5G smart parking solution developed on the basis of our 5G smart devices won the “Best 5G Commercial Solution Award 2019” presented by the Communications World All-media. In terms of product benefits, the Company provides 5G users with a rich selection of benefits including Internet, brands, business and memberships that cover videos, reading, travel, and discounts on 5G devices and on international roaming. 5G HD Video CRBT (Coloring Ring Back Tones) New Ways to Watch 新听法 Delivered the initial application of 4K ultra HD live broadcasting at a scale of hundreds of million users, with over 30 pioneering applications in the world. Pioneered full-screen video CRBT (Coloring Ring Back Tones) integrating watching, listening and touching and provided novel audio/visual services for the four ecosystems of “short videos, media communication, industry and commercial advertising” by enabling functions such as all HD, all size, all interactive, and CRBT plus vibration. Initiated the China Cloud Gaming Association and launched the East Wind Developers Plan, thus delivering a more engaging and convenient gaming experience based on such features of carrier-grade cloud gaming platforms as “ultra HD, no latency, running on cloud, and click and play”. Launched a series of innovative application scenarios such as VR same-screen interaction and photos with celebrities using 5G and AR technologies, thus providing a novel short video experience in the 5G era. Implemented full-scale upgrade of basic telecom services such as phone number, SMS and cloud service. In 2019, MIGU performed multiple 5G+4K ultra HD live broadcasts and 41 ”industry/global-first” 5G+4K+VR+AR live broadcasts. MIGU also launched the first cafe with 5G coverage in the world. Organizing the ”Sing for the New Era, My Ode to Motherland with 5G” Weibo 5G video live stream event in Hubei 5G Live Broadcasting Empowering Construction of a Smart Society 03 New Ways to Listen New Ways to Play New Ways to Shoot New Ways to Use

 

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Empowering Construction of a Smart Society China Mobile works with outstanding partners of the various industries to tap personalized long-tail needs and develop 5G applications in key sectors to facilitate their digitization. Integrating into Various Sectors and Industries Assisting in Automated Mine Management In 2019, our Neimenggu subsidiary worked with business partners and launched the “5G Smart Mining” project in Baotou. We transformed vehicles into unmanned vehicles and formed an autonomous driving work cluster for transportation in the open-air iron, mineral, ore and rough stone mine, realizing functions like remote vehicle control, integrated vehicle positioning, precise parking and autonomous obstacle avoidance. This has effectively improved the efficiency of mining vehicles in special environments and minimized the number of workers at the project sites, thus ensuring personnel safety. A remote intelligent dispatch and monitoring platform and a vehicle-vehicle, vehicle-network and vehicle-ground communication system have also been built, enabling automated management of mine production and operations. As of the end of 2019, we had completed transforming 4 vehicles into unmanned vehicles. We estimate over RMB9 million to be saved in fuel consumption annually and the production efficiency to increase by 10% when we finish the transformation of all 17 vehicles. Providing Accessible High-quality Networks to Help Build Orderly Urban Villages As a phenomenon of rapid urbanization, urban villages are densely populated with high mobility but are weak in network infrastructure construction. To help improve the network quality in Wanxiu Village in Nanning City of Guangxi, China Mobile summarized scenarios reflecting the local conditions and characteristics, and set up a “matrix + module” joint project team accordingly. We effectively improved the user experience with methods such as education and publicity on network, inspection and removal of unqualified signal amplifiers, optimization of signal layout, and construction of new base stations. After taking down 212 unqualified signal amplifiers and building over 700 new communication spots, we raised the 4G coverage in pilot urban villages to 98%, benefiting over 600,000 users and providing a foundation for guaranteeing the safety and stability of the urban villages. China Mobile’s Mobile Authentication supports one-click registration and login and is an optimization and upgrade from traditional identity authentication methods such as ”account + password” and ”mobile phone number + SMS verification code”. Based on our unique data network authentication and data capabilities as a telecom operator, we provide companies with a comprehensive one-stop solution for user account use and data management, thus turning mobile phone numbers from a communication industry-specific account system into a multiple-industry account system serving communication, Internet, IoT, banking and other industries China Mobile’s Mobile Authentication, the Facilitator for Industry Digitization and boosting the rapid development of video, e-commerce, online office and other fields. Additionally, using the Super SIM security encryption chip as a digital credential carrier, we have launched a series of innovative products such as SIM authentication, SIM card messaging, SIMeID, SIM signature, SIM all-in-one card and SIM car key, which enable authentication on a number of security levels and Near Field Communication (NFC) services in the 5G era. As of the end of December 2019, more than 670,000 users had activated the Super SIM feature. Scan the QR code to watch VR demonstration of 5G applications 5G industrial Internet 5G smart energy 5G smart transportation 5G smart healthcare 5G smart finance 5G smart media 5G smart campus 5G high-altitude Internet of Flying Things 5G smart agriculture 5G smart city 5G drones 5G HD industry video 5G smart park 5G cloud gaming 19

 

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20 In March 2019, we assisted the Beijing 301 Hospital to perform the world’s first 5G-based remote surgery - the “brain pacemaker” implantation surgery for a Parkinson’s patient. The features of 5G networks can effectively guarantee the stability, reliability and safety of surgeries and always allow experts to monitor the surgical process and patients’ status. In 2019, the project won the Asia Mobile Awards (AMO) “Award for Best Support for the United Nations Sustainable Development Goals Mobile Innovation” presented by the Global System for Mobile Communications (GSMA). As the application of 5G networks continuously expands in the medical field, the Company also supported the nation’s first 5G remote fundus laser surgery, 5G remote orthopedic surgery, 5G teleconsultation, 5G remote ultrasound and other projects, effectively improving the quality of medical services and management. Supporting the World’s First 5G Remote Surgery at Beijing 301 Hospital “I work in rotation between Beijing and Hainan. This surgery took place during my rotation in Hainan. A Parkinson’s patient in Beijing needed surgery, but his condition did not allow him to fly to Hainan. With the support of China Mobile’s 5G network, a remote surgery between Hainan and Beijing was performed for the first time. Free from 4G problems such as video lagging and significant remote-control delays, the surgery was performed in near real time and I hardly felt that the patient was actually 3,000 kilometers away. Through remote surgeries, high-quality and high-level experts in higher-level hospitals will be able to perform surgeries directly on patients in remote and backward areas, making possible surgeries that were once too challenging to deliver at the grassroots level.” —— Ling Zhipei, Director of Neurosurgery, First Medical Center and Hainan Hospital of Beijing 301 Hospital China Mobile has built the smart “And-Agriculture” product suite that helps reduce agricultural production costs and improve production efficiency, product quality and the ecological environment, thus contributing to the implementation of the Rural Vitalization strategy. Empowering the Whole Agricultural Industry Chain Precision Planting Precision Farming Smart Aquaculture Smart Agricultural Machinery The 5G precision greenhouse tomato planting solution is based on the key capabilities of agricultural AI and 5G advantages. Drawing on analysis by the AI brain, it performs intelligent control over the planting conditions, water and fertilizer to improve the quality and efficiency of tomato production. Drawing on the advantages of 5G, the intelligent pig farming platform overcomes the problems of deploying GPU (Graphics Processing Unit) servers in farms, such as high cost and poor maintainability, and enables functions like pig weight measurement, backfat measurement, body temperature measurement and sow lactation monitoring based on 5G capabilities and AI platforms. The circular aquaculture system under the control of 5G networks detects and analyzes the dissolved oxygen, temperature, pH value and other parameters of the water and performs remote intelligent control over water injection, aeration, sewage and pump bacteria. A smart, convenient, efficient and safe management model has been created through the establishment of a scientific and technological aquaculture log. The automated agricultural machinery control system is based on 5G and can work around the clock. It accurately plans the work route to ensure high-precision operations of the agricultural machinery at all times, thus improving the efficiency and increasing the income generated by the machinery.

 

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Our Hunan subsidiary was actively involved in assisting Hunan Province to build “Internet + Supervision” platform, empowering livelihood supervision with technology. As of the end of 2019, the “Internet + Supervision” in Hunan had enabled the identification of over 1.7 million problematic data entries, and displayed the account information of 208 livelihood subsidies and over 6 million pieces of transaction information of villages. The total views of the provincial, city-level and county-level web portals and the WeChat subscription account exceeded 1.2 billion person-times, and the WeChat subscription account attracted 3.37 million followers. The platform had become an important channel for people to carry out livelihood supervision. We upgraded the platform in 2019, intensifying efforts in areas like big data, cloud computing, standard system, and safety operations and maintenance. The major related project “Hunan Province Unified Financial Software for Village Finance” is the first in China to enable unified accounting and centralized supervision of village-level finance across the province. 21 Providing Technological Solutions to Livelihood Supervision Internal supervision portals We have set up a web portal that consolidates a variety of functions, such as data input, complaint handling, data collision analysis, performance evaluation and platform management, allowing the platform to operates smoothly, efficiently and safely. External public portals Breaking information barriers and advancing connectivity, the platform supports visits on computers, WeChat subscription accounts, mobile applications (apps) and query machines. With one click, people can access a variety of information, such as information on the remittance of their subsidies, targeted poverty alleviation policies and special grants as well as spending status of village-level organizations, and can file complaints or whistleblowing reports. 5G Classroom for Future Immersive interactive learning with 5G Cloud and AR China Mobile has developed comprehensive 5G-based smart campus solutions that focus on three core issues, namely better teaching, quality resources sharing and smart campus management. Making Education Smarter and More Scenario-based and Accessible 5G cloud AR immersive and interactive learning 5G safe campus 5G smart classes with dual teachers We have helped Shenzhen Longgang Science and Technology City Foreign Languages School launch 5G remote synchronous classes, where real-time class footage is transmitted between Shenzhen and Guizhou to allow classes to be shared between two locations. 5G remote holographic teaching We set up a holographic teaching facility at Beijing Normal University. It allows teachers to give lectures in a green screen studio and transmits life-size footage of the teachers to other places through 5G networks. Utilizing the Cloud XR (Extended Reality) educational platform, we have helped the China Science and Technology Museum build a virtual science and technology pavilion that breaks the constraints of time and space, providing more visitors and schools with richer and more convenient educational resources and services. We have built the “And-Recognition” smart reception system that enables college freshmen to complete all registration procedures based on face recognition using only their ID cards. Besides, the 5G Safe Campus solution offers a variety of customization functions tailored for real-life campus scenarios, such as family video calls, face recognition in exams, see-through kitchens, and face-recognition authentication for parents when picking up their children from school, greatly improving safety. Empowering Construction of a Smart Society

 

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04 22 China Mobile firmly adopts the “Customer-centered and Service-oriented” approach and has built a comprehensive, full-process and allhands service system. We have set up the China Mobile Service Leadership Project Steering Group headed by main company leaders to improve our customer service on all fronts, enhance the building of a service-oriented culture, and strengthen the formulation, application and management of regulations1 in areas like customer rights protection, thereby delivering enjoyable customer services. Providing Enjoyable Services Improving Customer Perception Building a Service- Oriented Culture Giving Back to Customers Protecting Customer Rights and Interests Carried out the “Leading Projects” for customer satisfaction, comprehensively improving customer perception. Ran the 10080 service quality supervision hotline to upgrade the centralized handling, supervision and management of complaints. Utilized new tools such as voice robot, text robot, intelligent quality inspection and intelligent strategy center to improve service efficiency. Implemented a series of service measures, including an upgraded version of the 0000 value-added service subscription inquiry and unsubscription and a more transparent complaint handling process. Built a comprehensive customer perception evaluation system to acquire customer perception in real time; the system has reached over 620 million person-times of customers in total. Our 4G customer satisfaction rate was 78.37% in 2019, maintaining a leading position. Held a series of “Enjoyable Services 365” customer opinion collection activities, of which the “Enjoyable Services 365 – Network” activity attracted the participation of 1,163,000 customers. Held General Manager Customer Reception Day activities which were attended by over 140,000 customers, and handled nearly 130,000 inquiries and complaints over the year. Established a two-tier User (Supervision) Committee, cumulatively recruited more than 2,000 users as committee members, and established diversified customer communication channels. Conducted activities like service star and star team selection and service management best practice selection to encourage quality service demonstration and promotion. Promoted the “Voice of Customers” project, and delivered more effective problem-solving and better service management by having managers at all levels listen to customer complaint recordings. Optimized customer bills and regulated key contact services such as data inquiry display, customer service numbers and 5G business service reminders. Comprehensively strengthened regulations on public notifications of tariffs of available services, simplified the tariff structure, and promoted transparent consumption. Carried out the “Sunshine Action” for the protection of customer rights and interests, continued to standardize operations like outbound marketing and deduction reminders, and formulated management measures on billing security and transparent consumption to fully protect customers’ right of choice. Introduced measures such as “free data on checking user seniority” and “quick installation and quick repair with free data for overtime”. Upgraded the three brands of GoTone, M-Zone and Easyown and launched a series of services and benefits around users’ lives. The Company has formulated the following documents in 2019 for the protection of customer rights and interests: the China Mobile Penalty Measures for Violation of Customer Rights and Interests (Trial), the Notice on Further Strengthening the Service Guarantee of Customers’ Independent Right of Choice, the China Mobile Data Inquiry and Display Service Specifications, the China Mobile Individual Customer Billing Service Specifications V3.0, the 5G Business Service Reminder Standards, the China Mobile Customer Service Numbers Management Measures, the Notice on Delimiting “Three Red Lines” for the Scope of Market Operations and Management, etc. 1: Ensuring Trusted Digital Consumption 04

 

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Ensuring Trusted Digital Consumption 23 China has the most seafarers of all countries and is the world’s largest exporter of seafarer services. The seafarers spend more than half of the year on the sea, where there is no signal, making it difficult for them to communicate with their families. To help seafarers meet their particular communication needs, our Beijing subsidiary and China Mobile International jointly launched the Seafarer Card, providing seafarers with the exclusive 1720711 number range and exclusive tariff benefits which, together with the Family Network, allow seafarers to enjoy free domestic calls with friends and relatives. Seafarers can also enjoy the benefits such as half-price data plans, free phone services and number hosting by logging in to the JegoTrip App using a Seafarer Card number. In the meantime, a communication group for Seafarer Card users has been set up with customer service available 24/7. The Seafarer Card brings seafarers closer to their families, realizing true worry-free sails with a card number. The card has been well received among our seafarer users. China COSCO Shipping Corporation currently provides the Seafarer Card for its seafarer employees as a basic communication welfare. Facilitating Worry-free Sails and Bringing Seafarers Closer to Families Building a business environment with ethnic characteristics in Jilin Promoting Speed Upgrade and Tariff Reduction China Mobile actively promotes speed upgrade and tariff reduction to effectively improve people’s sense of gain and well-being. Over the past five years since the Company began implementing speed upgrade and tariff reduction, we have implemented various tariff reductions measures, benefiting more than one billion users and four million enterprises, with data tariff dropping by more than 90% cumulatively. Moreover, in November 2019, we officially launched the “Mobile Number Portability” policy, allowing users to switch to another telecom operator without changing their numbers. We issued the Notice on Regulating Same-number Transfer between Operators, ensuring orderly progress in strict compliance with requirements of the MIIT. Individual Customers SME Customers Increased the value of data plans and basic plans, offered large-volume traffic plans, and continuously reduced tariffs charged when usage exceeding the plan. Handset data tariff decreased by 47% in 2019 from 2018. Carried out the inclusive dedicated Internet connection campaign, 100M enterprise broadband promotion campaign, GB enterprise broadband promotion campaign, etc. The broadband and dedicated connection tariffs for SMEs decreased by 39% and 25% respectively compared with 2018. ”The Voice of Customers” platform won the ”Quality Service Project” award in the third National Quality Service Competition. The ”Construction of IoT Service Quality Standard System Based on Customer Perception” project was recognized as a Highest-level Technology Achievement in the 4th National Quality Innovation Contest. ”5G Pioneer Cup” service skills competition in Shandong

 

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Published 14 regulations including the China Mobile Customer Information Security Protection Management Regulations and established a normalized customer information protection system. Pioneered the “Vault Mode”, including all high-risk operations on key system platforms that involve sensitive customer information into “Vault Management and Control”. Fuzzified sensitive customer information on customer service system interfaces to prevent customer information leakage. Carried out data security compliance assessments to improve data compliance management and audited all maintenance operations. Strengthened real-time and follow-up inspection and supervision of customer information security incidents. 24 Managing Spam Messages China Mobile makes dedicated efforts to manage all types of spam messages, effectively identifying and blocking spam SMS/MMS, nuisance/scam calls, etc. to help build a clear cyberspace. Released the China Mobile Key Work Plan for Further Preventing and Controlling Telecom Network Fraud to reinforce the security management of mobile phone cards, IoT cards, and new technologies and new services. Established the ”Group, Key Regions, Provincial Subsidiaries” three-tier technical protection system to quickly monitor and tackle problematic numbers roaming to key regions. Built the ”Customer Bad Credit Database” to prevent fraudsters from applying for new numbers to enter the network again. Blocked a total of 10.16 million international scam calls and 38.89 million scam messages and sent 2.4 billion free anti-fraud call reminders to 230 million users in 2019. Launched a high-frequency nuisance call protection service ahead of industry peers, cumulatively Tackling blocked 1.2 billion nuisance calls for 7 million users. Nuisance Calls For possible network security emergencies, the Company has formulated the China Mobile Network Security Emergency Response Plan (V1.0). It divides emergency responses to cyber security incidents into four levels, namely Critical (Level I), Significant (Level II), Moderate (Level III) and General (Level IV), with reference to “Information Security Technology – Guidelines for the Category and Classification of Information Security Incidents” (GB/Z20986-2007) to comprehensively improve the ability to respond to cyber security incidents. Our measures to deal with network security incidents include emergency bandwidth expansion, virus detection and the use of backup data. The Company makes every effort to protect the security and reliability of customers’ personal information according to laws and regulations. In the event of a major customer information breach, the Company would promptly inform the affected customers and propose measures to mitigate the damage. The Company had zero major customer information leakage incident recorded in 2019. The Company formulated the following 5G network security specifications during 2019: the 5G Telecom Network Security Technical Requirements, the 5G Network Security Risk Assessment Specifications, the 5G Network Equipment Security Configuration Specifications, the 5G Security Risk Prevention and Control Work Guide, the 5G Network and Service Security Benchmark Evaluation Specification, the 5G New Technology and New Service Security Evaluation Reference Index, etc. 1: China Mobile attaches great importance to network security. Under the united leadership of the Company’s Network Security Leadership Group, we have set up network security leadership groups headed by the top leader of each of our 31 provincial subsidiaries and our specialized subsidiaries and directly affiliated units while prioritizing network security efforts. We actively respond to the risks brought about by the development of 5G and AICDE services and have produced security white papers on topics like AI, IoT and 5G to improve the overall level of security. Maintaining Network and Information Security Campaigns Talent Cultivation ”Shield Building” Key Information Infrastructure Protection Campaign ”Discerning Eye” Network Data Security Enhancement Campaign 5G Network Security Defense System construction and standards and norms formulation1 Network security expert team ”Team Mountain Tai” Security training such as ”Talent Honing Plan” and ”5G – Shield Building” Certification of Certified Information Security Professional Preventing Communication Information Fraud

 

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25  In 2019, China Mobile made comprehensive progress in the quality management of key products such as individual, home and intelligent  hardware. We further improved the product quality evaluation standards and clarified the quantitative evaluation indicator system  on product quality. We also optimized the closed-loop management mechanism for problem grading and classification, classifying  problems as high, medium and low levels according to the scope of influence and probability of occurrence, thereby further refining the  closed-loop management requirements. For non-conforming products, we implement measures such as upgrade and optimization, or  repair, recall, rework and fines, according to the severity of the problems in accordance with our quality guidelines. The Company had  zero product recall incident for quality issues throughout the year.  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, 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.  Strengthening Product Responsibility  The EMR monitoring of base stations is a key challenge for EMR management. China Mobile took the initiative to communicate with the  community and customized an EMR publicity vehicle equipped with a vehicle-mounted dynamic EMR monitoring system and professional  testing devices. Professional technicians fully participated in educational tours conducted in various residential communities, towns,  rural areas and ethnic minority areas, effectively alleviating or dispelling negative public perceptions of EMR. In 2019, our EMR educational  publicity vehicles carried out 120 educational activities in the three provinces of Hubei, Jiangsu and Henan, covering 42 cities and  88 districts and counties.  Managing Electromagnetic Radiation (EMR)  Our Guangdong subsidiary and our online services specialized subsidiary jointly developed the AI anti-fraud application “OneAI  Smart Detective” and the whole-process real-name authentication solution, carrying out black card and channel identification  at the beginning of registration and in real time, thus effectively reducing the number of nuisance calls. The system also cooperates  with law enforcement departments, providing suspected scam numbers and fraud locations for reference to improve the  efficiency of crackdown on fraud. At present, the accuracy rate of “OneAI Smart Detective” identification and real-name authentication  is 81% and 99.9%, respectively.  If a mobile phone receives a large number of verification code messages within a short period of time for no reason, it is likely  that the user has been attacked by a ”SMS Bomb”. In response, we launched the ”SMS Bomb” Emergency Protection System  to intercept ”SMS Bombs” in real time. As of the end of 2019, the system had provided protection services for 1.32 million users  and intercepted 270 million nuisance ”SMS Bomb” messages.  AI Anti-fraud Application ”OneAI Smart Detective”  Emergency Protection System against ”SMS Bomb”  The Company’s Using AI Technology to Manage Cyberspace Spams and Protecting Users’ Legal  Rights and Interests won the ”WSIS Prizes 2019 Champion” award presented by the United Nations  World Summit on Information Society (WSIS) 2019.  Offering ”10086” dedicated customer service seats to elderly  customers  Hosting ”Convenience Services Brought into the Community”  campaign to offer anti-fraud education in Anhui  Ensuring Trusted Digital Consumption

 

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26  Key Performance Indicators  Connection Scale  Economic Performance  Indicators 2017 2018 2019  Number of household broadband customers  (million) 109 147 172  Number of corporate customers (million) 6.02 7.18 10.28  Number of IoT customers (million) 229 551 884  Number of countries and regions with  4G international roaming services 172 181 191  Number of countries and regions covered  by our data roaming services 229 239 247  Indicators 2017 2018 2019  Number of total mobile customers (million) 887 925 950  Number of 4G customers (million) 650 713 758  Indicators 2017 2018 2019  Operation revenue  (RMB100 million) 7,405 7,368 7,459  Taxation (RMB100 million) 337 359 353  Summary of Our Key Performances  Our Achievements in 2019  Our Goals for 2020 and Beyond  Officially launched 5G commercial services, implemented the “5G+” plan and the “Double GB Plan”, thereby improving  network quality, narrowing the digital divide, and accelerating the construction of a new type of information infrastructure  in the 5G era.  Built an agile and efficient emergency communication support system, and attained the goal of “zero major network  failure, zero major network security incident, and zero major complaint from customers”.  Held the second Technology Innovation Conference-cum-China Mobile Science and Technology Association Inauguration  Ceremony, deepened the “One System Four Rings + Three Verticals” scientific and technological innovation system,  and continuously inspired internal innovative vitality.  Carried out strategic cooperation, continuously opened up capabilities, supported the Entrepreneurship and Innovation,  and pursued shared development with micro, small and medium enterprises.  Undertook in-depth explorations in the customer market and verticals, thereby boosting higher-quality consumption and  the transformation and upgrade of different sectors and industries.  Adhered to the “Customer-centered and Service-oriented” approach, improved the service system, promoted speed upgrade  and tariff reduction, safeguarded information security, practiced compliant marketing, and made every effort to  protect customers’ legitimate rights and interests.  To expand 5G coverage to all cities at the prefecture level or above, achieve a net addition of 70 million  5G package customers, and strive to realize the commercial use of 5G SA networks at scale by 2020; to  release over 100 5G smartphones and over 100 5G devices for industry use; to develop 100 industry-transforming  and scalable 5G demonstration applications focusing on 14 key vertical industries.  To optimize 5G integrated innovation capability system and continuously augment the eight major innovation  capabilities of AI, IoT, cloud computing, big data, edge computing, security, blockchain and location.  To deepen open cooperation, bring into play the “multiplier effect” of 5G, and build a 5G ecological community  with worldwide industry partners.  To promote satellite-aerial-terrestrial integrated emergency communication, cross-domain integration of  emergency resources across all networks, and building of emergency management platforms capacity to  comprehensively guarantee successful support efforts.  To optimize the service system, build a leading service quality control mechanism, and provide customers  with smart, convenient and efficient services.  To continue to improve the three major capabilities of security situation awareness, security protection and  emergency response and strengthen the ability of critical infrastructure in resisting cyber security attacks.

 

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Indicators 2017 2018 2019  Overall customer satisfaction  in telecom service quality 1 79.19 80.86 81.99  Number of spam messages  report handled (10,000) 128 133 139  Number of scam phone  numbers handled 50,700 19,600 10,500  Average number of spam  messages handled per  month (100 million)  > 2 > 3.9 > 4  Average number of  accounts making  illegitimate group voice calls  handled per month 2  2.1 5.5 59.4  Number of anti-fraud SMS  alerts sent (100 million) 36.4 34.7 24.2  Annual number of targeted  covert fraud incidents  identified and successfully  intervened 3 (10,000)  > 370 > 123 > 2,322  Summary of Our Key Performances  关键绩效表  Network Capability  Network Quality Guarantee  Customer Rights and Interests Protection  R&D and Innovation  Open Cooperation  The evaluation of overall customer satisfaction in telecom service  quality was organized by the MIIT, who also announced the results. The  total score is 100.  In 2019, the Company further strengthened the governance of  nuisance calls, which resulted in the significantly increased average  number of cases handled each month.  In 2019, the Company added four identification models for scenarios  of covert communication information fraud, which resulted in the  significant increase in the annual number of cases handled.  1.  2.  3.  Notes:  an Inclusive  Good Life for All  Jointly Creating  Supporting Poverty Alleviation  and Public Welfare  Promoting Coordinated Regional  Development  37 Growing Together with Employees  35  30  Indicators 2017 2018 2019  Number of emergency  support 4,476 4,899 6,800  Significant political/  economic event support 4,253 4,597 6,658  Significant natural disaster  support 190 266 124  Significant accident or  catastrophe support 23 16 16  Public health incident  support 0 1 0  Social safety incident  support 10 19 2  Number of emergency  support vehicles deployed  (vehicle-times)  7,362 8,986 7,931  Number of emergency  support equipment installed  (set-times)  30,642 36,596 27,755  Number of person-times  involved in emergency  support (person-times)  201,250 314,427 259,807  Indicators 2017 2018 2019  Investment in entrepreneurship  and innovation support  (RMB10,000)  7,955 8,359 8,830  Number of users of  entrepreneurship and  innovation platform  15.4 15.6 16.1  Number of projects created  from entrepreneurship and  innovation events  2,535 2,918 3,183  Number of teams participated  in innovation and  entrepreneurship events  1,819 1,855 2,817  Number of patent  applications (pieces) 2,006 2,222 2,683  Number of newly granted  patents (pieces) 753 1,040 1,384  Indicators 2017 2018 2019  Number of enterprises  served by communication  capability open platform  >13 >15 >44  Average authentication  processes carried out on  the mobile authentication  platform per day  (100 million times)  >5 6.67 12.12  Number of developers on  OneNET 56,728 99,963 148,642  Number of enterprises on  OneNET 6,500 9,396 11,825  Number of connected  devices on OneNET  (10,000)  3,154.31 7,987.85 16,092.77  Number of developers of  Andlink 13,500 76,300 115,900  Number of enterprises on  Andlink 150 500 1,000  Indicators 2017 2018 2019  Number of GTI operator  members 132 134 136  Number of GTI industry  partners 163 176 237  Indicators 2017 2018 2019  Number of 4G base stations  (10,000) 187 241 309  Average 4G network  downloading rate on urban  roads (Mbps)  42.0 42.6 43.3  International transmission  bandwidth (G) 23,750 39,000 70,885  27

 

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28 ”Blue Dream”,  Innovating on Education for Poverty Alleviation  Eradicating poverty starts from changing the minds of people.  Poverty alleviation through education is a root solution to help  the poor. To improve the education conditions of primary and  secondary schools in central and western China, especially in  poverty-stricken areas, and to eliminate the root cause of intergenerational  poverty, China Mobile worked together with  the Ministry of Education and launched the China Mobile Blue  Dream Educational Aid Plan (“Blue Dream”) in 2006, focusing on  improving the comprehensive capabilities of rural teachers. We  further developed on a sub-program of “Blue Dream”, the Ministry  of Education-China Mobile Central And Western China Rural  Primary and Secondary School Principal Training Program (“Principal  Training”) and have established a unique principal training  system, thereby creating a new platform for improving the education  management skills of primary and secondary school principals  from poverty-stricken areas in central and western China.  2006  2008  2009  2016  2018  Started the model of centralized training of small study groups.  Started providing online support, setting up a dedicated section for Principal Training at the China Education  Administration Training Network of the National Academy of Education Administration, posting program updates  and allowing exchange of local progress of the program.  Innovated the Training-in-Teaching model and the ”Shadow Training + Remote Training” model, and set up the  shadow training schools.  Launched the first ”Seed Principal Online Workshop + Teaching in the Countryside” program.  Created the ”In-School Training” diagnostic training program.  Sustainability Context  The pursuit of happiness is a common aspiration for  all. Even though we have made significant progress in  technological development, there are still many issues  arising from unbalanced and inadequate development  nowadays. China actively strives to build a community  with a shared future for mankind, adheres to the concept  of inclusive development, implements targeted  poverty alleviation policies, coordinated regional development  strategies and the Belt and Road Initiative,  and works together with domestic and international  partners to make positive contributions to the implementation  of the relevant United Nations Sustainable  Development Goals.  China Mobile actively explores the infinite possibilities  of using 5G technology to serve society and improve  the well-being of people. In the decisive period of  building a well-off society in an all-round way, we are  committed to sharing the enabling benefits of 5G and  other ICT technologies with more people, and providing  our ideas and solutions for promoting the allround  development of people and social progress.  Innovative Training Models for Principals  From the “three-stage” training model of “centralized training +  shadow training + back to school practice” that has been made  part of government policy system by the Ministry of Education, to  the “five-stage” training model of “centralized training + shadow  training + online study + back to school training + sent to school  practice”, the program has been constantly evolving based on  implementation and evaluation results, creating unique and  innovative training models that contribute to the development of  a high-quality national principal training system for the new era.  We initiated the ”active training” concept and established a  platform for team training at county level and provincial level,  based on the individual development needs and career goals of  the principals and the training needs of the region, to give the  principals greater motivation to learn. We made effective use of  the online training community platform centered on the ”Seed  Principal Online Workshop”, and developed the combo training  model of online learning and on-site practice. We also set up a  menu-based, independent and open learning platform, where  the principals could customize their class selections based on  their individual needs. With over ten years of continuous efforts,  we have fostered a training culture of ”to learn and train to  become excellent”, motivating the all-around development of  the principals.  Collaborative Governance as Foundation  The program went beyond the traditional task-based training  concept. Instead, it has evolved into an effective “five-inone”  modern collaborative governance system, in which “the  Ministry of Education and China Mobile lead, the program  office coordinates, the provincial team designs, the training  base implements, and the county-level team manages”, all  collaborating to train the principals. Meanwhile, we insisted  on scientific management, studied best practices of similar  programs and developed the Principal Training Program  Standards, promoting program effectiveness with standardized  implementation, supervision and support.  Public Participation with Greater Impact  Poverty alleviation needs the support and participation  of society. We called on the public to join our efforts to  support education poverty alleviation in the form of matched  charitable donations. As of the end of 2019, 3.38 million  people had participated in MIGU Reading’s Read for Good  campaign and raised RMB10 million for the ”Blue Dream”;  and 27 Read for Good events were organized at Joy Reading  Cafes, which attracted 62.666 million person-times to  participate and raised a total of RMB6 million.

 

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”Blue Dream”, Innovating on Education for Poverty Alleviation  29  “‘Principal Training’ allowed me to better grasp and form my own understanding of education, and develop my own  action plan to manage my school. It has lit a shining light for my professional growth and daily practice, so that I can  become a better thought leader at my school and move in the right direction.”  —— Li Liansheng, Principal of Shangganshan Central Primary School, Shanggao County, Yichun City, Jiangxi Province  “‘Principal Training’ allowed me to reexamine myself from a new perspective, and showed me the way to a dense forest of  education, where my dreams can flourish. My dream is to work hard to support rural education.”  —— Chen Yang, Principal of Dandian Primary School, Tuanfeng County, Huanggang City, Hubei Province  ”I am a veteran of principal training. But it’s very rare to see programs like China Mobile’s ‘Principal Training’ that last for  over a decade to help rural principals. And it’s not an easy thing to do! China Mobile’s ‘Principal Training’ provides customized  training for rural principals with unwavering love and dedication, benefitting rural principals in Guangxi, especially  those from low-income counties. The program allowed the rural principals to feel the sincerity and warmth of charitable  support, which is a great boost to their confidence!”  —— Li Fuzhuo, Director of ”Principal Training” Guangxi Partner (Nanning Normal University)  Since the launch of the “Blue Dream” Education Aid Plan, the  Company has invested nearly RMB180 million and provided  training for over 127,000 rural primary and secondary school  principals from central and western China, directly benefiting  over 700 counties. To leverage our advantages and support  education poverty alleviation, we have also built 2,310 China  Mobile Libraries and 2,863 multimedia classrooms for schools  in regions in extreme poverty in 23 provinces in central and  western China and the Xinjiang Production and Construction  Corps, and equipped the multimedia classrooms with remote  learning equipment and “And Education” products.  In the future, China Mobile will continue to uphold the founding  aspiration of supporting the development of rural education and  serving the professional growth of rural primary and secondary  school principals in central and western China, continuously  inject new impetus into the development of education in the  central and western rural areas, and lay a new foundation for the  fundamental eradication of poverty.  ”In-School Diagnostic Training” of the ”Principal Training” program in Sichuan

 

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Supporting  Poverty Alleviation and Public Welfare  30  Contributing to Poverty Eradication  2019 is a crucial year for eradicating poverty in China. China Mobile developed a series of policies, including the China Mobile Poverty  Alleviation Priorities in 2019, the China Mobile Poverty Alleviation Assessment Methods in 2019, and the 2019 Notification on Specifying  Poverty Alleviation Tasks for China Mobile Units, to specify the priorities, implementation requirements and assessment standards for its  poverty alleviation work in 2019.  During the year, we summarized the experience, studied new trends and requirements in poverty alleviation, and developed the “network  + poverty alleviation” model based on the “1 + 3 + X” system, focusing on the network-based poverty alleviation model and implemented  poverty alleviation programs in education, health care, livelihood, industry, consumption, etc. with support in terms of organization,  funding and talents. In 2019, our parent company was recognized as one of the best performers in the targeted poverty alleviation assessment  by the central government, 13 provincial subsidiaries were recognized as provincial-level poverty alleviation models, and 8 provincial  subsidiaries received the top-level rating in the provincial poverty alleviation annual assessment.  Strengthening  Organizational  Support  Promoting Poverty  Alleviation Officers  Prioritizing  Poverty  Alleviation Funds  Building the  Information  Highway  Promoting Poverty  Alleviation in  Different Fields  We established a three-tier mechanism, under  which “the Group coordinates, provincial subsidiaries  manage, and city/prefectural branches and  poverty alleviation volunteers implement”, and  a collaboration mechanism consisting of “task  allocation and implementation, supervision and  notification, and assessment and accountability”.  Meanwhile, we cooperated with our parent company  and arranged nine provincial subsidiaries in  eastern China to support the six targeted counties,  and mobilized all employees and 1 billion  customers to participate in poverty alleviation.  We integrated network poverty alleviation  with efforts in other fields, such  as education, language, culture, health,  consumption, industry and employment,  and have achieved positive poverty alleviation  results.  We have been cooperating with our parent  company, undertaking the poverty alleviation  work and providing pair support in the 8  poverty counties of 5 provinces, such as the  “three regions and three prefectures”, and  covering the poverty alleviation work in 1,767  counties, townships and villages designated  by local government since 2002; and dispatched  4,425 employees (2,200 employees  on duty in 2019) working at the front line of  poverty alleviation full time. One of the poverty  alleviation volunteers, Duan Yuping, was  recognized as the highest award in poverty  alleviation in China, while other 24 received  provincial-level poverty alleviation awards.  We cooperated with our parent company and provided continuous support to improve  telecommunications infrastructure in less-developed areas, having connected 127,000  townships with voice service and 72,000 villages with wireline broadband connection  and 96% of archived poverty villages now have broadband connection cumulatively;  actively promoted 4G and wireline broadband development in less-developed areas, with  98% of administrative villages have 4G network coverage; implemented the Phase-4  Telecommunications Universal Service Project and covered 4,564 administrative villages  with 4G network; launched the Poverty Alleviation Service Package for archived poverty  households, benefiting 9.95 million users; donated house-brand mobile phones to  low-income households in Shule and Baisha; and have been donating Tibetan-Mandarin  bilingual mobile phones for two years in collaboration with China Internet Development  Foundation, benefiting 35,000 low-income Tibetan customers.  Our parent company gave priority to  funding poverty programs in areas with  extreme poverty and areas lacking basic  livelihood, education, health care  and housing conditions, and donated  a total of RMB290 million in 2019 with  approximately RMB55 million of in-kind  donations; and invested RMB1.1 billion,  totaling RMB1.6 billion cumulatively, in  the Central Enterprise Poverty Support  Industry Investment Fund.  Network + Poverty Alleviation ”1+3+X” System  Education  Healthcare  Livelihood Industry  Consumption  Employment  Talents  Organization  Funding  Network  05

 

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Supporting Poverty Alleviation and Public Welfare  31  Villagers learning how to use the ”Mandarin for Poverty Alleviation” app Customized ”China Mobile Education  for Poverty Alleviation” mobile phone  Providing Mandarin Training for Ethnic Minorities for a Better Life  Efficiency: Participated in developing the “Mandarin for  Poverty Alleviation” app, which included functions such  as character learning, daily dialogues, self-learning and  other modules covering 1,000 daily phrases and 500  high-frequency vocabulary items in the local region.  Affordability: Provided customized mobile phones for  poverty alleviation training with preinstalled “Mandarin  for Poverty Alleviation” app, and sponsored data subsidy  and mobile device subsidy.  ”Now, I can write my own name, read some simple characters, and speak Mandarin. I like the ‘Mandarin for Poverty Alleviation’  app. It is convenient and practical. I can learn Mandarin and Chinese characters anytime and anywhere because of  it.”  —— Youli, Villager, Guquan Village, Nujiang Lisu Ethnic Minority Autonomous Prefecture  The lack of Mandarin skills severely limits the capability of ethnic minorities to get rid of poverty and develop their regional economy.  To address this challenge, our Yunnan subsidiary developed the “1 + 3” information solution for Mandarin education, consisting  of one core app, the “Mandarin for Poverty Alleviation” app, and three support systems in data traffic, marketing promotion  and big data, to help more people learn Mandarin and gain access to more employment opportunities.  Accessibility: Carried out the all-round promotion of  the “Mandarin for Poverty Alleviation” app with the  support of Yunnan China Mobile stores, social channels  and village service points, and publicized successful  cases and set up Mandarin-speaking model villages to  encourage more people to use the app.  Measurability: Retrieved app usage data from the big  data platform to support the implementation of the  programs in different locations.  As of the end of 2019, we had donated 20,000 mobile phones customized with the “Mandarin for Poverty Alleviation” app, and  provided free in-app data for 120,000 users. The “Mandarin for Poverty Alleviation” app was used by 148,300 users, contributing  to a relatively fast growth of their annual income.  In April 2019, our parent company signed the Strategic Cooperation Framework of Promoting Mandarin Education for Poverty  Alleviation with the Ministry of Education, the Poverty Alleviation Office of the State Council, the State Language Commission and  iFLYTEK in Kunming to promote the Yunnan experience nationwide.  There are six targeted poverty alleviation counties for China Mobile, including Huanan and Tangyuan in Heilongjiang province,  Akto, Shule and Luofu in Xinjiang Autonomous Region, and Baisha in Hainan Province (“six targeted counties”), among which  the four counties in Xinjiang and Hainan are in extreme poverty. In 2019, we continued to cooperate with our parent company  to support the poverty alleviation work in the six targeted counties and overfulfilled all targets for the targeted poverty alleviation  commitment, including directly funding a total of RMB180 million, facilitating funding of RMB13.73 million, training 6,712 poverty  alleviation volunteers and local residents, and purchasing and helping sell over RMB100 million worth of agricultural products  from these counties. Among the six targeted counties, Huanan and Tangyuan were officially taken off the list of targeted poverty  alleviation counties in May 2019, and Shule and Baisha were in the process of being taken off the list. A total of 78,000 people  in the six targeted counties had successfully been removed from the registered poverty population list during the year.  Major Breakthrough in Targeted Poverty Alleviation Areas

 

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32  China Mobile developed the Targeted  Poverty Alleviation System, and deployed  the system in 92 cities and counties in 14  provinces to construct an ecosystem of targeted  poverty alleviation, serving 8,169,000  low-income households and 741,000 poverty  alleviation volunteers with its ”one  system and one mobile phone”. In 2019,  the Targeted Poverty Alleviation System was  included in the ”Global Showcases of Poverty  Alleviation” at China International Forum  on Poverty Alleviation.  With the Targeted Poverty Alleviation System, poverty alleviation volunteers can use  their phones to scan the QR code outside each low-income household to access the  details of the applicable poverty alleviation policies.  Targeted Poverty Alleviation  System  Our Hainan subsidiary actively participated in passion fruit planting in  Rongbang Village, Baisha Prefecture to support local poverty alleviation  Our Xizang subsidiary helped build greenhouses in Bangren Village in Aili  Prefecture and improved local livelihood  Promoting Education Equality with the  ”Internet + Education for Poverty Alleviation” Model  China Mobile has created the ”dual teacher classroom  solution” to promote the sharing of high-quality teaching  courses and resources among schools and student  households, allowing the less developed areas to improve  their teaching quality with not only accessibility but also  quality resources. Lack of available courses is not a bottleneck  anymore. This new teaching model has effectively improved  the education equality for the less developed areas.  In Jiangxi, we have deployed video hardware to connect  rural teaching sites with central schools in urban areas,  creating a Cloud Classroom that fully synchronizes the  teaching processes at both ends of the educational support  partnership with its remote teaching function. Its Cloud  Homework function can support the rural children's afterschool  learning needs. The service is available to the 8.64  million primary and middle school students in Jiangxi, and we  have provided the Cloud Homework service for free, together  with free broadband service, to 300,000 students from lowincome  households.  In Sichuan, we have developed the model of “live streaming of  courses of famous teachers + management software + intelligent  hardware”. In Gulin County, we have set up 45 virtual lecture  rooms for teachers and 255 virtual classrooms for students,  providing local students with quality traditional Chinese studies,  music, art and other courses from experienced teachers in  Beijing, Jiangsu and Zhejiang.  To date, the Company has deployed several hundred classrooms  in the poverty-stricken areas in central and western China,  benefiting nearly 10,000 students. In addition, we worked  together with the Ministry of Education to jointly launch  the campus broadband ”Double Plan” to give primary and  secondary schools in poverty-stricken areas free broadband  service upgrade. In 2019, we provided Internet access to  2,460 schools from the ”three regions and three prefectures”,  achieving a 30% increase in the Internet access rate.

 

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33  Supporting Public Welfare  Heart Caring Program – support for children with congenital heart disease in poverty: Since 2011, we have been providing free  screening and treatment for children from poverty-stricken families with congenital heart disease. In 2019, we donated RMB17.8  million to implement the program, and successfully completed the Ningxia phase III, Guangxi phase III and Yunnan phase I new projects.  Over the past 8 years, we have implemented the program in 10 provinces (regions), and provided free congenital heart disease  screening for 54,968 children and free surgical treatment for 5,973 diagnosed children, with a cumulative donation of RMB178.6  million.  Blue Dream – China Mobile Education Aid Plan: In 2019, we provided training to 11,556 principals from poverty-stricken areas and  built 561 multimedia classrooms. Please see pages 28-29 for detail information.  We also studied the actual needs of society and engaged in a variety of efforts focusing on the fields of poverty alleviation, community  development, and elderly care and child care, helping serve poverty population, children, outdoor workers, elderly, disabled and  other disadvantaged groups with programs such as the “And You” donation to support education, the “And Seedlings” volunteer  teaching program, and the “Learning from Lei Feng” voluntary service activities. We continued to explore new models to empower  public welfare with technology. In 2019, we worked together with the online news portal Toutiao and jointly launched the “Find  You” public welfare program, donating 1,000 “Find Him/Her” positioning bracelets to elderly people with Alzheimer’s disease.  In 2019, MIGU continued its efforts to support education. It developed the “Tongyue Project” client-side app, carried out  charity sales and donation of the MIGU version of Kindle, and participated in a number of education charity programs in cooperation  with various stakeholders. In the New Era Rural Reading Season program, the MIGU Read app has opened a section  of free e-books to encourage more farmers to experience the convenience of digital reading, and help solve the “last mile”  challenge of rural library service.  MIGU Music Class was launched in 2017. By the end  of 2019, it has entered more than 10 schools. Together  with star artists, music college students and volunteers  from all walks of life, the program has brought music  classes and donated musical instruments, books and  other items to more than 10,000 children in remote  areas, contributing to the improvement of rural quality  education.  Bring History Alive with Digitization  In 2019, MIGU and the China Museum Association jointly launched the Mobile Museum event, bringing together 130 national  top museums to create a museum aggregation platform. Our Shaanxi subsidiary and MIGU cooperated with Shaanxi Provincial  Bureau of Cultural Relics to jointly develop an “Internet + Cultural Heritage Education” platform with digital museums, museum  campus tours and cultural documentaries. The platform has made available the excellent digital cultural contents from  87 partner museums to thousands of households with the support of mobile optical broadband network and Internet TV. As  of the end of 2019, we had organized 28 themed activities in Shaanxi, including the Campus Han Costume Show, Intelligent  Poverty Alleviation, etc. The 5 digital museums we established have attracted over 5 million views and become a platform for  the younger generation to have close interaction with our cultural heritage.  The First Charity Platform for Internet Fans in China  In 2019, MIGU innovated the “Music + Public Welfare +  Fan Group” model and created the first fan-based public  welfare music platform in China. With the influence  of celebrities and the enthusiasm of music fans in charity  activities, MIGU launched an online charity challenge  relay and organized on-site visits, providing young  music fans with charitable activities to spread positive  energy.  Exploring Innovative Public Welfare Programs with Fun  Since its founding in 2009, the China Mobile Charity Foundation  has been adhering to its public welfare philosophy of  “sincerity, commitment, harmony and sharing” in the last decade.  Aiming at helping build a beautiful and inclusive society,  the Foundation has implemented various programs to support  the disadvantaged groups, promote education equality, support  environmental protection, and provide emergency assistance  in major disasters, etc.  The Foundation continuously improves its governance. It holds  board meetings to decide on major issues twice a year, has developed  and revised 11 rules and regulations such as the Charter of  China Mobile Charity Foundation, and makes three-year plans on  a rolling basis. Efforts have also been made to improve its informatization  and information disclosure. In 2019, the Foundation  continued to carry out its hallmark charity programs such as the  Heart Caring Program and Blue Dream .  Supporting Poverty Alleviation and Public Welfare  MIGU Music Class

 

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34  With the rapid development of the mobile  Internet, takeaway riders shuttling through  the streets have become an ordinary part  of urban life. Our Jiangsu subsidiary fully  studied the needs of delivery workers and  launched a charity campaign of “Caring for  Young Riders and Building a Star City” in  Changzhou City with three components to  support takeaway riders.  Caring Plan: Upgraded the existing “Caring  Station” for sanitary workers in 100 plus  stores for use by takeaway riders, providing  them with a shelter to rest with drinking  water, first aid supplies and convenience  tools. During rainy or snowy days, they  could also take shelter or borrow raincoats.  In each month, there was a “Rider Day”  special event organized at five showcase  caring stations, offering services such as  free mobile phone screen protectors, free  books and magazines borrowing to the riders.  Rate Plan: We launched preferential rate  plans based on the special usage of riders  to help them reduce expenses.  Empower Plan: We organized regular  awareness-raising programs on communication  technology and network security to  improve riders’ awareness of information  security.  China Mobile Youth Rider Caring Station  Riders getting drinking water at the caring station  Our Jilin subsidiary established its employee volunteer team 10 years ago and carried out a total of 33,816 hours of volunteering services to help the disabled,  the elderly and families in need. In 2019, the volunteer team was awarded the title of “Advanced Collective for Assistance to the Disabled in China”.  Caring for Takeaway Riders  Total number of registered  employee volunteers  Total amount of employee  volunteer service time  122,900 615,100 hours  As of the end of  2019

 

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Promoting Coordinated Regional Development  35  In recent years, the government further deepened its coordinated regional development strategy and implemented a number of regional  development plans, such as the Master Plan of the Hebei Xiong’an New Area (2018-2035), the Outline of the Development Plan for the  Guangdong-Hong Kong-Macao Greater Bay Area, the Master Plan of the China (Hainan) Pilot Free Trade Zone, and the Outline of the  Yangtze River Delta Regional Integrated Development Plan, injecting strong impetus into the high-quality economic development of China.  China Mobile actively implements the requirements of the relevant strategies. We have made special regional network plans in our  annual network planning and promoted the sharing of regional network resources to support coordinated regional development.  Serving Regional Construction  Xiong'an New Area  Guangdong-Hong Kong-Macao Greater Bay Area  Hainan Free Trade Zone  Yangtze River Delta Region  Completed the Phase 1 5G construction, helping the New Area build benchmark 5G network.  Hosted a series of forums on 5G and smart city, and arranged over 600 experts (person-times) to participate in the formulation  of smart city standards and programs.  Support the inclusion of the New Area into the national backbone network.  Preliminarily achieved “GB to the households and ten GBs to the enterprises” in the New Area.  Optimized the tariff plans and introduced the Guangdong, Hong Kong and Macao universal voice/data monthly packages. The  average roaming data tariff in Hong Kong and Macao decreased by 33% compared to 2018.  Facilitated the development of a regional collaboration and communication mechanism and the integrated development of  international optical cable network, data center, smart park, 4G/5G wireless and various industry application platforms in the  area, creating an optimized balance of resources and demand.  Constructed the Zhuhai-Hong Kong cross-border cable and upgraded the Shenzhen-Hong Kong cross-border cable to enhance  regional network transmission capacity.  Established the Hainan International Submarine Cable and Information Hub Construction Leading Group with Hainan provincial  government, and started the preparation for the construction of the Hainan-Hong Kong Submarine Cable Project and the  submarine cable from Hainan to the Maritime Silk Road countries.  Built a regional high-speed data center system by solving the hotspot resource over-demand challenge with the coordinative  planning of data center.  Our Hong Kong subsidiary, our Guangdong  subsidiary, Macao Telecom and  Guangdong Communication Industry  Association jointly initiated the establishment  of the Greater Bay Area 5G  Industry Alliance (“the Alliance”) in  August 2019. The Alliance takes advantage  of the 5G + industry chain in the  Greater Bay Area, coordinates research  of products and services, technological  innovation and industry standards  based on 5G technology, laying a solid  foundation for the high-quality development  of the Greater Bay Area.  Promoting  Coordinated Regional Development 06

 

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36  Supporting the Belt and Road Initiative  From Chinese President Xi Jinping proposing the initiative to jointly build the “Silk Road Economic Belt” and the “21st Century Maritime  Silk Road” in 2013, to the release of The Belt and Road Initiative: Progress, Contributions and Prospects report in 2019, the Belt and  Road Initiative has made concrete progress over the years in the areas of policy coordination, connectivity of infrastructure, unimpeded  trade, financial integration, and closer people-to-people ties. It has received positive responses from more and more countries and international  organizations, attracted wider attention internationally, and seen its impact grow steadily.  China Mobile has been actively participating in the construction of the Belt and Road Initiative. We established the Department of International  Business in 2019, which is responsible for formulating our international development plan as well as the Belt and Road Initiative  implementation plan, striving to help build a smooth “Information Silk Road” with measures such as promoting communication infrastructure  connectivity and providing high-quality information and communication services.  Regarding the construction of international communication infrastructure, we continue to optimize the “road, station and island” network  layout and promote the infrastructure construction in Belt and Road countries. We also lowered the tariffs accordingly. Among the  Belt and Road Countries, 105 directions enjoy the RMB30 daily package for data and 119 directions enjoy the Belt and Road RMB1 daily  package for voice calls. Moreover, we have achieved roaming settlement cooperation with almost all Belt and Road countries in Africa.  We launched the CMLink mobile service brand in overseas markets,  providing local communication services in UK, Japan, Thailand,  Canada, Singapore and other countries and regions, and  global data Internet access services for business travelers with  the CMLink global data card product. We also developed the  OneLink and One Card Two Numbers platforms to better serve  the needs of Internet of Things import and export business and  realize the global connectivity of the Internet of Things.  Regarding industry cooperation, we took the initiative and  launched the Hand-in-hand Program, aiming at providing customers  with a high-speed, seamless, worry-free and borderless  digital experience with a global Internet of low cost, high quality,  fast delivery and wide coverage through international business  and technical cooperation along the industry chain. In 2019, we  introduced the 5G Initiative into the Hand-in-hand Program and  developed the cooperation focusing on 5G + ecosystem, 5G +  roaming, and 5G + IoT, with a vision to achieve all-win in the  5G era. 16 partners joined the initiative. With regard to the expansion  of members, with Vietnamese telecom operator Viettel  becoming the 26th member of Hand-in-hand Program in 2019,  the program now covers more than 2.9 billion mobile users  worldwide.  Road Information Highway  (connecting resources)  Information Station  (POPs)  Information Island Hub  (data centers)  Promoting the construction of the  Asia-Oceania and Asia-America  undersea cables along the Belt  and Road countries, and upgrading  the capacity of various  undersea cables and cross-border  terrestrial cables.  Operating over 170 POPs  globally, including 137 selfbuilt  nodes, covering over 60  Belt and Road countries and  regions.  Data centers in Singapore and  the UK have been completed  and put into use; IDC resale  partners grew to 23 during  the year, covering 179 cities  around the world.  Road  China Mobile’s Improving Overseas Service Capabilities to Support Belt and Road Construction  won ”2019 Sustainable Development Goals Enterprise Best Practices (Global Partnership)” Award  by the UN Global Compact China Network.  Station Island

 

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Growing Together with Employees  37  1: The Company abides by the following laws and regulations regarding employee recruitment and employment: the Labor Law of China, the Labor  Contract Law of China, the Ban on Using Child Labor, the Special Provisions on Labor Protection of Female Employees, the Women's Rights Protection  Law of China, and the Law on Occupational Disease Prevention of China, etc.  Recognized as one of the ”2019 Top 10 Best Employers” at the 2019 Best Employer of China Award  event jointly organized by Zhaopin.com and the Institute of Social Science Survey, Peking University.  Received the ”2019 Top 100 Model Employers in China” Award and the ”2019 Employer Brand Management  Model” Award at the China Model Employer Award event.  Received the ”Best Employer Brand Value Award” at the 4th China Talent Selection Award event.  China Mobile strictly abides by the laws and regulations related to the protection of the rights and interests of employees in China and  overseas1. The Company adheres to the principle of equal pay for equal work, and forbids any form of child labor or forced labor. We  provide our employees with social insurance and housing fund, and protect the legitimate rights and interests of our employees in various  ways. We are committed to building a fair, just, flexible, efficient, harmonious and stable workplace.  Protecting Employees’ Rights and Interests  Equal Employment  Opportunity and  Non-discrimination  Protection of  Democratic Rights  and Interests  Workplace Safety  Management  The China Mobile Recruitment Management Measures upholds the principles of openness,  transparency, equality and fairness in recruitment, specifies that except for certain specific positions,  there should be no discriminatory job requirements such as height, appearance, ethnicity, gender, etc.,  and strictly prohibits the use of child labor and forced labor.  Adhering to relevant laws and regulations, our Labor and Employment Management Regulations  specify that the two types of employment (contracted employees and dispatched employees) should  be managed equally. It also specifies the management requirements regarding employment type,  recruitment, labor contract management, working hours, leave and vacation, employee exit, etc.  We uphold the employees’ freedom of association and the rights of collective bargaining, and maintain  smooth communication with employees in a number of ways, such as the CEO mailbox, employee  hotline, employee forum, and employee representative meeting. All of our provincial subsidiaries have  signed collective equal bargaining contracts with 100% of employees.  We fully protect the employees’ rights to know, participate, express and supervise, organize topic-based  trainings on rights protection, and conduct trainings for the managers working on rights protection.  We implement the “Female Rights Protection” program to help female employees better safeguard  their legitimate rights. We strictly comply with the collective contracts and the special contracts for  female employees, and monitor the compliance with labor contracts and labor protection laws and  regulations. We care for women's needs and 100% of our female employees at the headquarters have  returned to work after maternity leave.  We strictly implement the workplace safety accountability system, establish and continuously optimize  safety management policies, thoroughly identify safety hazards, invest in safety precaution facilities, so  as to create a safe and healthy workplace for employees.  We ensure labor safety supplies and gears are properly prepared and managed. We also provide  guidance and supervision to our employees in relation to personal safety protection during production  to guarantee the safety and health of employees.  We conduct full-coverage, multi-channel and high-quality safety training and education to raise the  safety awareness and capabilities of employees, both at work and in their daily life, to prevent safety  accidents.  Growing  Together with Employees 07

 

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38  Supporting Employee Career Development  China Mobile is committed to providing a broad development platform and space for its employees and cultivating outstanding talents  it needs to become a world-class enterprise. In terms of salary and incentive, we have implemented the salary system reform focusing on  “performance orientation and structural adjustment”. We issued the China Mobile Salary and Incentive Policy in 2019, which specifies a  variety of incentive policies for key talents, including incentive for internalized core capabilities for backbones, incentive for technological  innovation, annuity incentive for outstanding employees, periodic incentive on total salary, equity and dividend incentive for technology  enterprises, share option incentive scheme, etc. We have also organized a number of competitions to commend the employees who  have made outstanding contributions at work or in public welfare activities.  Employees who won the 2019 China Mobile Craftsman title  Representatives from The Most Beautiful Mobilers sharing their stories  China Mobile Craftsman  The Most Beautiful Mobilers  China Mobile Philanthropy Stars of the Year  In 2019, to cultivate outstanding talents within the Company, we organized the China Mobile Craftsman competition to  commend employees who have been working in ordinary positions but have made extraordinary contributions. 200 employees  won the China Mobile Craftsman honorary title.  The Company continued to organize the annual Most Beautiful Mobilers election to encourage all employees to learn from the  employees selected for their outstanding merits, including dedication, innovation spirit, perseverance, hard work, care for society  and willingness to serve the people.  Please scan the QR code to read the  stories of the China Mobile Craftsman  Please scan the QR code to read the  stories of this year’s Most Beautiful  Mobilers  Ruan Zhengyu is an employee of Qianjiang  Branch of our Chongqing subsidiary. In 2010,  he started participating in the Company’s  poverty alleviation efforts. He organized the  establishment of planting bases of traditional  Chinese herbs, pumpkin, mustard tuber, etc.,  and proactively help the farmers sell their  products. In addition, he studied the Company’s  poverty alleviation policy regarding  communication services, and leveraged these  services to guide the farmers to increase their  income with entrepreneurship and help them  solve the practical difficulties in production as  well as in daily life.  Zhang You is an employee of Yicheng Branch  of our Shandong subsidiary. In 2010, he joined  the Yicheng Volunteer Association. Since then,  he has participated in more than 100 public  welfare activities, including multiple times  of blood drives, at which he donated a total  of 3,800 milliliters of blood. With 9 years of  persistence, he has demonstrated the spirit for  public welfare by practising what he preaches.  Liang Zhongping is an employee of Yuhang  Branch of our Zhejiang subsidiary. As the team  leader of the Liangzhu Museum Volunteer Service,  he and his team members have provided  over 80,000 hours of volunteer guide services  to tourists in their own spare time. He also  helped apply China Mobile’s 5G technology in  the Liangzhu National Heritage Park, creating  an experience of going back in history for visitors  with 5G technology.

 

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39  Regarding employee training, we implemented the New Drivers Capacity Enhancement Master Plan to provide effective support to  the “Powerhouse” strategy of the Company. Meanwhile, we developed curriculum resources in an efficient way, created plenty of  opportunities for our internal trainers, and carried out various unique training activities for employees at different levels.  Organized the “5G+ General  Knowledge Learning for All” event  for all technical employees, focusing  on 5G + AICDE essential knowledge  and know-how to systematically  update the knowledge across the  entire organization.  Developed a multi-field, multi-layer  capability system for “Cloud Reform”  and 5G core technology talents, used  skills map, learning path map and  skill certification as the starting point  to accumulate training resources  progressively, and used practical training  as an effective and targeted way to  deal with the lack of core capabilities  needed in the transformation.  Developed a tiered curriculum  system for business customer  managers, grid managers and  store managers with both online  and offline courses, strengthening  the systematic training for front  line employees.  New Drivers Capacity Enhancement Master Plan  We continued to carry out the skill certification of financial, user experience and network maintenance personnel. In 2019, we organized  more than 400 skill certification exams and 140,000 person-times had passed.  Implemented the Pair Support Action Plan to help solve practical problems in operations.  Organized demonstration classes for key management staff of subsidiaries at prefecture level  focusing on strategy implementation and day-to-day organization skills, and provided online  courses to approximately 1,700 management staff members in companies at prefecture-level to  improve their overall capabilities.  Developed annual key training plans for technology, marketing and other functions, and carried  out over 200 onsite training programs for core business personnel at the Group headquarters.  Carried out the ”3-3-3” Leapfrog Growth Program for channel managers, providing them with  the innovative ”systematic training + practical training” model, and a capability model and a  curriculum system specially designed for channel managers.  Provided online learning opportunities through online universities to help employees improve  their professional skills and teamwork, with a total participation of more than 450,000 persons.  Organized 5 senior management seminars and formulated themed research reports as reference  for management decision-making.  Carried out the leadership development program for new senior deputy management to help  them improve management efficiency.  Organized special training on finance, discipline inspection and other functions to improve the  business capability of senior management.  The China Mobile Academy won the ”Advanced Enterprise University” Award of China Enterprise  Executive Training and Development Alliance.  The China Mobile Academy won the “Best Corporate University of China 2019” Award in China’s  Best Corporate University ranking.  The China Mobile Academy’s Network Operation and Maintenance Technical Talent Training and  Certification Program won the 2019 ATD Excellence Practice Award by the Association of Talent  Development.  Employees  Mid-level  Management  Senior  Management  Empowering All Employees  Reshaping the Skills of  Core Talents  Improving the Capability of  the Front-Line Employees  Growing Together with Employees

 

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40  New retail training for channel  personnel at “Burning Ice Action”  in Jiangsu  Home broadband  training in Shaanxi  Network and support personnel  operation skills competition in  Anhui  Capacity building  training for core  backbone employees in  Hunan

 

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41  China Mobile strives to create a working environment conducive to physical and mental health and well-being for its employees, pays  attention to the work life balance of employees, and strives to continuously improve employee satisfaction.  Caring for Employees’ Work-life Balance  Summer program for children of employees in Shanghai The Fourth ”Happiness 1+1” Employee Games in Xinjiang  ”Happiness 1+1”  Employee Care  Program  Medical Care  Disaster Relief  Employee  Assistance  Program (EAP)  ”Five Smalls”  Employee Caring  Project  Caring for Mental Health of Employees in Hubei  Strengthened mental health education, integrated various  resources to provide online lectures for 19 times on  prevention knowledge and psychological assistance on  the online university platform, and launched an online  EAP psychological mini-lecture series with over 8,000  views.  Established a dedicated psychological counseling hotline  for employees, which had handled over 40 consultations  for a total duration of over 2,000 minutes.  Strengthened the efforts of employee care, gave out  RMB510,000 as special subsidies to infected employees,  gave out RMB334,000 as relief money to quarantined employees  and their families, organized front-line staff support  activities for 4,552 person-times, and distributed materials  valued at RMB1.63 million.  Over 6,000 employees participated in the online epidemic  time psychological self-assessment, where participants with  certain conditions received timely follow-up calls and targeted  consultation.  Growing Together with Employees  In order to alleviate the psychological stress caused by the long lock-down due to the outbreak of COVID-19, our Hubei subsidiary  promptly optimized the EAP work plan and actively provided psychological support for its employees.  The program was launched in 2015, encouraging employees to pick up “1” sport activity and cultivate  “1” hobby. In 2019, we launched a variety of activities under the program, including walking, running,  hiking, tree planting, mobile photography exhibition, calligraphy and painting exhibition, etc., covering  395,000 employees of the Company.  We continuously improve the facilities at our workplace of our companies at county (municipal) and  lower level, such as equipment at dining area, water dispenser area, washroom, changing room, lounge,  learning area, etc., to provide a comfortable working environment for employees. In 2016, we launched  the “Five Smalls” Employee Caring Project and started creating a homelike atmosphere for employees  with small canteen, small bathroom, small lounge, small activity room and small reading room. In 2019,  we spent RMB469 million to comprehensively improve the workplace conditions in grass-roots units, with  priority given to locations in less developed areas with hard conditions and inadequate infrastructure.  We have been offering EAP programs for 14 consecutive years. We have organized a variety of forums,  work sharing sessions and training courses, and accumulated rich experience in crisis intervention and  training of specialists. In 2019, 31 provincial subsidiaries and 20 professional units had established EAP  programs, covering over 320,000 employees, and having cumulatively trained a total of 3,093 EAP  specialists and set up 120 stress rooms, care rooms and other places.  We provide regular physical examinations with examination reports issued for all employees, and  conduct health lectures and health consultation services. In 2019, 97% of our employees participated  in the free medical examinations we offered. We also use relief fund, medical insurance and employee  mutual aid to help employees with severe disease or personal difficulties.  We have increased the amount and the response speed for emergency support. In 2019, we gave out  a total of RMB2.8 million to support employees of 10 units who were affected by disasters such as  floods and typhoons, bringing them the timely care from the Company.

 

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42  Employment and Diversity  Summary of  Our Key Performances  Our Achievements in 2019  Our Goals for 2020 and Beyond  Developed the “network + poverty alleviation” model based on “1+3+X” system, with our parent company investing  RMB760 million in targeted poverty alleviation and dispatched 4,425 poverty alleviation volunteers to promote poverty  alleviation support in the fields of education, health care and livelihood. Huanan and Tangyuan were officially taken off  the list of targeted poverty alleviation counties in May 2019.  Continued to carry out our brand public welfare programs such as the Blue Dream Education Aid Plan and the Heart  Caring Program, innovated on project commencement modes based on social needs and development trends, and encouraged  employees to participate in volunteering activities. As of the end of 2019, the China Mobile Charity Foundation  had donated RMB356 million cumulatively.  Actively participated in the implementation of regional coordination and development strategies, promoted the development  of the Belt and Road Initiative and strove to build a smooth ”Information Silk Road”.  Upheld the principle of equal opportunity and no discrimination in employment, strictly safeguarded the legitimate  rights of employees, provided employees with unimpeded career development channels and a comprehensive training  system, protected employees, health and safety, and made efforts to help employees maintain work-life balance. In  2019, the Company provided training to its employees for 1.825 million person-times.  To promote the “network + poverty alleviation” model based on the “1+3+X” system in an all-around way, give  priority to support areas in extreme poverty, and provide continuous support to ensure the counties newly taken off  the list of targeted poverty alleviation counties do not slip back to poverty; to adhere to the requirements of the Rural  Revitalization Strategy, vigorously promote poverty alleviation through developing local industries and information  solutions, and improve the quality of poverty alleviation.  To further increase our support to less developed areas in western China, integrate our brand public welfare programs with  battling poverty alleviation efforts, and give priority to address the needs for aid and education of areas in extreme poverty.  To deepen our implementation of coordinated regional development strategies and the Belt and Road Initiative, continue to improve  regional network infrastructure, strengthen communication business cooperation, and build a high-quality information highway.  To optimize the career development path closely related to capability development and performance evaluation, strive  to establish an employee career development system that provide smooth vertical and flexible horizontal mobilities and  clear career path, and provide employees of different categories with a multi-dimensional career development space; to  implement the “New Drivers Capacity Enhancement Master Plan”, and carry out the company-wide “CHBN Knowledge  Empowerment Action” to encourage all employees to deepen their understanding of general knowledge related to 5G+.  Key Performance Indicators  Indicators 2017 2018 2019  Cumulative donation made by  China Mobile Charity Foundation  (RMB10,000)  27,225 31,055 35,590  Total number of registered  employee volunteers (10,000) 11.10 13.59 12.29  Total amount of employee volunteer  service time (10,000 hours) 56.80 56.76 61.51  Cumulative number of impoverished  children to receive free congenital  heart disease screenings  39,488 45,648 54,968  Cumulative number of assisted  children in poverty who suffered  from congenital heart disease  4,498 5,358 5,973  Cumulative number of multimedia  classrooms built 2,030 2,302 2,863  Cumulative number of principals  of rural primary and secondary  schools trained  103,828 115,782 127,338  Indicators 2017 2018 2019  Total number of employees 1 464,656 459,152 456,239  Number of jobs created (10,000) 260 288 268  Human Resource Composition  Percentage of technical personnel (%) 23.34 25.18 27.13  Percentage of marketing  personnel (%) 56.56 55.17 53.27  Percentage of management  personnel (%) 7.25 7.29 7.51  Percentage of general affairs  personnel (%) 10.09 10.50 10.64  Percentage of other  personnel (%) 2.76 1.86 1.45  Diversity 2  Number of employees in Mainland  China 454,298  Number of employees in Hong  Kong, Macau, Taiwan and overseas  markets  1,941  Public Welfare

 

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Summary of Our Key Performances  Indicators 2017 2018 2019  Percentage of employees under 30  years of age (%) 29.62 24.35 19.76  Percentage of employees between  30 and 50 years of age (%) 65.95 71.13 75.33  Percentage of employees over 50  years of age (%) 4.43 4.52 4.91  Percentage of female employees (%) 55.11 53.17 53.94  Percentage of female employees at  senior management level (%) 13.18 16.45 16.40  Ethnic minorities as a percentage of  total employees (%) 6.83 7.03 7.07  Percentage of local employees in our  Hong Kong subsidiary (%) 89.4 89.5 88.5  Percentage of local employees at  management level in our Hong Kong  subsidiary (%)  75.0 71.2 66.7  Employee Turnover 2  Total number of newly hired  employees 27,011 20,259 23,727  Number of female employees  newly hired 14,194 8,397 10,122  Number of male employees newly  hired 12,817 11,862 13,605  Total number of resigned employees 14,831 18,217 13,161  Number of resigned female  employees 8,242 9,411 7,375  Number of resigned male  employees 6,589 8,806 5,786  Total number of dismissed  employees 925 1,317 1,401  Number of female employees  dismissed 589 888 949  Number of male employees  dismissed 336 429 452  Turnover rate of employees  under 30 years of age (%) 2.24 1.55 1.42  Turnover rate of employees between  30 and 50 years of age (%) 1.59 2.56 1.55  Employee turnover of employees  over 50 years of age (%) 0.21 0.15 0.05  Female employee turnover rate (%) — 2.05 1.63  Male employee turnover rate (%) — 1.92 1.40  Indicators 2017 2018 2019  Total investment in workplace safety  (RMB100 million) 21.09 23.24 24.07  Number of safety emergency drills 1,250 1,225 1,230  Participation rate in safety  emergency drills (%) 86.0 86.0 86.3  Accident fatality rate per 1,000  employees (%) 0.004 0.004 0  Number of fatalities caused by  workplace safety incidents 2 2 0  Indicators 2017 2018 2019  Training expense per employee (RMB) 1,717 1,892 2,004  Number of person-times trained  (10,000 person-times) 183.9 182.1 182.5  Number of senior  management trained (person-times) 986 1,047 1,237  Number of middle-level management  trained (person-times) 28,669 18,744 22,357  Number of general employees trained  (10,000 person-times) 181.0 180.1 180.2  Average training time per employee  (hours) 88.5 100.8 105.7  Average training time per senior  management (hours) 106.9 106.0 107.4  Average training time per middle-level  manager (hours) 88.1 109.5 114.2  Average training time per general  employee (hours) 88.6 100.7 105.6  Training participation rate of senior  management (%) 98.7  Training participation rate of  middle-level management (%) 95.8  Training participation rate of general  employees (%) 98.6  Average Online University study  time per employee (hours) 50.0 53.6 65.3  Number of mobile Online University  users via mobile phone (10,000) 29.1 34.5 36.8  Indicators 2017 2018 2019  Percentage of dispatched employees  who are labor union members (%) 98 98 98  Employee Rights  Percentage of contracted employees who  are labor union members (%) 100 100 100  关键绩效表  Notes:  1. All employees of the Company during the year are full-time, and no  part-time employees are hired.  2. The indicators under Diversity and Employee Turnover are based on the  number of on-post employees at the end of 2019. The employee  turnover refers to resigned employees.  Developing Innovative Green Solutions  Promoting Low Carbon, Circular  Development  46  48  a Harmonious  Ecology  Jointly Shaping  Employee Health and Workplace Safety  Employee Training  43

 

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44 Sustainability Context  Climate change has become a challenge facing all  countries. The Chinese government earnestly fulfils its  obligations under the United Nations Framework Convention  on Climate Change and the Paris Agreement,  incorporates the construction of an ecological civilization  into the overall national development planning,  and thoroughly implements three major action plans  for the prevention and control of atmospheric, water  and soil pollution. Based on a sustainable consumption  and production model, China has contributed  significantly to the realization of the relevant United  Nations Sustainable Development Goals. One of  the contributions lies in the ICT sector, which plays  a key role in monitoring climate change, mitigating  and adapting to its impact, and promoting society’s  transformation to a green circular economy. At the  same time, with the continuous evolution and development  of 5G technology, how the ICT industry seeks  a balance between the surge in energy demand and  low-carbon development has also been placed under  the spotlight.  Adhering to the ecological civilization philosophy of  “Lucid waters and lush mountains are invaluable assets”,  China Mobile is committed to pursuing green  and environmentally friendly development. While  leveraging our industry advantages and actively managing  our own environmental footprint, we continue  to innovate the methods and means of applying ICT  to environmental protection as we join hands with all  sectors of society to contribute to minimizing environmental  pollution.  Safeguarding Lucid Waters and Lush Mountains  with Smart Applications  In the Yunzhongshan Nature Reserve of Anxi, Fujian province, there is a magical pair of ”eyes”: they can detect forest pests and instantly  prompt the conservation department to take treatment measures; when the rangers handle withered trees, they can then connect  them with experts for ”zero distance” guidance; and they can also swiftly detect forest fires and send the fastest warnings to the forest  department.  This pair of “eyes” is called the Yunzhongshan Nature Reserve Information System, which has been tailor-made for the provincial-level  Yunzhongshan Nature Reserve by our Fujian subsidiary. Relying on 4G, cloud computing, Global Positioning System (GPS) and other information  technologies, the system supports a range of management functions such as personnel positioning and dispatching, real-time  monitoring of key locations, processing of captured images, and SMS alert and publicity, and diligently performs its duties to protect the  local environment.  This system has been of enormous help to Yunzhongshan rangers. Not long ago, tea farmers in the Reserve set the tea trees on fire as they  attempted to plant fruit trees in the tea garden. The system detected the smoke when the fire began to develop and sent out an immediate  early warning, which prompted the forest protection department to quickly rush to the scene and stop a forest fire from happening. This  spring, the system detected some hunters hunting in the mountain at night. The rangers immediately joined forces with the forest police to  take protection actions and conducted timely investigations in surrounding villages, which served as an effective deterrent.  A Smart ”Housekeeper” for Forest Monitoring  Located in the mountainous area of Anxi County, the expansive Yunzhongshan Nature Reserve is home to many precious animals and  plants and requires intensive efforts to patrol and protect the forest. The Yunzhongshan Nature Reserve Information System enables a  full range of functions such as ranger management, video surveillance and mobile resource monitoring. Different from traditional forest  protection that relies on manual labor, the system has digitalized the alerting and monitoring of forest fires and disasters with the monitoring  command center as the core and digital communication as the means.  With the help of the System, the ranger is dedicated to safeguarding the  Yunzhongshan Nature Reserve  Real-time HD video surveillance at each important location of the  Yunzhongshan Nature Reserve area  The system divides up the entire scenic area and sets up  electronic fences. GPS positioning and historical movement  tracing enable assessment and management of the rangers  at any time; forest fires are monitored in real time through  remote monitoring of key areas and intersections using the  video surveillance system.  At the same time, the system uploads pictures taken by  the thermal imaging monitors to the monitoring center  through the mobile resource monitoring system. Those  pictures enable the Reserve to collect and analyze information  of passing rare animals and provide clues about  poaching and smuggling of wild animals and plants,  leading to markedly enhanced efficiency and precision in  solving cases and effectively deterring illegal activities.

 

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Safeguarding Lucid Waters and Lush Mountains with Smart Applications  45  “A few days ago, we communicated in real time over the treatment of a few withered trees, which were found by some  rangers during a patrol. We immediately set up a dedicated line to have the rangers communicate with forestry experts in  real time via a video link, and provided proper treatment of the trees.”  —— Shen Jinquan, Director of the Management Committee of the Yunzhongshan Nature Reserve Area  “This system can help us report situations discovered during the patrol to the back-office staff in time. For example, when  we discover abnormal conditions such as fallen trees, suspicious animal access, insect disasters, fires, etc., we can use the  platform to report information automatically with precise geographic location to facilitate work while ensuring our personal  safety.”  —— Lin Fuxiang, Ranger  A Smart ”Helper” to Daily Forest Patrols  The Yunzhongshan Nature Reserve Information System is mainly  composed of the monitoring command center, long-distance  video surveillance, resource monitoring wireless image-capturing,  and ranger movement tracing. In addition to smart monitoring  in the forest areas, there is also a smart patrol “good helper” for  frontline rangers.  This ”good helper”, called the ”Smart Ranger Patrol System”,  was specially developed for Yunzhongshan forest preservation inspections.  During the inspections, the rangers can take photos or  videos with the built-in camera of specially-made mobile phones,  which are uploaded to the cloud in real time. By analyzing the  uploaded data, the monitoring center can accurately detect cases  of illegal forest logging and provide scientific guidance on pest  control and forest preservation. In the event of an emergency,  the rangers can also use a one-click SOS alarm to quickly locate  the incident, which safeguards their safety and guarantees highly  effective firefighting efforts.  As of the end of 2019, we had equipped all the rangers with the patrol system, enabling protection of over 3,000 hectares of forests.  Ranger using the Smart Ranger Patrol System Real-time video communication with ranger

 

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Supervision  of residents’  garbage  disposal  Intelligent big  data center  command  and dispatch  Supervision  of the  transportation  process  46  In the past years, China Mobile has put into practice the green development concepts and strives to make the sky bluer, water  greener, and mountain lusher by promoting ecological construction with information-based means. The Company has launched  exploration of IoT application in many fields across China, such as smart logistics, smart transportation, smart lighting and smart  factories, using IoT technology to help all sectors effectively reduce greenhouse gas (GHG) emissions.  Innovating Environmental Applications  With a view to better protecting the lakes, wetlands and  meadow ecosystem in Sanjiangyuan region, our Qinghai  subsidiary and the Qinghai Provincial Environmental Protection  Department jointly launched the Qinghai “Window of  Ecology” project, and established a provincial observation  and control platform, an on-site video observation system  at observation points for key ecological function areas and  typical locations, an audio and video connection system, and  dedicated long-distance transmission networks. The project  Closely following governmental requirements for environmental  protection, our Beijing subsidiary introduced a  full-process garbage sorting supervision program based on its  independent R&D and local integration capabilities.  Window of Ecology, Contributing to Clearer Water  Technology Empowering Garbage Sorting for a Green Life  enables remote and real-time HD video observation, monitoring,  and research and assessment of the ecological types,  natural landscapes, wildlife and biodiversity in the five major  ecological regions of Qinghai based on 35 observation points  deployed throughout the province. A unified, complete, authoritative  and efficient ecological environment monitoring  network has thus been constructed, guaranteeing better refined  management of environmental protection efforts.  Supervision of the transportation process: It tracks garbage  trucks in real time and plans the collection and  transportation routes and personnel workload in a rational  and effective manner to improve work efficiency.  Supervision of residents’ garbage disposal: The AI smart  garbage bins placed in the community allow registered  residents to throw in garbage based on face recognition;  the residents can also scan a QR code to acquire  knowledge on garbage sorting and earn points by  throwing in garbage, which can be exchanged for rewards.  The residents can also see their rankings on the  data analysis platform and learn about the impact of  garbage sorting on the environment.  Intelligent big data center command and dispatch: It  enables timely collection of data about the whole process  of garbage disposal, collection, transportation and  processing and the flow of garbage to prevent the sorted  garbage from being mixed again on the back end.  APP platform interaction: It promptly publishes monitoring  data via the public service app and interactive  coordination platform, and has channels in place to  offer consultation and receive complaints, suggestions  and feedback from residents.  Hand-held devices for quality inspection: These devices  allow sanitation workers to enter information such as  the type of garbage, and offer intelligent means to  reduce their workload such as the smart sorting system  and smart inspection app.  Hand-held  devices for quality  inspection  APP platform  interaction  At present, the full-process garbage sorting supervision services  have been piloted in Miyun District and Dongcheng  District of Beijing, increasing the decontamination, reuse and  recycling rate of garbage in those two districts from 65% to  100%. In the future, we will further improve the functions  and promote nationwide adoption of the services to contribute  to garbage reuse and recycling.  Smart garbage bins Garbage sorting mobile  app  Developing  Innovative Green Solutions 08

 

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Developing Innovative Green Solutions  47  Our Energy Conservation Awareness Week continued in 2019. We fully played to our strengths and disseminated low-carbon and  green concepts among our stakeholders such as employees, customers and the general public through activities like carbon emissions  calculation, “And Machine Swap Service” (the trade-in of old mobile phones for new ones and recycling and refurbishing  of optical modems and set top boxes), “Green Box by Your Side” (recycling of used phones, batteries and accessories), Green Life  Photography Exhibition, and the publication of the Special Issue on Energy Conservation Awareness.  Spreading Green Ideas  Scan the QR code to watch China Mobile  2019 Energy Conservation Awareness  Week proposal  Scan the QR code to learn more about  China Mobile Green Action Plan  Charity run in celebration of China’s 70th birthday Green class at the private Yumiao Elementary School  In Liaoning, our employees made office supplies and daily necessities with waste paper and made vases and unique pen  holders and storage boxes with waste newspapers, cultivating a sound atmosphere of energy consumption and low carbon.  In Sichuan, we carried out a number of activities such as garbage sorting and recycling, green running and urban ”scanning”,  calling on our employees customers and partners to cultivate an environmental awareness in their daily work and life.  In Shanxi, we initiated the hand-drawn energy consumption awareness posters event themed “Energy Conservation by My Side”  at our business stores in Taiyuan and Yuncheng, promoting green ideas to our customers through delicately drawn posters.  “Green Shanghai with You” is a strategic public welfare brand of our Shanghai subsidiary. It works with government agencies  and runs diversified programs with a view to intensifying residents’ awareness and actions for loving, protecting and appreciating  the environment. Our Shanghai subsidiary hosted a number of environmental protection volunteering campaigns in 2019, which  were very well received by the public.  Various Green and Environmental Protection Awareness Activities  Helping Build Green Urban Homes  Charity Run in Celebration of China’s 70th Birthday: We supported activities such as “Scent of Books Exchange for Scent of  Flowers” and “One Child and One Tree” at the Charity Run event to allow residents to experience the environmental protection  and public welfare concept of “Green Life Starts With Me”.  Close-to-nature Family Activity: The event allowed parents and children to experience the wonderful and magical relationship  between plants and insects in nature together by watching the ”One Flower One World” painting exhibition. The  ”Garbage Sorting” family game further strengthened children's awareness of garbage sorting.  Care Activities on Campus: Gifts like ecology photographs and flowers were given to mentally challenged students in the  supplementary reading class of Xinzhuang elementary school; educational classes on environmental protection and guided  outdoor appreciation courses were given to the private Yumiao Elementary School where the majority of the students were  children of migrant workers, and our volunteers also conducted interactive prize quizzes and gave away free plant seeds.  Since the project was launched, our Shanghai subsidiary has won honors such as “Excellent Public Welfare Partner” and “Excellent  Partner in Shanghai for Volunteer Tree Planting”. In the future, our Shanghai subsidiary will continue to carry out environmental  volunteering activities regularly and advocate environmental protection together with the public.

 

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48  Since the launch of the Green Action Plan in 2007, we compile the China Mobile Green Action Plan Annual Priorities every year, and  allocate special funds for energy conservation and emission reduction to be used in energy saving renovations of communication  base station, data center, office building, business stores, etc., thereby safeguarding the implementation of climate change related  investment projects. We also vigorously promote energy conservation measures in technology and management and actively use  renewable energy.  In 2019, we established the China Mobile Leading Group for Pollution Prevention and Energy Conservation as the main  responsible body for ecological environmental protection and energy conservation, to ensure that solid progress is being made in  pollution prevention and control as well as in energy conservation. We have formulated the China Mobile’s Management Measures  for Prevention and Control of Environmental Pollution Risks and the China Mobile Management Measures for Energy Conservation,  laying out detailed regulations on the identification, prevention and remediation of the risk points of air, water, soil and other  emissions in our operation activities, as well as detailed requirements regarding energy conservation and pollution prevention,  including allocation of responsibilities, scope of work, prevention and control measures, functional management requirements and  comprehensive evaluation system.  Climate Risks Faced by China Mobile and Our Responses  China Mobile actively responds to the challenges brought by climate change. We have established a circular management system  covering all aspects of our operation, and made continuous efforts to improve our environmental performance and reduce our GHG  emissions.  Coping with Climate Change  Risk Type Risk Description Response  Current or  emerging laws  and  regulations  The requirements of laws  and regulations regarding  energy conservation and  emission reduction, and  carbon trading market become  stricter  We closely follow changes in policies, laws and regulations, and promptly  adjust our strategy and measures accordingly and arrange for the publicizing  and implementation across the Group; quarterly calculate carbon emissions  data and evaluate the cost of fulfilment and legal risk regarding non-fulfilment;  and annually assess and ensure the consistency of our current internal  management rules of carbon trading with the ETS regulations released by Beijing  Municipal Commission of Development and Reform. In 2019, we successfully  completed the tasks of submission of carbon emission report, third-party  verification, carbon trading and compliance.  Legal  Risk of the counterparty  default due to increase in  carbon price  We regularly monitor carbon price fluctuation, and monthly evaluate the  cost of fulfilment and the financial impact if the counterparty defaults.  Market  Risk of sudden expansion  of network scale due to  rapid user growth  We analyze the impact of network scale on energy consumption and greenhouse  gas emissions and on our cost based on our annual internal planning.  EMS Coverage: All aspects of our operations, including  product operation and commercial facilities, selection of  suppliers and service providers, research and development of  new products and services, packaging and shipping, waste  management, engineering design, new project construction,  due diligence, daily office operations, etc.  Promoting  Low Carbon, Circular Development 09

 

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Promoting Low Carbon, Circular Development  49  Huainan Data Center, located in Anhui Province, is the single largest data center in East China and a major energy user. We actively  researched and innovated on green data center. In 2019, we filed 4 patent applications, laying a solid foundation for the  transformation to become a clean and low-carbon data center.  Building Green Data Centers  Fine management of equipment room cooling: We  replace compressors with natural atmospheric cooling in  autumn and winter, and use storage cooling in off-peak  time in the middle of the day, realizing an annual power  saving of over 12 million kWhs.  Central air conditioning water treatment and pollution  reduction system: The system monitors the water quality  of water-cooled air conditioning units, and softens  and treats the water automatically to increase the  efficiency of heat exchange. The system can help reduce  power consumption by 1.9 million kWhs and avoid the  discharge of 20,000 cubic meters of sewage each year.  Zero-power green testing system: The system can be  used to run the full-capacity testing of new data center  equipment rooms, to avoid the overheating problem  associated with full-capacity operation.  Smart and paperless equipment room maintenance  system: Maintenance personnel swipe their NFC enabled  mobile handsets over patrolling checkpoints, allowing  accurate, automatic and closed-loop management and  maintenance of data center infrastructure.  AI precision refrigeration configuration assistant: We use  AI technology to automatically adjust the configuration  of refrigeration hardware based on the real-time  operating conditions to improve refrigeration efficiency  with precision and to lower A/C energy consumption.  Equipment room airflow optimization: We modify the air  duct and air baffle to ensure the isolation of hot and cold  air in the equipment room to achieve accurate cooling.  In 2019, we modified more than 1,000 existing equipment rooms and data centers to make them more energy-saving and green, including  optimization of air conditioning system and airflows, application of natural cooling sources, sleep function for power switches,  and upgrade to high-efficiency power switches.  Risk Type Risk Description Response  Reputation  Risk of government criticism  or fine for unfulfilled  carbon trading obligations  We conduct regular assessments on fulfilment risk, plan to include a contingency  mechanism regarding non-fulfilment in our carbon trading management  system, and assess the impact of reputation damage on the Company.  Acute  physical  Damages to infrastructure  and fixed assets due to  extreme weather conditions  We built 46 super base stations in 2019 that can function under disaster conditions  of earthquake, flood, typhoon or snow storm.  Chronic  physical  Greater power consumption  of equipment room  due to global warming  We regularly evaluate and monitor the operation hours of A/C units in equipment  room, and the impact on energy cost. We have also adopted energy-saving  technology for main equipment in wireless network, transmission, IT/IP  and core networks. We have implemented energy-saving upgrade of existing  equipment rooms by using air-conditioning, power supply, lighting and other  energy efficient technologies and products.  Upstream  Equipment with high  energy consumption will  use more energy  We issue equipment energy conservation grading standards to suppliers annually  as part of the supplier assessment process, requiring equipment manufacturers  to meet the requirement for product energy consumption and efficiency.  During the procurement process, we strictly inspect the energy consumption  and efficiency parameters of the equipment. Each year, we calculate and  evaluate the energy consumption and financial impact of each supplier, and  update the energy conservation grading standard to achieve greater emission  reduction along our supply chain.  Downstream  Data center (IDC) leasing  business increases energy  consumption  We regularly make forecasts about the growth rate of the IDC business, and  evaluate the related financial impacts such as operating cost and energy cost.  Technology  Existing low-carbon technologies  cannot meet market  and policy requirements  We regularly research the growth trend of our energy consumption every year  based on policies or other management requirements. We also conduct cost  analysis on the portion that exceeds the control targets, set energy saving and  emission reduction targets for the current year, formulate the plan of technologies  to be added or replaced as well as old or high energy consumption  equipment to be replaced, and ensure the implementation by formulating  relevant work and evaluation requirements. Meanwhile, we actively explore  and apply the latest and most practical low-carbon technologies, closely follow  industry trends related to energy-saving technologies and products, cooperate  with research institutions to support long-term research on energy conservation,  actively carry out pilot applications of new energy-saving technologies and  products, regularly collect best practices in energy conservation and emission  reduction from front-line units, and organize training and experience sharing  on energy conservation and emission reduction.

 

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50  Regarding the use of renewable energy, we actively promote the use of alternative new energy sources, such as solar energy, wind energy,  water energy, hydrogen energy, etc. in areas with rich natural resources but insufficient supply of traditional energy. Xinyu Branch of  our Jiangxi subsidiary utilized its unused rooftop space and built a 105kWp distributed solar power generation system, which generated  82,000 kWhs of power in 2019.  Regarding the construction of 5G base stations, we studied the energy consumption of 5G network in advance, and upgraded our enterprise  equipment energy conservation grading standards accordingly during the early stage of network construction. In Jiangsu, we innovatively  applied the liquid cooling technology, which could significantly reduce the PUE of base station to around 1.1, saving as much  as 35% of energy compared with traditional base stations. At the 2019 Information and Communication Industry Conference on Energy  Conservation and Emission Reduction, the 5G liquid cooling node technology was the only application technology of the Company selected  for sharing, showcasing our leadership in the green application of 5G network.  In 2019, the Company had zero violation of environmental laws and regulations.  Managing Water Resources Consumption  The water used in our daily office and production operations mainly comes from centralized municipal water supplies. We do not have  any risk of water resources.  We strictly abide by the relevant requirements of the Water Law of China and the Water Pollution Control Law of China, advocate water  conservation, strictly control sewage discharge, and strive to reduce water consumption. In 2019, we continued to strengthen water  management of equipment rooms, management facilities and stores. Our Ningxia subsidiary adopted wastewater recycling and reuse  technology to treat and recycle the wastewater generated in the production center, and used it as supplementary water sources for vegetation  irrigation and toilet flushing, reusing nearly 10,000 tonnes of wastewater on average each year.  Driving Value Chain Green Transformation  While continuously developing and applying advanced energy-saving technologies, we are also committed to driving the green  transformation of our value chain.  Optical modem is a low value optical fiber transmission equipment widely used in the installation of fiber optical broadband  equipment. Retired optical modems are usually disposed of as waste. Our Hubei subsidiary launched the Optical Modem Recycle,  Refurbish and Reuse project, established a dedicated team overseeing the process and a standard operation procedure manual  that covers the entire process including code-scanning recycle registration, sorting and testing, cleaning, repairing, refurbishing,  labeling and packaging. We also formulated quality inspection standards to ensure that the refurbished optical modems could  function properly.  As of the end of 2019, we had delivered 387,600 refurbished optical modems and 180,000 set top boxes, saving RMB62.16 million  from the purchase of optical modem and auxiliary supplies.  Reusing Optical Modems to Promote the Circular Economy  Green Procurement  In 2019, our paperless bidding process ran smoothly, achieving an annual  paperless rate of 99.9% of all biddings. We continue to apply energy  conservation grading standards, energy-saving technical requirements  and green packaging grading standards for communication products in  our equipment bidding and procurement. We also gave greater priority  to energy conservation at the source, and significantly increased the  weight of energy conservation performance in the technological assessment  of the centralized procurement of 5G wireless equipment.  At the annual supplier reception day event, we focused on the theme  of “Building a Green Supply Chain”, publicized the green development  concept to our suppliers, and shared with them our excellent cases to  encourage them to work together with us to build a green planet for all.  Green Packaging  We cooperated with Apple Inc. to implement  the mixed pallet upgrade project.  During the initial sales of iPhone 11 series  products, we upgraded the single-layer,  single-model and mixed pallet model to  the single-layer, multi-model, multi-category  and mixed pallet model, using 15%  less wood pallets. Meanwhile, our green  packaging rate of newly procured main  equipment reached 69%, saving 164,000  cubic meters of timber resources.

 

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Summary of Our Key Performances  51  Indicator 2017 2018 2019  Investment in Green Action  Plan (RMB100 million)  1.4 1.9 1.6  Indicators 2017 2018 2019  Coal gas consumption  (million m3)  0.10 0.05 0.08  LPG consumption (100 tonnes) 3.1 2.7 2.3  Indirect Energy Use  Total electricity  consumption (100 GWhs)  223.3 244.7 264.0  Purchased heating costs  (RMB million)  160.9 123.4 157.9  Energy Savings  Total annual electricity  savings (100 GWhs)  21.4 26.6 22.1  Equivalent annual cost  savings (RMB100 million)  28.9 37.7 21.6  Key Performance Indicators  Environmental Investment  Energy  Summary of Our Key Performances  Our Achievements in 2019  Our Goals for 2020 and Beyond  Leveraged our expertise to innovate on ecological and environmental information applications.  Established the China Mobile Leading Group for Pollution Prevention and Energy Conservation, continued to implement  the Green Action Plan, and further optimized our environmental management system.  Reduced our annual overall energy consumption per unit of information flow by 43% through measures such as energy  saving renovations, innovative environmental applications and improvement in green operation.  Implemented green procurement and promoted the green development of the supply chain, and increased our green  packaging rate of newly procured main equipment to 69%.  Reduced annual power consumption by 2.21 billion kWhs, equivalent to the reduction of 1.415 million tonnes of GHG  emissions.  Awarded the CDP (Carbon Disclosure Project) Global Leadership Level Company on climate change, and was one of the  top-rated companies in Mainland China.  To explore the means and ways to apply 5G technology for environmental protection, and continuously innovate on  environmental applications.  To reduce the overall energy consumption per unit of information flow by 15% and the overall energy consumption  per unit of telecom business by 10% by 2020; to achieve a 60% or higher ratio of green packaging usage by 2020.  To continue to promote green procurement and green logistics management, and establish a green supply chain system  covering the whole procurement process, realizing fully paperless and electronic procurement in the next three years;  to formulate scientific energy conservation and environmental protection targets, and encourage suppliers to enhance  their social responsibility awareness; to promote the full-process application of green packaging, continue to strengthen  reverse logistics, explore Radio Frequency Identification (RFID) embedded packaging, and realize the traceability of the  whole process.  To ensure that the year-on-year growth rate of our overall energy consumption and the year-on-year growth rate of our  carbon emissions are lower than the growth rate of our network (connection) scale in the next five years.  Indicators 2017 2018 2019  Direct Energy Use  Coal consumption  (10,000 tonnes)  0.1 0.2 0.05  Gasoline consumption  (million liters)  121.5 112.4 101.3  Diesel fuel consumption  (million liters)  19.4 14.8 13.1  Natural gas consumption  (million m3)  7.9 11.2 11.0

 

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52  Indicators 2017 2018 2019  Equivalent annual GHG emission  reduction (10,000 tonnes)  148.5 170.6 141.5  Overall energy consumption per unit  of telecom business (kg standard coal/  RMB10,000)  21 10 6  Percentage decrease of overall energy  consumption per unit of telecom business  (%)  29 53 40  Reduction in overall energy consumption  per unit of information flow (%)  40 57 43  Indicators 2017 2018 2019  CO2 emissions 1 (million tonnes) 15.98 16.17 17.32  Direct GHG emissions (Scope 1) (million  tonnes)  0.33 0.31 0.28  Indirect GHG emissions (Scope 2)  (million tonnes)  15.65 15.86 17.04  Carbon emission intensity  (tCO2e/ RMB10,000)  0.216 0.219 0.232  SO2 emissions 2 (tonnes) 23.59 35.93 9.28  Carbon emission from commute  (10,000 tonnes)  37.79 39.45 50.77  Carbon emission from business travel  (10,000 tonnes)  29.44 7.10 8.19  Indicators 2017 2018 2019  Total amount of water consumption  （million tonnes）  42.24 35.12 36.29  Water consumption per capita (tonnes) 91 76 80  Indicator 2017 2018 2019  Total amount of resources used for  producing devices (tonnes)  8,847 9,394 12,396  Indicators 2019  Non-hazardous solid waste produced (10,000 tonnes) 7.14  Non-hazardous waste produced (10,000 tonnes) 4.52  Electronic waste produced (10,000 tonnes) 2.62  Non-hazardous General solid waste comprehensively  utilized (10,000 tonnes)  7.21  Comprehensive utilization rate of non-hazardous solid  waste 4 (%)  93.93  Non-hazardous solid waste intensity (kg/RMB10,000) 0.96  Hazardous waste produced (10,000 tonnes) 1.89  Hazardous waste disposed (10,000 tonnes) 2.17  Hazardous waste disposal rate 5 (%) 84.30  Hazardous waste intensity (kg/RMB10,000) 0.25  Indicators 2017 2018 2019  Number of video conferences usage at  group level  882 970 1,184  Online sales volume (RMB100 million) 4,648 4,785 5,635  Number of online e-procurement  projects in the year (10,000)  appr.  3.8  appr.  1.0  appr.  3.4  Reduction of paper-based documents  with the wholly electronic procurement  process (10,000 copies)  appr.  61.6  appr.  14.1  appr.  48.0  Emissions  Water Use  Green Operations  Raw Materials Use  Waste Management 1.2.3  CO2 is the only type of GHGs generated in our operations, and over  95% of our CO2 emissions are from the use of electricity. CO2 emissions  are calculated mainly in accordance with the Guidelines for National  Greenhouse Gas Inventories published by IPCC in 2006, and the  baseline emission factors for the China regional grid published by the  National Development and Reform Commission in 2017.  SO2 is the only type of air emissions generated in our operations, mainly  from coal burning in certain regions.  2.  1.  Notes:  In 2019, we updated and standardized the scope for the statistics of  different types of solid waste in accordance with the requirements of  the Notification on Issuing the Statistical Report on Energy Conservation  and Ecological Environmental Protection of Central Enterprises of  SASAC. We will disclose new indicators on a rolling basis every year.  Our operation generates three types of solid wastes: non-hazardous  waste, electronic waste and hazardous waste.  Non-hazardous waste mainly includes domestic waste, food waste, office  and marketing waste paper or packaging, construction waste, etc.  Electronic waste mainly includes electronic components and equipment  replaced from base stations and equipment rooms, and retired office  equipment such as printers, copiers, fax machines and computers.  Hazardous waste mainly includes bare circuit boards and batteries retired  from base stations and equipment rooms, printer cartridges, ink  cartridges and fluorescent tubes from offices, and damaged or retired  smart terminals such as mobile phones, batteries and SIM cards. We  sell most of our waste to qualified third parties recycling companies for  disposal.  The comprehensive utilization rate of non-hazardous solid waste refers  to the ratio of the amount of non-hazardous solid comprehensively  utilized within the reporting period minus the storage capacity of comprehensive  utilization in the past year, to the amount of non-hazardous  solid waste generated. In 2019, our comprehensive utilization from the  previous year was approximately 5,100 tonnes.  The disposal rate of hazardous waste refers to the ratio of the volume  of hazardous waste disposed minus the storage volume of hazardous  waste from the previous year, to the amount of hazardous waste generated  in the reporting period. In 2019, our hazardous waste disposal  storage volume from the past year was approximately 5,800 tonnes.  1.  3.  2.  4.  5.  Notes:

 

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Risk Management  China Mobile has established a three-tiered risk management structure consisting of the Board of Directors, functional departments  and functional positions to realize the specialized management of the whole process. For detailed information on the Company’s risk  management, please refer to the Risk Management and Internal Controls section in the Corporate Governance Report from China  Mobile Limited’s 2019 Annual Report.  The Company continuously optimizes its risk assessment mechanism focusing on our development strategy and business objectives, and  carries out risk assessment at three levels to improve the accuracy and timeliness of risk forecast.  Feature: Responsible Operations  The Board of Directors has an  Audit Committee, which is  responsible for overseeing the  Company’s financial reporting  system, risk management and internal  control procedures, monitoring  the integrity of financial  statements, the annual reports  and accounts, interim report and  quarterly reports of the Company,  and reviewing significant  financial reporting judgments  contained in them, etc.  Risk management execution  departments and supervision departments  perform their respective  duties: the Department of Finance  takes the lead in organizing and  carrying out various internal  control and risk management  work; business departments are  responsible for the internal control  and risk management work in  specialized areas; and the Internal  Audit Department is responsible  for supervising and evaluating the  effectiveness of internal control  design and implementation.  Each department has dedicated  positions and personnel that  are responsible for the implementation  and regular supervision  and inspection of specific  internal control systems, while  the Risk Management Expert  Bank is responsible for the  research and planning on general  or specific internal control  and risk management issues of  the Company.  Board of Directors Functional Departments Functional Positions  Regarding internal audit, the Internal Audit Departments of the Company and its operating subsidiaries are responsible for providing  independent and objective confirmation of and consultation on the appropriateness, compliance and effectiveness of various business  activities and the internal control and risk management of the Company, and assisting the Company in improving its corporate governance,  risk management and control process. In 2019, we further intensified the audit and supervision on the areas related to the business  and home markets, customer rights, key costs and expenses, system management and control, etc., to ensure the effectiveness of  our cost reduction and efficiency improvement efforts and prevent business risks. We also further optimized our audit and rectification  management mechanism with a new Smart Audit Cloud Hub and an improved “remote + onsite” holographic interactive smart audit  model.  Meanwhile, we have established a hierarchical, multi-type training system for backbone internal control and risk management employees,  prefecture-level financial managers and backbone financial employees, new financial employees, employees of all business lines and  internal auditors, striving to create a risk management culture with the full participation of all employees.  The major risks are assessed annually and semi-annually, and forecasts of possible future major risks are  made comprehensively based on internal and external situations the Company faces. A comprehensive  risk management report is prepared annually.  Carry out pilot assessment of the specific risks of major projects, and the functional department in  charge is required to develop an assessment report of the specific risks before making decisions on major  projects to prevent decision-making risks.  Conduct regular internal control and risk assessment of existing business system processes or IT systems,  and carry out risk assessment before the release or launch of new systems, processes and mechanisms  to ensure ”compliance on release”.  Strategy  Business  Feature: Responsible Operations  53  Process

 

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54  Integrity and Anti-corruption  China Mobile actively upholds the healthy culture of hard work and integrity, adheres to the principles of openness and transparency in  the operations, and continues to strengthen its anti-corruption efforts.  Compliance Management  China Mobile has established a compliance management system with a top-down design and focusing on the following four aspects.  Our parent company established the China Mobile Compliance  Committee with the Chairman as the committee head. Its General  Counsel serves as the head of the Office of the Compliance  Committee, who is responsible for overseeing the building of  compliance management system, handling major compliance  incidents and risk prevention, and leading the office to provide  expert opinions before making major business decisions in relation to  antitrust, anti-unfair competition as well as tendering and bidding.  Continuously deepened the Compliance Escort Plan to ensure the  compliance of our business operations.  Conducted compliance review prior to actions such as  devising major marketing strategies and entering into  major contracts, and conducted compliance review on  major business activities such as transferring between  operators with the same number, online privacy policies,  and sharing of business partners’ information.  Conducted due diligence on issues in relation to network  and information security in procurement projects to effectively  prevent compliance risks.  Launched the Hebao intelligent dialogue robot and big  data visualization analysis and intelligent search functions  in the contract management system.  Formulated the China Mobile Compliance Management Report,  summarizing our compliance management conditions and  putting forward the requirements for compliance management.  Developed a series of compliance policies to provide guidance  for frontline employees, including the Guide for Intellectual  Property Rights Compliance and the Compliance Guide for  Business Partners.  Improved intellectual property management with various  efforts, including organizing the Intellectual Property Awareness  Week activities for 10 consecutive years, organizing intellectual  property training, issuing special analysis reports on intellectual  property cases, trademarks and brands, and compiling the book,  Compliance and Data: Using Big Data for Compliance.  Our parent company joined the China Enterprise Compliance  Promotion Alliance as a vice-chairman member.  Set up a Compliance Escort online learning section at the  online university of the Company, with a total participation  of over 3,400,000 person-times.  Organized nearly a thousand training sessions on compliance  issues in relation to key areas such as Foreign  Investment Law, network security, market competition,  and bidding and procurement.  Started organizational preparation for establishing the Office of Anti-Corruption Leading Group and  initiated a new round of signing procedures of Business Integrity Pledge.  Deepened the implementation of the embedded integrity corruption risk prevention and control mechanism  and adjusted the 2019 performance evaluation indicators for embedded prevention work, urging the  responsible departments to actively reflect on and examine themselves to identify any problems.  Issued the Notice on the Work Progress of the Centralized Rectification of Formalism and Bureaucracy  which formulated nearly 4,000 rectification measures focusing on 1,540 issues.  Issued the Provisions on Maintaining Record of China Mobile Senior Management Interfering with Major  Matters (Trial) to ensure that the senior management exercise their power in compliance with laws and  regulations with fairness and integrity.  Established multiple whistleblowing channels for corruption reporting, including mail, email, telephone  hotline, onsite communication, the CEO Mailbox, etc.  Protected the legitimate rights of whistleblowers, with confidentiality given to the reported issues, the  status of the investigation, and the relevant information of the whistleblowers.  Received a total of 1,730 whistleblowing cases, handled 393 corruption cases, and took disciplinary actions  for 516 person-times in 2019.  Launched the Anti-corruption and Integrity Awareness Month, organized 4,960 education activities  covering over 90% of the employees; encouraged employees to record their learning experiences with  reference to their own position and to give integrity commitment, and organized field trips for employees  to anti-corruption education centers, thereby improving the effectiveness of anti-corruption education.  Built a defense line against corruption by posting key learning content and best practice cases in various  channels, including the web page of the Office of Discipline Inspection and Supervision, China Mobile  Online University and MIGU reading.  Sent out pop-up anti-corruption alerts before festivals to remind employees to strictly abide by integrity  requirements.  Organizational  Support  System  Optimization  Anti-corruption  Education  Whistleblowing  Working Style  Construction  Organization  Process System  Culture

 

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55  In 2019, the statistical scope of suppliers was changed from the number  of centralized procurement suppliers to the number of suppliers with  active procurement activities during the year.  Percentage of first-level local suppliers means the proportion of  domestic suppliers (registered in Mainland China) among all suppliers  for first-level procurement.  Percentage of second-level local suppliers means the proportion of  local suppliers (registered in the province to which the China Mobile  provincial subsidiary belongs) among all suppliers for second-level  procurement.  The number of supplier assessments carried out by our Procurement  Shared Service Center, covering both winning and non-winning  suppliers, does not include second-level procurement.  1.  3.  2.  4.  Notes:  Supply Chain Management Compliance and Anti-corruption  Indicators 2017 2018 2019  Number of centralized  procurement suppliers  8,039 7,216 12,278  Number of first-level  suppliers 1 571 480 897  Percentage of first-level  local suppliers 2 100 100 100  Number of second-level  suppliers  7,468 6,736 11,930  Percentage of second-level  local suppliers 3 55.69 80.35 55.20  Number of assessments on  first-level suppliers 4 2,417 2,194 2,268  Percentage of confirmed  first-level suppliers  assessed  100 100 100  Number of onsite supplier  assessments conducted  — 674 1,330  Indicators 2017 2018 2019  Number of Board Meetings  in the year  4 4 5  Number of anti-corruption  education activities in the  year  3,580 3,717 4,960  Coverage rate of  anti-corruption education  activities  >90 >90 >90  Participation of  anti-corruption education  and trainings  (person-times)  722,720 759,810 915,527  Number of corruption cases  disciplined in the year  275 321 393  Number of employees  dismissed and disciplined  for corruption in the year  (person-times)  414 433 516  Number of petitions  received in the year  1,240 1,263 1,730  We published the China Mobile Suppliers Cooperation Guidelines on our own procurement website portal, explicitly requiring our  suppliers to fulfil their responsibilities, including: actively fulfilling the obligations of paying social security and tax; abiding by laws  and regulations on lawful hiring, labor protection, occupational health and safety, social responsibility and environmental protection;  forbidding the use of child labor as defined by law, the use of forced labor, and the physical abuse of employees; prohibiting  any form of unlawful discrimination; complying with national laws and regulations regarding salary, benefits, working hours,  working overtime, health and safety conditions; and complying with all applicable environmental protection regulations.  We assess suppliers’ overall capacities based on the criteria in the certificates of SA 8000 (Social Accountability), OHSAS 18001  (Occupational Health and Safety Assessment Series) and ISO 14000 (environmental management standards). In 2019, we required  the verification of the SA8000, OHSAS18001 and ISO14000 certificates submitted by the suppliers as part of the preliminary certification  inspection process for suppliers of key products. For suppliers of certain products, we also required onsite inspection to  ensure that their environmental protection measures were properly implemented.  Promoting Compliance of Suppliers  Adhering to the principle of “procurement under sunshine”, we require all business units to set up dedicated procurement facilities with  audio and video recording equipment, allowing online supervision and inspection of all procurement processes. As of the end of 2019,  we had set up 791 dedicated bidding facilities nationwide, and completed the closed bidding evaluation of 9,065 projects, preliminarily  realizing the whole process supervision of key procurement processes.  To ensure the fairness and transparency of the procurement environment, we continued to carry out a series of information disclosures  of the first-level suppliers, including supplier performance evaluation result, comprehensive inspection information, and rectification of  negative findings. Suppliers can use the China Mobile Procurement and Tendering Portal to access their supplier evaluation results, the  rectification result of negative findings, and the timely notification of their updated performance evaluation result.  In 2019, together with some of our partners, we jointly launched the Procurement Under Sunshine Together business integrity event.  We revised the Business Integrity Pledge to specify the disciplinary actions for violations. We also launched the online signing function of  the Business Integrity Pledge to make the procurement process more efficient and convenient.  Procurement Transparency  Supply Chain Management  Supply chain management is a key component of our sustainability management. Insisting on responsible procurement, China Mobile  has been continuously standardizing its procurement process and procurement audit, and achieved the overall management of the  whole procurement process, fulfilling the social responsibilities jointly with its supply chain partners.  Feature: Responsible Operations

 

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56  Sustainability Management  Since 2006, China Mobile has been managing its corporate social responsibility (CSR) practice in a strategic way in joint connection  with its corporate strategy and operation. We have developed a 4-module strategic CSR management system covering strategy,  implementation, performance and communication. In 2019, we further streamlined the scope of each CSR management module in  accordance with the “3 steps and 10 methods” requirements for CSR management.  Strategy Management  Adhering to our CSR philosophy of “With perfect sincerity and integrity, we will strive to fulfil our triple-sided responsibilities: our economic  responsibility, our social responsibility and our environmental responsibility”, our parent company established the CSR Steering  Committee in 2008 (name changed to Sustainability Steering Committee in 2016) and a three-layer CSR management system of decision-  making, organization and implementation. Meanwhile, we formulated management policies such as the China Mobile CSR Management  Measures and the China Mobile Annual Best CSR Practices Selection and Reward Determination, to enhance our CSR management  improvement and further standardize the system and process requirements of CSR management.  Headed by the Chairman of the Company and  consists of all departments of our headquarters  and relevant business units; reviews and makes  decisions on the Company’s CSR strategy, goals,  plans and specific key issues, especially ESG (Environment,  Social and Governance) related issues.  Belongs to the Department of Development Strategy  at the headquarters; responsible for leading,  organizing and coordinating CSR practice of functional  departments and subsidiaries, promoting  ESG management, and ensuring the realization of  relevant sustainability plans and targets.  Functional departments at headquarters manage  the closed-loop management of strategy, implementation  and evaluation regarding the specific  sustainability issues according to their respective  functions, and organize the assessment of and  response to related key ESG issues.  The strategy department of each subsidiary is responsible  for advancing the CSR implementation  with the support of a virtual team, coordinates  the CSR practice, and engages in communication  with key stakeholders.  Integrating CSR into strategic performance  management  Best CSR practices selection  Preparing, releasing and distribution of the  sustainability report  Engaging stakeholders through various platforms and  channels  Sustainability Steering Committee and relevant  organizational structure  Mission, vision and responsibility  CSR strategy and planning  CSR management system and special policies  Establishing the CSR mega-team  CSR research and training to raise awareness  Identifying, managing and information tracking of  material CSR issues  Integrating CSR into corporate management and  decision-making mechanism  Strategy  Management  Implementation  Management  Performance  Management  Communication  Management  China Mobile  Sustainability  Management  System  Decision-  Making  Organization  Implementation  Sustainability  Steering Committee  Sustainability Office  Functional departments Subsidiaries

 

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Sustainability Management  57  Implementation Management  The Company continued to deepen the capacity building for its  CSR team with regular internal trainings to help functional departments  and business units learn about the latest requirements  and trends of sustainable development, and enhance the sustainability  awareness of all employees. In 2019, the total participation  of our CSR training activities reached 418,500 person-times.  We continued the management of sustainability related issues,  conducted research and surveys on stakeholders, and studied the  evolution of key sustainability standards at home and abroad, the  best practice of our industry peers, and hot issues in relation to  sustainability. Based on these, we identified our annual material  sustainability issues, and took the opportunity of collecting information  for our annual sustainability report to improve our management  and disclosure of key sustainability issues as well as our  Performance Management  The Company organized the annual Best CSR Practice Selection  for the 12th consecutive year, inviting internal and external  experts to sit on the annual review panel. Over the last 12 selections,  we have received more than 820 CSR cases, 184 of which  won an award. The selection has effectively encouraged our subsidiaries  to innovate on CSR practices. In 2019, we also published  Communication Management  In 2019, the Company prepared and released its 13th sustainability  report. Not only did we fully comply with the requirements  for ESG information disclosure, we also practiced our CSR in innovative  forms such as promotional clips and short videos, which  created a record-high online views of over 18 million.  The Company attaches great importance to the concerns of our  stakeholders and has established a variety of communication  channels in accordance with their expectations. In 2019, we organized  the third “CSR Communication Day” event to listen to  the opinions and suggestions of our wide range of stakeholders  on our CSR activities. CSR communication activities were organized  at 3,184 self-operated China Mobile stores, where 1,508  Indicators 2017 2018 2019  CSR trainings participation (person-times) 471,669 447,006 418,507  Number of emails received in CEO Mailbox 1,279 1,315 903  Number of customer visits on Customer Day (person-times) 102,060 138,301 141,627  Number of complaint and inquiry cases handled on Customer Day 91,960 118,304 126,509  sustainability performance. Please see page 59 for the process of  how we identified our material sustainability issues of 2019 and  the results.  Regarding the implementation process, the Company continued  to deepen the involvement of senior management in sustainability  related matters. In addition to the establishment and  operation of the Sustainability Steering Committee, our annual  sustainability report is required to be formally reviewed and approved  by senior management and the Board of Directors of the  Company. Meanwhile, we have also strengthened the horizontal  coordination across functional departments with clearly defined  management responsibility over the relevant key CSR issues, fully  incorporating CSR into their core operations.  a book containing all the selected CSR best practice cases since  2013, New Era, New Connectivity, New Responsibility: Selected  Best CSR Practice of China Mobile (2013-2018). These cases  present an overview of China Mobile’s practice, explorations and  accomplishments in fulfilling its corporate social responsibilities  with a focus on connectivity.  general managers of our prefecture-level branch companies and  over 37,000 person-times of customers participated.  In addition, we also actively participated in the revision of sustainability  standards, communicated and shared our experience  with our industry peers, and strove to further improve the CSR  management and performance jointly with our industry peers.  We carried out over 40 major communication activities during  the year.  Please see page 58 for the concerns and communication channels  of our stakeholders.

 

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58  Stakeholder Engagements  We have established a variety of communication channels and maintained regular communication with 6 groups of stakeholders,  including customers, employees, shareholders and investors, government and regulators, value chain partners, and community and  environmental organizations. When preparing this report, we used questionnaires to identify sustainability issues that concerned  different stakeholder groups, and then determined areas to be disclosed in the report based on a materiality analysis.  *Note: The top 5 key issues of concern of each stakeholder group come from the results of the stakeholder survey in relation to the materiality analysis.  Please refer to the materiality analysis on page 59.  Stakeholders  Customers  Employees  Shareholders  and Investors  Government  and  Regulators  Community and  Environmental  Organizations  Value Chain  Partners  1. Network Quality  2.Information Security and Privacy  Protection  3. Service Quality and Customer Rights  Protection  4. 5G Development  5. Corporate Governance and  Risk Management  1. Information Security and Privacy  Protection  2. Network Quality  3. Service Quality and Customer  Rights Protection  4. 5G Development  5. Corporate Governance and  Risk Management  1. Customer Reception  Day  1. Employee  Representative  Conferences  5. Customer  Satisfaction Surveys  4. MMS Magazine  Mobile Weekly  2. 10086 Hotline  2. Regular Trainings  6. Mobile APP  5. Employee Recognition  Mechanism  3. Weibo and WeChat  Interactions  3. Performance  Communication  Mechanism  7. CEO Mailbox  6. Employee Complaint  Mechanism  7. CEO Mailbox  4. Online and Mobile  Customer Service Platforms  Key Issues of Concern (Top 5)* Examples of Communication Channels  1. Information Security and Privacy  Protection  2. Network Quality  3. Corporate Governance and Risk  Management  4. Financial Performance and Tax Payment  5. Service Quality and Customer Rights  Protection  1. Information Security and Privacy  Protection  2. Network Quality  3. Service Quality and Customer  Rights Protection  4. 5G Development  5. Corporate Governance and  Risk Management  1. Network Quality  2. Information Security and Privacy  Protection  3. Service Quality and Customer  Rights Protection  4. 5G Development  5. Corporate Governance and  1. Information Security and Privacy  Protection  2. Network Quality  3. Service Quality and Customer  Rights Protection  4. Integrity and Anti-corruption  5. 5G Development  1. Annual Reports, Interim Reports and  Announcements  2. General Meeting  3. Investor Briefings and Conferences  1. Regular Reports and Communication  2. Specific Investigation and Meetings  3. Relevant Forums  4. CEO Mailbox  1. Procurement  2. Suppliers Web Portal, Service Sites and  Supplier Hotline  3. Training and Assessment  4. Forums and Meetings  5. CEO Mailbox  1. Community Activities  2. Mass Media  3. Weibo and WeChat  4. Charity Platform  5. CEO Mailbox

 

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Degree of the Issue’s Impact  on the Stakeholders  59  Materiality Analysis  In 2019, based on the materiality analysis of various sustainability issues, we evaluated the degree of impact being brought on  stakeholders by economic, environmental and social issues, and the importance of these issues to China Mobile, and identified issues of  the high materiality to be highlighted in this report.  Based on the analysis and conclusion during the identification stage, this year we have added three issues: “5G development”, “social  ICT solutions”, and “environmental ICT solutions”. We have also made adjustment to three issues, replacing “anti-corruption and  compliance” with “integrity and anti-corruption”, “carbon emissions reduction” with “coping with climate change”, and “employee  health and safety” with “employee rights and interests protection”. There is no significant change regarding the reporting scope of each  issue.  Using online questionnaires, we  carried out the key stakeholder  survey with respect to the degree  of impact of sustainability issues  on stakeholders, collecting 3,901  valid questionnaires in total.  With reference to industry practices,  we teamed up internal  and external experts to evaluate  the importance of different  sustainability issues to China  Mobile’s operations.  A materiality matrix was formed  (see the chart right) to highlight  issues to be prioritized in the report.  Identification 01  Evaluation  Report Preparation  Materiality No. Issue Page(s) Boundary  1 Service Quality and Customer  Rights Protection 10-11,22-27  Customers, government and regulators,  community and environmental  organizations  2 Information Security and  Privacy Protection 24,26-27  Customers, government and regulators,  community and environmental  organizations  3 Network Quality 10-14,26-27  Customers, value chain partners,  community and environmental  organizations  4 5G Development 6-7,18-21  Customers, government and regulators,  value chain partners, community and  environmental organizations  5 R&D and Innovations 16-17,26-27 Customers, government and regulators,  value chain partners  6 Integrity and Anti-corruption 54-55 Customers, government and regulators,  value chain partners  7 Social ICT Solutions 11,18-21  Customers, government and regulators,  value chain partners, community and  environmental organizations  8 Corporate Governance and  Risk Management 4,53-55 Customers, shareholders and investors,  government and regulators  9 Financial Performance and Tax  Payment 4 Shareholders and investors, government  and regulators  10 Environmental ICT Solutions 44-47  Customers, government and regulators,  value chain partners, community and  environmental organizations  11 Human Resource Development 38-40,43 Customers, shareholders and investors  12 Employee Rights and Interests  Protection 10,37,41-43 Customers, value chain partners  13 Fair Employment and Nondiscrimination  37,42-43 Customers, value chain partners  14 Reducing Environmental  Resource Use 48-52 Customers, employees, government and  regulators, value chain partners  15 Stakeholder Engagement 58  Customers, employees, shareholders and  investors, government and regulators,  value chain partners, community and  environmental organizations  16 Public Welfare 28-34,42-43 Customers, community and environmental  organizations  17 Coping with Climate Change 48-52 Customers, employees, government and  regulators, value chain partners  18 Supply Chain Management 50,55 Value chain partners, community and  environmental organizations  19 Waste Management 50,52 Customers, employees, value chain  partners  20  Offshore Compliance  of Corporate Social  Responsibilities  36 Customers, value chain partners  Very High  Very High  1  2  3  4  6 5  7 8  9  10  11  12  13  14  15  16  19  18  20  17  HKEx ESG Reporting  Guide  GRI standards  UN SDGs  UNGC Ten Principles  International standard  benchmarking  Analysis of key sustainability  issues and key industry issues  Corporate strategy analysis  Degree of the Issue’s Importance  to China Mobile  Very High High Moderate  Sustainability Management  02  03

 

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60  Independent Assurance Report  To the Board of China Mobile Limited:  I. Scope of Our Engagement  The 2019 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), in accordance with the criteria selected by  the Company. Management is also responsible 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  over key social responsibility performance indicators for the year  ended 31 December 2019 and to issue the assurance statement  in accordance with the ”International Standard on Assurance Engagements  3000: Assurance Engagements other than Audits or  Reviews of Historical Financial Information” (ISAE3000), based on  the Management’s instructions and as agreed with Management  in our terms of reference signed in August 2018.  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:  The limited assurance procedures were performed over the following  key performance indicators in the Sustainability Report  for the year ended 31 December 2019:  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  newly launched in the ”Universal Telecommunications  Service Project”  Economic 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  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  Environmental indicators  安永華明（2020）專字第60688545_A01 號  Social indicators

 

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Independent Assurance Report  61  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.  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.  安永華明（2020）專字第60688545_A01 號  In preparing the above key performance indicators, China Mobile  applied the criteria in GRI Standards issued by the Global Sustainability  Standards Board (GSSB).  A limited assurance engagement consists of making enquiries,  primarily of persons responsible for preparing the key performance  indicators subject to assurance, and applying analytical  and other limited assurance procedures.  The limited assurance procedures performed included, but were  not limited to:  III. Limitations of Our Scope  Our scope of work did not include:  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.  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  March 25, 2020  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 2019 Sustainability Report of China Mobile Limited,  in accordance with the criteria defined above.

 

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62  About This Report  This report is the 14th Sustainability Report of China Mobile  Limited. The report discloses relevant information about our  economic, social, and environmental sustainability performance.  We report annually on our sustainability performance. Unless  otherwise stated, the time span of this report is from January 1,  2019 to December 31, 2019. Our last Sustainability Report was  published in March 2019.  Report Form  Report language: This report is published in both Chinese  and English. Should there be any inconsistencies  between the Chinese version and the English version,  the Chinese version shall prevail.  Report version: This report is presented in both printing  and online versions (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. In 2019, we mainly referred to the following standards:  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.  Hong Kong Stock Exchange (HKEx) Environmental, Social  and Governance Reporting Guide  United Nations 2030 Agenda for Sustainable Development  GRI Sustainability Reporting Standards by the Global  Sustainability Standards Board (GSSB)  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  Report Content and Boundary  In accordance with the principle of ”stakeholder engagement,  sustainability context, materiality and completeness”, China Mobile  determined materiality issues and their boundary through  materiality analysis (See page 59 for the process and result of the  materiality analysis.)  Reporting Scope  Unless otherwise specified, all cases and data in this report are  from China Mobile Limited and its subsidiaries.  Data and Information Disclosure  Currency  Report Assurance  The main channels for the collection of data and information in  2019 Report include:  Relevant data collection systems and statistical statements  of the Company  CSR practice cases submitted by provincial subsidiaries  every quarter  Cases received during the 2019 Best CSR Practices  competition  Questionnaires developed to collect qualitative and  quantitative information based on the report framework  Unless otherwise specified, all monetary figures shown in this  report are expressed in RMB (yuan).  In 2019, China Mobile contracted Ernst & Young (special general  partnership) to provides independent third-party assurance  service for this report. Please see pages 60-61 for the Assurance  Report. The Company’s 2019 Annual Report contains details  regarding audited financial statements and other financial performance  and operating performance for the year ended on December  31, 2019, and can be downloaded from the Company’s  website at www.chinamobileltd.com.  Report Theme and Design  The theme of the report is ”5G+ Infinite Future”. It conveys our  responsibility concept of China Mobile leverages its expertise  and works together with its stakeholders to build a smart society  and create a shared better future. It symbolizes our ambition to  integrate 5G into every industry and every walk of life and create  shared value for society. On the center of report cover is a ”5G+”  logo together with a design of the ”infinite” symbol that connects  a variety of scenarios, representing our founding aspiration  to ”Communicate a Boundless World and Construct an Information  Society”, indicating the broad space and infinite possibilities  for the Company to innovate social values in the 5G era.  Feedback  Should you have any feedback or suggestions, please  kindly send it to us through the channels listed below.  We will take your comments seriously and promise not to  disclose your information to any unauthorized third party.  E-mail: [email protected]  Fax: +86-10-52616167  Scan the QR code to fill the online  feedback form

 

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Subject Areas and  Aspects  General Disclosures and KPIs Page(s)  A. Environmental  Aspect A1：  Emissions  General Disclosure: Information on the policies and compliance with relevant laws and  regulations that have a significant impact on the issuer relating to air and greenhouse  gas emissions, discharges into water and land, and generation of hazardous and nonhazardous  waste.  48-52  KPI A1.1: The types of emissions and respective emissions data. 52  KPI A1.2: Greenhouse gas emissions in total (in tonnes) and, where appropriate, intensity  (e.g. per unit of production volume, per facility).  52  KPI A1.3: Total hazardous waste produced (in tonnes) and, where appropriate, intensity  (e.g. per unit of production volume, per facility).  52  KPI A1.4: Total non-hazardous waste produced (in tonnes) and, where appropriate,  intensity (e.g. per unit of production volume, per facility).  52  KPI A1.5: Description of measures to mitigate emissions and results achieved. 48-52  KPI A1.6: Description of how hazardous and non-hazardous wastes are handled,  reduction initiatives and results achieved.  50,52  Aspect A2:  Use of Resources  General Disclosure: Policies on the efficient use of resources, including energy, water and  other raw materials.  48,50  KPI 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).  51-52  KPI A2.2: Water consumption in total and intensity (e.g. per unit of production volume,  per facility).  52  KPI A2.3: Description of energy use efficiency initiatives and results achieved. 48-52  KPI A2.4: Description of whether there is any issue in sourcing water that is fit for  purpose, water efficiency initiatives and results achieved.  50,52  KPI A2.5: Total packaging material used for finished products (in tonnes) and, if  applicable, with reference to per unit produced.  52  Aspect A3:  The Environment  and Natural  Resources  General Disclosure: Policies on minimizing the issuer's significant impact on the  environment and natural resources.  48-50  KPI A3.1: Description of the significant impacts of activities on the environment and  natural resources and the actions taken to manage them.  48-51  B. Social  Employment and Labor Practices  Aspect B1:  Employment  General Disclosure: Information on the policies and compliance with relevant  laws and regulations that have a significant impact on the issuer relating to  compensation and dismissal, recruitment and promotion, working hours, rest  periods, equal opportunity, diversity, anti-discrimination, and other benefits and  welfare.  37  KPI B1.1: Total workforce by gender, employment type, age group and geographical  region.  42-43  KPI B1.2: Employee turnover rate by gender, age group and geographical region. 43  63  Report Disclosure Indexes  Report Disclosure Indexes  HKEx Environmental, Social and Governance Reporting Guide

 

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64  Subject Areas and  Aspects  General Disclosures and KPIs Page(s)  Aspect B2:  Health and Safety  General Disclosure: Information on the policies and compliance with relevant laws and  regulations that have a significant impact on the issuer relating to providing a safe working  environment and protecting employees from occupational hazards.  37,41  KPI B2.1: Number and rate of work-related fatalities. 43  KPI B2.2: Lost days due to work injury. 43  KPI B2.3: Description of occupational health and safety measures adopted, how they are  implemented and monitored. 10,37,43  Aspect B3:  Development and  Training  General Disclosure: Policies on improving employees' knowledge and skills for discharging  duties at work. Description of training activities. 38-40  KPI B3.1: The percentage of employees trained by gender and employee category (e.g.  senior management, middle management). 43  KPI B3.2: The average training hours completed per employee by gender and employee  category. 43  Aspect B4:  Labor Standards  General Disclosure: Information on the policies and compliance with relevant laws and  regulations that have a significant impact on the issuer relating to preventing child and  forced labor.  37  KPI B4.1: Description of measures to review employment practices to avoid child and  forced labor. 37  KPI B4.2: Description of steps taken to eliminate such practices when discovered. 37  Product Practices  Aspect B5:  Supply Chain  Management  General Disclosure: Policies on managing environmental and social risks of the supply  chain. 50,55  KPI B5.1: Number of suppliers by geographical region. 55  KPI B5.2: Description of practices relating to engaging suppliers, number of suppliers  where the practices are being implemented, how they are implemented and monitored. 50,55  Aspect B6:  Product  Responsibility  General Disclosure: Information on the policies and compliance with relevant laws and  regulations that have a significant impact on the issuer relating to health and safety,  advertising, labelling and privacy matters relating to products and services provided and  methods of redress.  25  KPI B6.1: Percentage of total products sold or shipped subject to recalls for safety and  health reasons. 25  KPI B6.2: Number of products and services related complaints received and how they are  dealt with. 22-23,27  KPI B6.3: Description of practices relating to observing and protecting intellectual property  rights. 16,25,27,54  KPI B6.4: Description of quality assurance process and recall procedures. 25,52  KPI B6.5: Description of consumer data protection and privacy policies, how they are  implemented and monitored. 24,26-27  Aspect B7:  Anti-corruption  General Disclosure: Information on the policies and compliance with relevant laws and  regulations that have a significant impact on the issuer relating to bribery, extortion, fraud  and money laundering.  54  KPI 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.  54-55  KPI B7.2: Description of preventive measures and whistle-blowing procedures, how they  are implemented and monitored. 54-55  Community  Aspect B8:  Community  Investment  General Disclosure: Policies on community engagement to understand the needs of the  communities where the issuer operates and to ensure its activities take into consideration  the communities' interests.  28-34  KPI A8.1: Focus areas of contribution (e.g. education, environmental concerns, labor  needs, health, culture, sport). 10,30-34  KPI B8.2: Resources contributed (e.g. money or time) to the focus area. 10,42

 

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65  United Nations Sustainable Development Goals (SDGs)  SDGs Our Practices Page(s)  Cooperating with our parent company to undertake the targeted poverty alleviation task and support areas  in extreme poverty, establishing a sound poverty alleviation system framework, dispatching poverty alleviation  volunteers, building communications infrastructure in poor areas, and comprehensively promoting  poverty alleviation through related education, health, livelihood, industry and consumption programs.  28-34,  42-43  Building the smart ”And + Agriculture” product suite that covers agricultural production, business, management  and service, and using new technologies such as 5G and AI to increase agricultural production  and income.  20,30,32  Providing free screening and treatment of congenital heart disease for low-income children, promoting the  deployment and upgrade of medical information systems in less developed areas and the interconnection  of medical resources; organizing medical examinations for all employees, protecting physical and mental  health of employees with employee assistance programs (EAP), ”Happiness 1+1” activities, etc.  10-11,20,  33,37,41-43  Carrying out the ”Blue Dream” Education Aid Plan to provide training for primary and secondary school  principals in remote central and western regions, and donating teaching equipment and facilities to primary  and secondary schools in less developed areas; promoting the ”Internet + Education” platform, encouraging  employee volunteers to teach in less developed areas, and supporting the improvement of teaching  conditions.  11,21,  28-33  Providing equal employment and training opportunities for employees, and ensuring a fair workplace; implementing  the ”Female Rights Protection” program, and ensuring the legitimate rights of female employees.  37-40,  41-42  Promoting water conservation, strictly managing sewage discharge, and reducing water consumption;  strengthening water management in equipment rooms, office facilities and stores. 50,52  Carrying out energy-saving and green renovation projects for equipment rooms and data centers, and  promoting new energy sources such as solar energy, wind energy, hydropower and hydrogen in areas with  abundant natural resources and insufficient supply of traditional power.  48-52  Adhering to stable operations and transformation development, providing shareholders with good economic  performance; providing employees with competitive compensation, a smooth career development  platform, and a sound training system, and working with value chain partners to create job opportunities.  4,38-40,  42-43  Building first-class infrastructure that is high-speed, secure, ubiquitous, and intelligent, and continuously  optimizing network quality; implementing the innovation-driven development strategy, and enhancing innovation  capabilities in areas such as 5G, AI and cloud computing.  6-7,12-17,  26-27  Expanding the network coverage of administrative villages to reduce the digital divide between urban and  rural areas; jointly building network infrastructure in Belt and Road countries to promote inclusive economic  growth and create shared values.  12,28-36  Expanding 5G application in vertical industries to support the development of a smart society; leveraging  our expertise to implement China regional development strategies and the Belt and Road Initiative. 19-21  Continuously improving network and information security, strengthening the governance of malicious  information, and protecting customers’ right to choose and right to know; carrying out activities such as  ”Satisfaction Service 365” to improve customer satisfaction; and carrying out environmental volunteering  activities, promoting sustainable consumption and green concept to the public.  22-25,  26-27,  47,51-52  Focusing on the impact of 5G on climate change, established the China Mobile Leading Group for Pollution  Prevention and Energy Conservation, implementing the Green Action Plan to establish an environmental  management system covering the entire value chain, and conducting regular assessment of climate risks  and contingency measures.  48-52  No relevant practice. —  Developing smart applications for environmental protection and help protect the ecology; 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.  25,44-47  Continuously improving our risk assessment mechanism, building a comprehensive compliance management  system, actively fostering a healthy atmosphere of integrity and integrity, and further implementing  responsible procurement, and jointly fulfilling social responsibilities with suppliers.  50-55  Continuing to improve the open cooperation layout, implement ecological cooperation plans, and cooperate  with government agencies, large enterprise groups, global carriers and academic institutions to build a  thriving 5G industry ecology; establishing an open cooperation platform for partners, and supporting small  and medium enterprises with information solutions and quality services.  15-17,  26-27,36  Report Disclosure Indexes1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17

 

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66  GRI Sustainability Reporting Standards  GRI Standard Disclosure Page(s)  GRI 102:  General  Disclosures  2016  Organizational profile  Disclosure 102-1 Name of the  organization 4  Disclosure 102-2 Activities,  brands, products, and services 4  Disclosure 102-3 Location of  headquarters Back cover  Disclosure 102-4 Location of  operations 4  Disclosure 102-5 Ownership and  legal form 4  Disclosure 102-6 Markets served 4  Disclosure 102-7 Scale of the  organization 4  Disclosure 102-8 Information on  employees and other workers 4,42-43  Disclosure 102-9 Supply chain 55  Disclosure 102-10 Significant  changes to the organization and  its supply chain  4,55  Disclosure 102-11 Precautionary  Principle or approach 2-3  Disclosure 102-12 External  initiatives 6,16,36  Disclosure 102-13 Membership of  associations 6,54  Strategy  Disclosure 102-14 Statement  from senior decision-maker 2-3  Ethics and integrity  Disclosure 102-16 Values,  principles, standards, and norms  of behavior  8,56-57  Governance  Disclosure 102-18 Governance  structure 4  Stakeholder engagement  Disclosure 102-40 List of  stakeholder groups 58  Disclosure 102-41 Collective  bargaining agreements 43  Disclosure 102-42 Identifying and  selecting stakeholders 58  Disclosure 102-43 Approach to  stakeholder engagement 58  Disclosure 102-44 Key topics and  concerns raised 58  Reporting practice  Disclosure 102-45 Entities  included in the consolidated  financial statements  4,62  Disclosure 102-46 Defining report  content and topic Boundaries 59  Disclosure 102-47 List of material  topics 59  Disclosure 102-48 Restatements  of information No  Disclosure 102-49 Changes in  reporting 59  Disclosure 102-50 Reporting  period 62  Disclosure 102-51 Date of most  recent report 62  Disclosure 102-52 Reporting cycle 62  Disclosure 102-53 Contact point  for questions regarding the report 62  Disclosure 102-54 Claims of  reporting in accordance with the  GRI Standards  62  GRI Standard Disclosure Page(s)  GRI 102:  General  Disclosures  2016  Disclosure 102-55 GRI content  index 66-67  Disclosure 102-56 External  assurance 60-61  GRI 201: Economic Performance  GRI 103: Management approach disclosures 2016 4,53-54  GRI 201:  Economic  Performance  2016  Disclosure 201-1 Direct economic  value generated and distributed 4  Disclosure 201-2 Financial implications  and other risks and opportunities due  to climate change  48-50  GRI 202: Market Presence  GRI 103: Management approach disclosures 2016 4,53-55  GRI 202:  Market  Presence 2016  Disclosure 202-2 Proportion of  senior management hired from  the local community  43  GRI 203: Indirect Economic Impacts  GRI 103: Management approach disclosures 2016 28-34  GRI 203:  Indirect  Economic  Impacts 2016  Disclosure 203-1 Infrastructure  investments and services  supported  12,30,36  Disclosure 203-2 Significant  indirect economic impacts 28-34,42-43  GRI 204: Procurement Practices  GRI 103: Management approach disclosures 2016 50,55  GRI 204:  Procurement  Practices 2016  Disclosure 204-1 Proportion of  spending on local suppliers 55  GRI 205: Anti-corruption  GRI 103: Management approach disclosures 2016 54  GRI 205: Anticorruption  2016  Disclosure 205-2  Communication and training  about anti-corruption policies  and procedures  54  Disclosure 205-3 Confirmed  incidents of corruption and  actions taken  54-55  GRI 301: Materials  GRI 103: Management approach disclosures 2016 50  GRI 301:  Materials 2016  Disclosure 301-1 Materials used  by weight or volume 52  Disclosure 301-2 Recycled input  materials used  50  Disclosure 301-3 Reclaimed  products and their packaging  materials  50,52  GRI 302: Energy  GRI 103: Management approach disclosures 2016 48-51  GRI 302:  Energy 2016  Disclosure 302-1 Energy  consumption within the  organization  51  Disclosure 302-2 Energy  consumption outside of the  organization  51  Disclosure 302-3 Energy intensity 51-52  Disclosure 302-4 Reduction of  energy consumption 48-52  Disclosure 302-5 Reductions in  energy requirements of products  and services  48-50  GRI 303: Water  GRI 103: Management approach disclosures 2016 50  GRI 303: Water  2016  Disclosure 303-2 Water sources  significantly affected by  withdrawal of water  50  Disclosure 303-3 Water recycled  and reused 50  GRI 304: Biodiversity  GRI 103: Management approach disclosures 2016 24,44-46

 

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67  GRI Standard Disclosure Page(s)  GRI 304:  Biodiversity  2016  Disclosure 304-1 Operational sites  owned, leased, managed in, or  adjacent to, protected areas and  areas of high biodiversity value  outside protected areas  44-46  Disclosure 304-2 Significant  impacts of activities, products,  and services on biodiversity  44-46  GRI 305: Emissions  GRI 103: Management approach disclosures 2016 48-51  GRI 305:  Emissions 2016  Disclosure 305-1 Direct (Scope  1) GHG emissions 52  Disclosure 305-2 Energy indirect  (Scope 2) GHG emissions 52  Disclosure 305-3 Other indirect  (Scope 3) GHG emissions 52  Disclosure 305-4 GHG emissions  intensity 52  Disclosure 305-5 Reduction of  GHG emissions 52  Disclosure 305-7 Nitrogen oxides  (NOX), sulfur oxides (SOX),  and other significant air emissions  52  GRI 306: Effluents and Waste  GRI 103: Management approach disclosures 2016 50-51  GRI 306:  Effluents and  Waste 2016  Disclosure 306-1 Water  discharge by quality and  destination  52  Disclosure 306-2 Waste by type  and disposal method 52  Disclosure 306-3 Significant spills No  Disclosure 306-4 Transport of  hazardous waste No  Disclosure 306-5 Water bodies  affected by water discharges and/  or runoff  No  GRI 307: Environmental Compliance  GRI 103: Management approach disclosures 2016 48-50  GRI 307:  Environmental  Compliance 2016  Disclosure 307-1 Non-compliance  with environmental laws and  regulations  50  GRI 308: Supplier Environmental Assessment  GRI 103: Management approach disclosures 2016 50  GRI 308: Supplier  Environmental  Assessment 2016  Disclosure 308-1 New suppliers  that were screened using  environmental criteria  55,55  Disclosure 308-2 Negative  environmental impacts in the  supply chain and actions taken  50  GRI 401: Employment  GRI 103: Management approach disclosures 2016 37  GRI 401:  Employment  2016  Disclosure 401-1 New employee  hires and employee turnover 43  Disclosure 401-2 Benefits provided  to full-time employees that are not  provided to temporary or part-time  employees  37,41  Disclosure 401-3 Parental leave 42  GRI 402: Labor/Management Relations  GRI 103: Management approach disclosures 2016 37  GRI 403: Occupational Health and Safety  GRI 103: Management approach disclosures 2016 37,40  GRI 403:  Occupational  Health and  Safety 2016  Disclosure 403-2 Types of injury  and rates of injury, occupational  diseases, lost days, and  absenteeism, and number of  work-related fatalities  43  GRI Standard Disclosure Page(s)  GRI 404: Training and Education  GRI 103: Management approach disclosures 2016 38-40  GRI 404:  Training and  Education  2016  Disclosure 404-1 Average hours of  training per year per employee 43  Disclosure 404-2 Programs for  upgrading employee skills and  transition assistance programs  38-40  Disclosure 404-3 Percentage  of employees receiving regular  performance and career  development reviews  38-40  GRI 405: Diversity and Equal Opportunity  GRI 103: Management approach disclosures 2016 37  GRI 405:  Diversity  and Equal  Opportunity  2016  Disclosure 405-1 Diversity of  governance bodies and employees 43  GRI 406: Non-Discrimination  GRI 103: Management approach disclosures 2016 37  GRI 407: Freedom of Association and Collective  Bargaining  GRI 103: Management approach disclosures 2016 37  GRI 408: Child Labor  GRI 103: Management approach disclosures 2016 37  GRI 409: Forced or Compulsory Labor  GRI 103: Management approach disclosures 2016 37  GRI 412: Human Rights Assessment  GRI 103: Management approach disclosures 2016 28-34,37,55  GRI 413: Local Communities  GRI 103: Management approach disclosures 2016 28-34,55  GRI 413: Local  Communities  2016  Disclosure 413-1 Operations with  local community engagement,  impact assessments, and  development programs  28-34  Disclosure 413-2 Operations with  significant actual and potential  negative impacts on local  communities  28-34,55  GRI 414: Supplier Social Assessment  GRI 103: Management approach disclosures 2016 55  GRI 414:  Supplier Social  Assessment  2016  Disclosure 414-1 New suppliers that  were screened using social criteria 55  Disclosure 414-2 Negative social  impacts in the supply chain and  actions taken  55  GRI 416: Customer Health and Safety  GRI 103: Management approach disclosures 2016 22-25  GRI 416:  Customer  Health and  Safety 2016  Disclosure 416-1 Assessment of  the health and safety impacts of  product and service categories  25  Disclosure 416-2 Incidents of  non-compliance concerning the  health and safety impacts of  products and services  25  GRI 417: Marketing and Labeling  GRI 103: Management approach disclosures 2016 25  GRI 417:  Marketing and  Labeling 2016  Disclosure 417-1 Requirements for  product and service information  and labeling  25  GRI 418: Customer Privacy  GRI 103: Management approach disclosures 2016 24  GRI 418:  Customer  Privacy 2016  Disclosure 418-1 Substantiated  complaints concerning breaches  of customer privacy and losses of  customer data  24,27  GRI 419: Socioeconomic Compliance  GRI 103: Management approach disclosures 2016 25  GRI 419:  Socioeconomic  Compliance 2016  Disclosure 419-1 Non-compliance  with laws and regulations in the  social and economic area  25  Report Disclosure Indexes

 

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68  No. Index Page(s)  Human Rights  Principle 1  Businesses should support and respect the protection of internationally  proclaimed human rights  28-34,37,55  Principle 2 Make sure that they are not complicit in human rights abuses 28-34,37,55  Labor Standards  Principle 3  Businesses should uphold the freedom of association and the effective  recognition of the right to collective bargaining  37  Principle 4 The elimination of all forms of forced and compulsory Labor 37  Principle 5 The effective abolition of child labor 37  Principle 6 The elimination of discrimination in respect of employment and occupation 37  Environmental  Principle 7  Businesses should support a precautionary approach to environmental  challenges  48-50  Principle 8 Undertake initiatives to promote greater environmental responsibility 44-50  Principle 9  Encourage the development and diffusion of environmentally friendly  technologies  44-47  Anti-Corruption  Principle 10  Businesses should work against corruption in all its forms, including  extortion and bribery  54  Ten Principles of the United Nations Global Compact  ISO 26000  Core Issues Index Page(s)  Organization Governance 4,53  Human  Rights  1. Due diligence 53-54  2. Human rights risk situations 28-34,37,55  3. Avoidance of complicity 54-55  4. Resolving grievances 54-55  5. Discrimination and vulnerable  groups 28-34,37  6. Civil and political rights 37  7. Economic, social and cultural  rights 19-21,41  8. Fundamental principles and  rights at work 38-41  Labor  Practices  1. Employment and employment  relationships 38-41  2. Conditions of work and social  protection 37,41  3. Social dialogue 37  4. Health and safety at work 37,41,43  5. Human development and  training in the workplace 38-40,43  Environmental  1. Prevention of pollution 48-52  2. Sustainable resource use 46-52  3. Climate change mitigation and  adaptation 48-52  4. Protection of the environment,  biodiversity and restoration of  natural homes  44-45  Core Issues Index Page(s)  Fair  Operating  Practice  1. Anti-corruption 54-55  2. Responsible political  involvement —  3. Fair competition 54  4. Promoting social responsibility  in the value chain 50,55  5. Respect for property rights 16-17,27,54  Consumer  Issues  1. Fair marketing, factual and  unbiased information and fair  contractual practices  25,54  2. Protecting consumers’ health  and safety 24-25  3. Sustainable consumption 47  4. Consumer service, support and  compliant and dispute resolution 22-23,27  5. Consumer data protection and  privacy 24  6. Access to essential services 22-25  7. Education and awareness 22-25  Community  Involvement  and  Development  1. Community involvement 28-34  2. Education and culture 28-34,37-  40,42-43  3. Employment creation and skills  development  30-32,37-  40,42  4. Technology development and  access 16-17,27  5. Wealth and income creation 4,42  6. Health 28-29,33,37,  41-43  7. Social investment 28-34,42

 

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With perfect sincerity and integrity, we will strive to fulfil our triple-sided responsibilities: our economic responsibility, our social responsibility and our environmental responsibility china mobile china mobile limited registered address: 60/f, the center, 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. The global compact we support gri gri community 2019 this report is printed on environmentally friendly paper

 

Exhibit 3.1

 

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

 

 

NOTICE OF THE ANNUAL GENERAL MEETING

 

 

 

 

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Notice is hereby given that the Annual General Meeting of China Mobile Limited (the “Company”) will be held in the Conference Room, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 20 May 2020 at 10:00 a.m. for the following purposes:

 

 

 

 

 

 

And to consider and, if thought fit, to pass the following as ordinary resolutions:

 

ORDINARY RESOLUTIONS

 

 

 

 

 

 

 

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Such mandate shall expire at the earlier of:

 

 

 

 

 

 

 

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By Order of the Board

China Mobile Limited

Wong Wai Lan, Grace

Company Secretary

 

14 April 2020

 

Notes:

 

 

 

 

 

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 Wednesday, 27 May 2020 to Friday, 29 May 2020 (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 Tuesday, 26 May 2020.

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As at the date of this announcement, the Board of Directors of the Company comprises Mr. Yang Jie, Mr. Wang Yuhang and Mr. Dong Xin as executive directors and Dr. Moses Cheng Mo Chi, Mr. Paul Chow Man Yiu, Mr. Stephen Yiu Kin Wah and Dr. Yang Qiang as independent non-executive directors.

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Exhibit 4.1

 

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

 

 

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

If you are in any doubt as to any aspect of this document, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

 

 

 

 

To the Shareholders

 

Dear Sir or Madam,

 

 

This is the explanatory statement required to be sent to shareholders under the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) in connection with the proposed ordinary resolution set out in item 6 of the notice of the annual general meeting dated 14 April 2020 (the “AGM Notice”) for the approval of the renewal of the general mandate for buy-back of shares. This document also constitutes the memorandum required under section 239 of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong). Reference in this document to “Shares” means share(s) of all classes in the capital of China Mobile Limited (the “Company”).

Exercise of the Buy-back Mandate

 

Whilst the board of directors of the Company (the “Board”) do not presently intend to buy back any Shares immediately, they believe that the flexibility afforded by the mandate granted to them if the ordinary resolution set out in item 6 of the AGM Notice (the “Buy-back Mandate”) is passed would be beneficial to the Company and its shareholders as a whole.

 

It is proposed that up to 10 per cent. of the number of issued Shares on the date of the passing of the resolution to approve the Buy-back Mandate may be bought back. As at 25 March 2020, the latest practicable date for determining such figures, 20,475,482,897 Shares were issued. On the basis of such figures, the Board would be authorised to buy back up to 2,047,548,289 Shares during  the  period  up  to  the  date  of  the  next  annual  general  meeting in  2021,  or  

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the expiration of the period within which the next annual general meeting of the Company is required by law to be held, or the revocation or variation of the Buy-back Mandate by an ordinary resolution of the shareholders at a general meeting of the Company, whichever of these three events occurs first.

 

Reasons for Buy-backs

 

Buy-backs of Shares will only be made when the Board believes that such a buy-back will benefit the Company and its shareholders. Such buy-backs may, depending on the market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per Share.

 

Funding of Buy-backs

 

Buy-backs pursuant to the Buy-back Mandate would be financed entirely from the Company’s available cash flow or working capital facilities. Any buy-backs will be made out of funds of the Company legally permitted to be utilised in this connection in accordance with its articles of association and the laws of Hong Kong, including distributable profits. Under the Companies Ordinance, a company’s distributable profits, in relation to the making of a payment by the company, are those profits out of which the company could lawfully make a distribution equal in value to the payment.

 

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in its most recent published audited accounts for the year ended 31 December 2019 dated 19 March 2020) in the event that the Buy-back Mandate is exercised in full. However, the Board does not propose to exercise the Buy-back Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Board are from time to time appropriate for the Company.

 

Disclosure of Interests

 

None of the directors of the Company, and to the best of their knowledge, having made all reasonable enquiries, none of their associates, have any present intention, if the Buy-back Mandate is approved by the shareholders of the Company, to sell any Shares to the Company or its subsidiaries.

 

No core connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company, nor have they undertaken not to do so, if the Buy-back Mandate is approved by the shareholders of the Company.

 

Directors’ Undertaking

 

The Board has undertaken to the Stock Exchange that, so far as the same may be applicable, it will exercise the Buy-back Mandate in accordance with the Listing Rules and the applicable laws of Hong Kong.

 

Share Buy-backs Made by the Company

 

No  buy-backs  of  Shares  have  been  made  by  the  Company  during  the  last  six  months (whether on the Stock Exchange or otherwise).

 

Takeovers Code Consequences

 

If as a result of a buy-back of Shares by the Company, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Hong Kong Code on Takeovers and Mergers (the “Takeovers Code”). As a result, a shareholder, or group of shareholders acting in concert, depending on the level of increase of its or their shareholding, could obtain or consolidate control of the Company and become obliged to

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make a mandatory offer in accordance with Rule 26 of the Takeovers Code. The Board is aware of the consequences arising under the Takeovers Code of any buy-back.

 

As at 25 March 2020 (being the latest practicable date prior to the printing of this document), the immediate controlling shareholder of the Company, China Mobile Hong Kong (BVI) Limited (“CMHKBVI”), was recorded in the registers required to be kept by the Company under section 336 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”) as having an interest in 14,890,116,842 Shares, representing approximately 72.72 per cent. of the number of issued shares of the Company as at that date. In the event that the Buy-back Mandate is exercised in full and assuming that there is no change in the number of Shares held by CMHKBVI, the shareholding of CMHKBVI in the Company will be increased to approximately 80.80 per cent. of the reduced number of issued shares of the Company immediately after the exercise in full of the Buy-back Mandate. The Board is not aware of any consequences in relation to CMHKBVI which would arise under the Takeovers Code as a result of such share buy-back by the Company. In addition, in exercising the Buy-back Mandate (whether in full or otherwise), the Board will ensure that the Company shall comply with the requirements of the Listing Rules, including the minimum percentage of Shares being held in public hands.

 

Market Prices

 

The highest and lowest prices at which the Shares have traded on the Stock Exchange during each of the previous 12 months before the latest practicable date prior to the printing of this document were:

 

 

Extension of Share Issue Mandate

 

A resolution as set out in item 8 of the AGM Notice will also be proposed at the annual general meeting authorising the Board to increase the maximum number of new Shares which may be issued under the general mandate for the issuance and allotment of Shares by adding to it the number of any Shares bought back pursuant to the Buy-back Mandate.

 

 

Pursuant to Article 99 of the Company’s Articles of Association, Mr. WANG Yuhang will hold office until the forthcoming annual general meeting of the Company and will then be eligible for re-election. Besides, pursuant to Article 95 of the Company’s Articles of Association, Mr. Paul CHOW Man Yiu and Mr. Stephen YIU Kin Wah will retire by rotation at the forthcoming annual general meeting of the Company and, being eligible, offer themselves for re-election.

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The biographies of the directors proposed for re-election at the forthcoming annual general meeting (“Directors for Re-election”) are set out in Appendix I to this document. 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. None of the Directors for Re-election 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 pro-rata basis for any non-full year’s service. Mr. WANG Yuhang has voluntarily waived his annual director’s fees. 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.

 

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 above, 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 Listing Rules.

 

Mr. Paul CHOW Man Yiu was appointed as an independent non-executive director of the Company in May 2013 as proposed by the Nomination Committee of the Company and after review and approval by the Board. With his financial and regulatory expertise that is unique in the Board, he can contribute to the Board diversity of the Company and is a highly valued and respected member of the Board. Each year, he provided the Company with a confirmation of his independence, and the Board is of the view that he is independent. The Board believes that he will make a significant contribution to the Company with his extensive experience gained from the financial services industry as well as various listed companies, public organizations and securities regulatory bodies. Accordingly, the Board is of the view that the re-election of Mr. Paul CHOW Man Yiu as an independent non-executive director of the Company is in the interests of the Company and its shareholders as a whole.

 

Mr. Stephen YIU Kin Wah was appointed as an independent non-executive director of the Company in March 2017 as proposed by the Nomination Committee of the Company and after review and approval by the Board. With his accounting expertise that is unique in the Board, he can contribute to the Board diversity of the Company and is a highly valued and respected member of the Board, and is also qualified under the Listing Rules as the Chairman of the Audit Committee of the Company. Each year, he provided the Company with a confirmation of his independence, and the Board is of the view that he is independent. The Board believes that he will make a significant contribution to the Company with his extensive experience gained from the accounting profession. Accordingly, the Board is of the view that the re-election of Mr. Stephen YIU Kin Wah as an independent non-executive director of the Company is in the interests of the Company and its shareholders as a whole.

 

 

 

 

 

 

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APPENDIX I

 

 

BIOGRAPHI E S   O F   T H E   DIR E CT ORS   PROPOS E D   FOR   R E - E L E CTION   AT   TH EFORTHCOMING ANNUAL GENERAL MEETING

 

EXECUTIVE DIRECTOR

 

MR. WANG YUHANG

Age 58, Executive Director of the Company, joined the Board of Directors of the Company in October 2019, principally in charge of human resources and inspection matters. He is also a Director of CMCC and CMC. Mr. Wang formerly served as a deputy general manager of Development Department, general manager of Supervision Department, deputy director of Supervision and Inspection Office, the chief director of Legal Center, general manager of Human Resources Department and executive vice president of China Ocean Shipping (Group) Company; a vice president of COSCO Americas Inc.; the general manager of COSCO Shipbuilding Industry Company; the general manager of COSCO Shipyard Group Co., Ltd. as well as the executive vice president of China COSCO SHIPPING Corporation Limited. Over the past three years, Mr. Wang had served as a non-executive director and vice chairman of China International Marine Containers (Group) Co., Ltd. (listed in Hong Kong and Shenzhen), a non-independent and non-executive director and the chairman of COSCO SHIPPING International (Singapore) Co., Ltd. (listed in Singapore), a non-executive director of COSCO SHIPPING Holdings Co., Ltd. (listed in Hong Kong and Shanghai), and an executive director and the chairman of COSCO SHIPPING International (Hong Kong) Co., Ltd. (listed in Hong Kong). Mr. Wang graduated from Dalian Maritime College in 1983 with a major in marine engineering management. He is a senior engineer with many years of experience in the shipping industry and in human resources and corporate management.

 

INDEPENDENT NON-EXECUTIVE DIRECTORS

 

MR. PAUL CHOW MAN YIU

Age 73, 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, 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 and an independent non-executive director of CITIC Limited from March 2016 to June 2019. Mr. Chow currently serves as an independent non-executive director of Julius Baer Group Ltd. and Bank Julius Baer & Co. Ltd.

 

MR. STEPHEN YIU KIN WAH

 

Age 59, 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

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APPENDIX I

 

 

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.

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Exhibit 5.1

 

 

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

 

 

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in any doubt as to any aspect of this circular, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

 

 

 

 

 

 

PROPOSED ADOPTION OF SHARE OPTION SCHEME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A letter from the Board is set out on pages 3 to 14 of this circular.

The AGM will be held on Wednesday, 20 May 2020 at 10:00 a.m. in the Conference Room, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong. A notice of the AGM is set out on pages 70 to 72 of the Company’s 2019 Annual Report. The form of proxy for use at the AGM has been despatched to the Shareholders together with the Company’s 2019 Annual Report and also published on the websites of the Stock Exchange and the Company. Whether or not you intend to attend the AGM, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon. The form of proxy should be deposited at the Company’s registered office at 60/F, The Center, 99 Queen’s Road Central, Hong Kong as soon as possible and in any event not less than 24 hours before the time appointed for the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or at any adjournment thereof should you so wish.

 

 

14 April 2020

 

 

 

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DEFINITION

 

 

In this circular, unless the context otherwise requires, the expressions below shall have the following meanings:

 

 

 

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LETTER FROM THE BOARD

 

 

 

To the Shareholders

Dear Sir or Madam,

PROPOSED ADOPTION OF SHARE OPTION SCHEME

Reference is made to the announcement of the Company dated 23 January 2020 in relation to the proposed adoption of the Share Option Scheme.

The purpose of this circular is to provide you with, among other things, further details of the terms of the Share Option Scheme, and to seek your approval of the resolution relating to the Share Option Scheme to be proposed at the AGM.

Purposes

The Share Option Scheme aims at (1) further improving the governance structure of the Company, and establishing and improving the balance of interests mechanism between employees and Shareholders, investors and the Company; (2) establishing a benefit sharing and risk sharing mechanism among Shareholders, the Company and employees to enhance the Company’s performance and long-term stable development; and (3) effectively attracting, motivating and retaining the core backbone employees of the Company to support the Company’s strategic transformation and long-term development.

Scope of Scheme Participants

Scheme Participants are in principle limited to Directors (excluding independent non-executive Directors) and senior management of the Company, and backbone management, technical and business personnel who have a direct impact on the Company’s operating performance and sustainable development. The assessment results of the Scheme Participants shall meet or exceed the relevant standards for performance appraisal of the Company.

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LETTER FROM THE BOARD

 

A person shall not be a Scheme Participant under the Scheme if he/she falls under any of the below:

Matters such as the list of Scheme Participants and the number of Shares in respect of which Share Options may be granted shall be confirmed by the Remuneration Committee of the Company, and reviewed and approved by the Board.

Shares

The shares to be issued upon an exercise of the Share Options will be the ordinary shares in the Company.

Effective Period

The Scheme will be effective for a term of ten (10) years commencing from the date on which the Scheme is approved by the Shareholders at the AGM, unless terminated in advance under relevant requirements of the Scheme.

Maximum Quantity of Grant, Grant Date and Interval of Grant

Maximum Quantity of Grant

The maximum number of Shares to be issued upon the exercise of the Share Options granted under the Scheme (and any other schemes) shall not in aggregate exceed 10% of the total share capital of the Company as at the date of approval of the Scheme at the AGM. Share Options that have lapsed in accordance with the terms of the relevant scheme(s) are not counted in the calculation of the total number of the underlying Shares issued when the Share Options granted under the Scheme (and any other schemes) are exercised. By way of reference, the total share capital of the Company as at the Latest Practicable Date comprised 20,475,482,897 Shares, based on which Share Options representing a maximum of 2,047,548,289 Shares could be granted under the Scheme.

The number of Shares that may be issued upon the exercise of all granted but outstanding Share Options under the Scheme (and any other schemes) shall not exceed 30% of the total number of issued Shares at any time.

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LETTER FROM THE BOARD

 

Unless approved at a general meeting, the Shares issued and to be issued upon the exercise of the Share Options granted to any individual Scheme Participant (including exercised or outstanding Share Options) during the Effective Period shall not exceed 1% of the total share capital of the Company.

In the event of non-market factors affecting the value of Shares such as conversion of capital reserve into new shares, issue of bonus shares, share subdivision, share consolidation or rights issue during the Effective Period, the number of Share Options to be granted will be subject to adjustments in accordance with the relevant requirements of the Scheme.

The expected return of each Scheme Participant from the Share Options granted in principle shall not exceed a certain level of his/her total salary at the time of Grant, assuming that a Grant will be conducted every two (2) years.

Grant Date

Each Grant Date shall be determined by the Board as appropriate, after the Grant proposal is considered and approved by the Board and approved by the SASAC, the Scheme is approved by the Shareholders at the AGM, and the Conditions for Grant are fulfilled.

Each Grant Date shall be a trading day, the determination of which shall comply with the relevant regulatory rules including the Listing Rules and shall not pose any significant risks (including but not limited to compliance risk) to the Company.

The Board shall not grant Share Options after becoming aware of inside information until the announcement of the relevant information. In particular, no Share Options shall be granted during the following periods:

until the end of the day of the relevant results announcement; and

Interval of Grant

In principle, upon the fulfilment of the Conditions for Grant, a Grant will be conducted every two (2) years.

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LETTER FROM THE BOARD

 

 

Conditions for Grant and Exercise Price

Conditions for Grant

The Company may grant Share Options to a Scheme Participant upon fulfilment of the following conditions by the Company and the Scheme Participant:

Conditions for Grant for the Company

Conditions for Grant for the Scheme Participant

Exercise Price

The Exercise Price of the Share Options shall be determined in accordance with the fair market price principle, with the base day for pricing being the Grant Date. The Exercise Price shall not be lower than the higher of the following prices:

In the event of non-market factors affecting the value of Shares such as conversion of capital reserve into new shares, issue of bonus shares, share subdivision, share consolidation or rights issue during the Effective Period, the Exercise Price will be subject to adjustments in accordance with the relevant requirements of the Scheme.

No fee shall be payable by a Scheme Participant on the application for or acceptance of the grant of Share Options.

Time Limit for Exercise of Share Options

Restriction Period

No Share Options shall be exercised within twenty-four (24) months from the Grant Date.

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LETTER FROM THE BOARD

 

Vesting Period

In respect of each Grant, upon satisfaction of the Conditions for Vesting as provided under the Scheme, the Share Options granted shall be vested in three batches as follows:

 

 

Conditions for Vesting

In respect of each Scheme Participant, the vesting of Share Options under the Scheme shall be conditional upon fulfilment of the following conditions by the Company, the Affiliated Unit of the Scheme Participant (if applicable) and the Scheme Participant:

Conditions for Vesting for the Company

Conditions for Vesting for the Affiliated Unit

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LETTER FROM THE BOARD

 

 

Conditions for Vesting for the Scheme Participant

If the Conditions for Vesting are not satisfied, no Share Options shall be vested.

The specific Conditions for Vesting of the first Grant are expected to be approved by the SASAC together with the approval of the Scheme by the SASAC. The specific Conditions for Vesting of each subsequent Grant are expected to be formulated by the Board and then approved by the SASAC prior to the Grant.

Transferability of Share Options

The Share Options shall be personal to the Scheme Participants whom are granted the Share Options and shall not be transferred or used as guarantee or repayment of debts.

Rights Attaching to Share Options and Shares

The Shares allotted and issued by the Company upon the exercise of the Share Options shall be subject to all the provisions of the Articles of Association and have the same rights as the fully paid Shares that have been issued on the date of the allotment. In other words, the Shares confer the Scheme Participants the rights to receive all dividends or other distributions paid or made by the Company on or after the date of the Share allotment, but the record date for determining the dividend or distribution must be after the date of the relevant Share allotment.

The Shares allotted and issued by the Company upon the exercise of the Share Options shall carry voting rights only after the Scheme Participants or their nominees are registered as Shareholders in the register of members of the Company.

In the case of voluntary winding-up of the Company, a Scheme Participant may, within fifteen (15) business days after the passing of the relevant resolution, elect to request the Company to treat all or part of his/her unexercised Share Options (whether or not vested) as exercised, and pay to the Company the full subscription price of the relevant Shares underlying such Share Options. Upon the Company being notified, such Scheme Participant will enjoy the same rights as other Shareholders and be entitled to receive the assets distributed during the Company’s winding-up in respect of the relevant Shares, with such amount to be received equal to the amount receivable for Shares that carry voting rights.

Adjustments to Share Options

In the event of conversion of capital reserve into new shares, issue of bonus shares, share subdivision, share consolidation or rights issue of the Company, such corresponding adjustments (if any) shall be made by the Board as authorized at a general meeting to the number of Share Options and/or the Exercise Price.

In addition, in respect of any such adjustments, the auditors or an independent financial adviser of the Company must confirm to the Directors in writing that the adjustments satisfy the requirements of Rule 17.03(13) of the Listing Rules.

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LETTER FROM THE BOARD

 

 

Adjustment to the Number of Share Options

Subject to compliance with the requirements of the section under “Adjustments to Share Options” in this circular, if there is any conversion of capital reserve into new shares, issue of bonus shares, share subdivision, share consolidation or rights issue prior to the exercise of the Share Options, an adjustment to the number of Share Options shall be made accordingly. The method of adjustment is set out as below:

Conversion of capital reserve into new shares, issue of bonus shares or share subdivision

Q = Q₀ × (1 + n)

Where: “Q₀” represents the number of Share Options before the adjustment; “n” represents the ratio per Share of the conversion of capital reserve into new shares, issue of bonus shares or share subdivision; “Q” represents the number of Share Options after the adjustment.

Share consolidation

Q = Q₀ × n

Where: “Q₀” represents the number of Share Options before the adjustment; “n” represents the ratio of consolidation; “Q” represents the number of Share Options after the adjustment.

Rights issue

Q = Q₀ × P₁ × (1 + n) ÷ (P₁+ P₂ × n)

Where: “Q₀” represents the number of Share Options before the adjustment; “P₁” represents the closing price as at the record date; “P₂” represents the subscription price; “n” represents the ratio of allotment; “Q” represents the number of Share Options after the adjustment.

Adjustment to the Exercise Price

Subject to compliance with the requirements of the section under “Adjustments to Share Options” in this circular, if there is any conversion of capital reserve into new shares, issue of bonus shares, share subdivision, share consolidation or rights issue prior to the exercise of the Share Options, an adjustment to the Exercise Price shall be made accordingly. The method of adjustment is set out as below:

Conversion of capital reserve into new shares, issue of bonus shares or share subdivision

P = P₀ ÷ (1 + n)

Where: “P₀” represents the Exercise Price before the adjustment; “n” represents the ratio per Share of the conversion of capital reserve into new shares, issue of bonus shares or share subdivision; “P” represents the Exercise Price after the adjustment.

Share consolidation

P = P₀ ÷ n

Where: “P₀” represents the Exercise Price before the adjustment; “n” represents the ratio of consolidation; “P” represents the Exercise Price after the adjustment.

Rights issue

P = P₀ × (P₁ + P₂ × n) ÷ (P₁ × (1 + n))

Where: “P₀” represents the Exercise Price before the adjustment; “P₁” represents the closing price as at the record date; “P₂” represents the subscription price; “n” represents the ratio of allotment; “P” represents the Exercise Price after the adjustment.

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LETTER FROM THE BOARD

 

 

Termination of the Scheme

If any of the following events occurs in relation to the Company, the Scheme shall be terminated, and once the resolution in relation to the termination of the Scheme due to any of the following events is considered and approved by the Board, within one (1) year after the effective date of the resolution of the Board, no new Share Options shall be granted to the Scheme Participants while the Scheme Participants shall not exercise any Share Options or obtain any gains under the Scheme:

Lapse and Cancellation of Share Options

If any of the following events occurs in relation to a Scheme Participant, his/her Share Options will automatically lapse, and the Board shall cease granting new Share Options, cancel Share Options which are not yet exercised by him/her, and recover any gains obtained by him/her from the exercise of the Share Options:

Amendments to the Scheme

The Board may revise the Scheme as it considers necessary for fulfilling state-owned assets supervision procedures in accordance with laws and regulations. If the terms of the Scheme differ from the relevant laws, regulations, Listing Rules or requirements of the Stock Exchange, or the relevant laws, regulations, Listing Rules or requirements of the Stock Exchange are modified, then those relevant laws, regulations, Listing Rules or requirements of the Stock Exchange shall prevail.

Amendments to the Scheme shall be approved at a general meeting of the Company where:

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LETTER FROM THE BOARD

 

 

Authorization to the Board

The Board proposes to be granted the following authorization to act as the executive body of the Scheme and be responsible for its implementation and administration upon seeking approval from the Shareholders at the AGM:

Application for Listing

Application will be made by the Company to the Stock Exchange for approval of the listing of, and permission to deal in, the Shares to be issued and allotted pursuant to the exercise of any Share Options granted under the Scheme.

Value of All Share Options

The Board considers that it would not be appropriate to state the value of all Share Options that may be granted under the Scheme as if they had been granted on the Latest Practicable Date because there are a number of variables which are crucial for the calculation of the value of the Share Options (including the Exercise Price and other variables). The Board believes that any calculation of the value of the Share Options as at the Latest Practicable Date based on a number of speculative assumptions would not be meaningful and would be misleading to the Shareholders.

Document Available for Inspection

A copy of the terms of the Share Option Scheme will be available for inspection during normal

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LETTER FROM THE BOARD

 

business hours at the registered office of the Company at 60th Floor, The Center, 99 Queen’s Road Central, Hong Kong from the date of this circular to and including the date of the AGM.

The AGM will be held on Wednesday, 20 May 2020 at 10:00 a.m. in the Conference Room, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong. A notice of the AGM is set out on pages 70 to 72 of the Company’s 2019 Annual Report. The form of proxy for use at the AGM has been despatched to the Shareholders together with the Company’s 2019 Annual Report and also published on the websites of the Stock Exchange and the Company.

To ascertain Shareholders’ eligibility to attend and vote at the AGM, the register of members of the Company will be closed from Thursday, 14 May 2020 to Wednesday, 20 May 2020 (both days inclusive), during which period no transfer of Shares will be effected. In order to be entitled to attend and vote at the AGM, 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 Wednesday, 13 May 2020.

Whether or not you intend to attend the AGM, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon. The form of proxy should be deposited at the Company’s registered office at 60/F, The Center, 99 Queen’s Road Central, Hong Kong as soon as possible and in any event not less than 24 hours before the time appointed for the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or at any adjournment thereof should you so wish, but in such event the instrument appointing a proxy shall be deemed to be revoked.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder has a material interest in the Share Option Scheme and therefore no Shareholder is required to abstain from voting at the AGM.

The Directors (including the independent non-executive Directors) consider that the proposed adoption of the Share Option Scheme and the proposed authorization to the Board to handle all matters in relation to the Share Option Scheme are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend all Shareholders to vote in favour of the resolution relating to the Share Option Scheme to be proposed at the AGM.

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make this circular or any statement herein misleading.

 

 

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