UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM20-F

OR

For the fiscal year ended December 31, 20152018

OR

For the transition period fromto

OR

Date of event requiring this shell company report                    

For the transition period fromto

Commission file number:1-14696

China Mobile Limited

(Exact Name of Registrant as Specified in Its Charter)

N/A

(Translation of Registrant’s Name into English)

Hong Kong, China

(Jurisdiction of Incorporation or Organization)

60th Floor, The Center

99 Queen’s Road Central

Hong Kong, China

(Address of Principal Executive Offices)

Grace Wong

Company Secretary

China Mobile Limited

60th Floor, The Center

99 Queen’s Road Central

Hong Kong, China

Telephone: (852) 3121-8888

Fax: (852) 2511-9092

(Name, Telephone,E-mail and/or Facsimile Number and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2015, 20,475,482,897 ordinary2018, 20,475,482,897ordinary shares were issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   x☒    No  ¨☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or (15)(d) of the Securities Exchange Act of 1934.    Yes  ¨☐    No  x☒

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨☒    No  ¨

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a non-accelerated filer.an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer,” and large accelerated filer”“emerging growth company” inRule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ¨☐    Item 18  ¨☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    Yes  ¨☐    No  x☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ☐    No  ☐

TABLE OF CONTENTS

China Mobile Limited

Forward-Looking Statements

This annual report on Form20-F 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, or the Exchange Act. These forward-looking statements are, by their nature, subject to significant risks and uncertainties. These forward-looking statements include, without limitation, statements relating to:

The words “aim”, “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “seek”, “should”, “target”,“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 “Item 3. Key Information — Risk Factors”.

-1-

PART I

Not applicable.

Not applicable.

Selected Financial Data

The following tables present selected historical financial data of our company as of and for each of the years in the five-year period ended December 31, 2015.2018. Except for amounts presented in U.S. dollars and per American depositary share, or ADS, data, the selected historical consolidated statement of comprehensive income data and other financial data for the years ended December 31, 2013, 20142016, 2017 and 20152018 and the selected historical consolidated balance sheet data as of December 31, 20142017 and 20152018 set forth below are derived from, should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements, including the related notes, included elsewhere in this annual report on Form20-F. The selected historical consolidated statement of comprehensive income data (other than ADS data) for the years ended December 31, 20112014 and 20122015 and the selected historical consolidated balance sheet data as of December 31, 2011, 20122015 and 20132016 set forth below should be read in conjunction with and are derived fromqualified in their entirety by reference to our internal records and management accountsaudited consolidated financial statements that are not included in thisour previous annual reportreports on Form20-F. Our consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRSs, as issued by the International Accounting Standards Board, or IASB.

In November 2015, China Mobile TieTong Company Limited, or CM TieTong, our wholly-owned subsidiary, acquiredWe completed the acquisition of certain telecommunications assets, businesses and related liabilities andas well as their related employees in relation to the fixed-line telecommunications operations, or Target Assets and Businesses, of China Tietong Telecommunications Corporation, or China TieTong, for a final consideration of RMB31,967 million (approximately US$4,934.9 million). The acquisition was completedTietong, in December 2015. See “Item 4. Information on the Company—Company — Business Overview—Acquisition fromOverview — Investments and Acquisitions.” Because we and Target Assets and Businesses were under common control of China TieTong of certain Assets, BusinessesMobile Communications Group Co., Ltd.(formerly known as China Mobile Communications Corporation), or CMCC, both prior to and Related Liabilities and Employees.” The aforementionedafter the acquisition, the acquisition was considered as a business combination under common control as CM TieTong and China TieTong are both ultimately controlled by our parent company, China Mobile Communications Corporation, or CMCC. Under IFRSs, such acquisition was accounted for using merger accounting in accordance with the Accounting Guideline 5 “Merger Accounting for Common Control Combinations” (“Combinations,” or AG 5”)5, issued by the Hong Kong Institute of Certified Public Accountants, (“HKICPA”). Accordingly,or the acquiredHKICPA. Target Assets and Businesses arewere stated at predecessor values,their historical cost, and were included in the consolidated financial statements from the beginning of the earliest period presentedincluded in this annual report on Form20-F as if Target Assets and Businesses had always been part of our company during all the Group. As a result, the Group has restated the 2011, 2012, 2013 and 2014 comparative amounts of the consolidated statements of comprehensive income by including the operating results of Target Assets and Businesses and eliminating its transactions with Target Assets and Businesses, as if the acquisition had been completed on the earliest date of therelevant periods being presented, i.e., January 1, 2011. The consolidated balance sheets of the Group as at December 31, 2011, 2012, 2013 and 2014 was restated to include the assets and liabilities of Target Assets and Businesses. See Note 2(b) topresented.

We publish our consolidated financial statements.statements in Renminbi. Solely for the convenience of the reader, this annual report on Form20-F contains translations of certain Renminbi and Hong Kong dollar amounts into U.S. dollars and vice versa at RMB6.8755 = US$1.00 and HK$7.8305 = US$1.00, the noon buying rates in New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2018. The noon buying rates in New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York are published on a weekly basis in the H.10 statistical release of the Board of Governors of the Federal Reserve System of the United States. These translations should not be construed as representations that the Renminbi or Hong Kong dollar amounts could actually be converted into U.S. dollars at such rates or at all.

-2-

The statistical information set forth in this annual report on Form20-F relating to Mainland China is taken or derived from various publicly available government publications that were not prepared or independently verified by us. This statistical information may not be consistent with other statistical information from other sources within or outside Mainland China.

-2-

-3-

-4-

Exchange Rate Information

We publish our consolidated financial statements in Renminbi. Solely for the convenience of the reader, this annual report on Form 20-F contains translations of certain Renminbi and Hong Kong dollar amounts into U.S. dollars and vice versa at RMB6.4778 = US$1.00 and HK$7.7507 = US$1.00, the noon buying rates in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2015. The noon buying rates in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York are published on a weekly basis in the H.10 statistical release of the Board of Governors of the Federal Reserve System of the United States. These translations should not be construed as representations that the Renminbi or Hong Kong dollar amounts could actually be converted into U.S. dollars at such rates or at all.

The noon buying rates in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York were RMB6.4571 = US$1.00 and HK$7.7551 = US$1.00, respectively, on April 19, 2016. The following table sets forth the high and low noon buying rates between Renminbi and U.S. dollars and between Hong Kong dollars and U.S. dollars for each month during the previous six months:

Noon Buying Rate

The following table sets forth the average noon buying rates between Renminbi and U.S. dollars and between Hong Kong dollars and U.S. dollars in 2011, 2012, 2013, 2014 and 2015 calculated by averaging the noon buying rates on the last day of each month during the relevant year.

Average Noon Buying Rate

-5-

Risk Factors

The following factors, and those factors described in our other reports submitted to, or filed with, the SEC, among other factors, could affect our actual results and could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf, and such factors may have a material adverse effect on our business, financial condition, results of operations and prospects as well as the value of our ordinary shares and ADSs.

-4-

Risks Relating to Our Business

We may not be able to maintain the same level of growth as we have experienced over the past decade, which could have a material adverse effect on our financial condition and results of operations as well as our profitability.

We have experienced significant growth over the past decade, measured by the increase in both our customer base and our revenue. However, in recent years, we have experienced a lower rate of growth as measured by our revenue, and in 2013, 2014 and 2015, we experienced a decrease in profit from operations and net profit compared to the previous years. We cannot assure you that we will be able to achieve a high level of growth in the future due in part to the increased market saturation and competition among mobile operators and from other related industries in Mainland China. In particular, according to data published by the Ministry of Industry and Information Technology, or the MIIT, mobile penetration rate in Mainland China reached 95.5% as of December 31, 2015. Moreover, measures adopted by the PRC government in 2013 that permit certain operators approved by the MIIT to lease and repackage mobile services for sale to end customers have changed the competitive landscape in the telecommunications industry in Mainland China and have resulted and will result in further intensified competition among existing industry participants as well asThe increasing competition from providers offering telecommunications services using alternative technologies, in particular Internet service providers. See “— Competition from other telecommunications services providers and competitors in other related industries may further increase, which may reduce our market share and decrease our profit margin, and we cannot assure you that any potential changechanges in the competitive landscape of the telecommunications industry in Mainland China would not have a material adverse effect on our business, financial condition and results of operations.” In addition, the implementation of value-added tax in Mainland China has had, and is expected to continue to have, a short-term negative impact on our operating revenue and profit compared to previous years. See “— Implementation of value-added tax in Mainland China has had, and is expected to continue to have, a negative impact on our operating revenue and profit.” Besides, the introduction of the new national policy of “speed upgrade and tariff reduction” in May 2015 also has had, and is expected to continue to have, a negative impact on our operating revenue and profit compared to the previous years. See “ —Item 4. Information on the Company — Business Overview — Tariffs.” Furthermore, the adjustment of interconnection settlement standards has had, and is expected to continue to have, a negative impact on our revenue and profitability. See “— Current or future asymmetrical and other regulatory measures adopted by the PRC regulatory authorities could materially harm our competitive position, which would in turn significantly reduce our revenues and profitability, and our financial condition and results of operations may be materially and adversely affected.”

All of the foregoing factors, among others, have contributed to a slowdown in the growth of our telecommunications services in Mainland China. Our costs for the provision of telecommunications services may also increase in order for us to maintain our growth. Our efforts to achieve growth could be hampered and our profitability may decrease if we are unable to compete effectively with other telecommunications services providers and Internet service providers in Mainland China. We cannot assure you that we will be successful in our efforts to achieve a high level of customer growth or to increase the utilization of our telecommunications services. If we are unable to sustain our growth, our financial condition and results of operations as well as our profitability may be materially and adversely affected.

-6-

Competition from other telecommunications services providers and competitors in other related industries may further increase, which may reduce our market share and decrease our profit margin and we cannot assure you that any potential change in the competitive landscape of the telecommunications industry in Mainland China would not have a material adverse effect on our business, financial condition and results of operations..

We continue to face increasing competition from other telecommunications services providers in Mainland China. Principal participants in the telecommunications industry in Mainland China include China United Network Communications Group Co., Ltd.,Unicom (Hong Kong) Limited, or China Unicom, China TelecommunicationsTelecom Corporation Limited, or China Telecom, and us. In January 2016,particular, we have been competing against China Telecom and China Unicom in the delivery of 4G services since the Ministry of Industry and Information Technology, or the MIIT, granted permissions to all three telecommunications services providers to provide 4G services based on the LTE/Time Division Duplex standard, orTD-LTE technology, in December 2013. We received the permission to provide 4G services based on the Frequency-Division Long-Term Evolution standard, or LTE FDD technology, on April 3, 2018, while China Telecom and China TelecomUnicom obtained such permission in February 2015. In accordance with this permission, we can develop mobile IoT and Industrial Internet services nationwide, and LTE FDD services only in rural areas. Constrained by the services available to us, we may not effectively compete with other operators except for rural areas and it may result in the potential risk of ROIC (Return on Invested Capital). Moreover, our competitors entered into a strategic cooperation agreement to promote resource-sharing in several keycertain aspects of business operations. Such cooperation as contemplated by our two major competitors, if materialized,operations and may significantly change the competitive landscape of telecommunications industryfurther cooperate in Mainland China.other aspects. For further information, see “Item 4. Information on the Company — Business Overview — Competition.” Such cooperation may significantly change the competitive landscape of the telecommunications industry in Mainland China. Accordingly, we cannot assure you that we will be able to compete effectively, or that such competition will not materially and adversely affect our business, financial condition and results of operations.

The government of the People’s Republic of China, or the PRC, government has extended favorable regulatory policies to some of our competitors in order to help them become more viable competitors. See “— Current or future asymmetrical and other regulatory measures adopted by the PRC regulatory authorities could materially harm our competitive position which would in turn significantly reduce our revenues and profitability, and our financial condition and results of operations may be materially and adversely affected.”

Further increased competition could reduce the rate at which we add new customers to our network and decrease our market share as customers choose to receive mobile services from other providers. Furthermore, we expect that we will face intenseor enhance competition in the delivery of 4G services from China Telecom and China Unicom, which have received permits to operate their 4G services based mainly on FDD mode long-term evolution, or FDD-LTE, technology in 2015. See “— We may encounter difficulties and challenges in developing and implementing TD-LTE technologies and developing our 4G services.” As part of changes in our marketing model, we may, depending on the competitive environment, offer more tariff promotions to our customers, which may negatively impact our revenues. As a result of the above, we cannot assure you that we will not experience increases in churn rates as competition intensifies, which may materially reduce our profitability. Moreover, we cannot assure you that any potential change, and in particular, any further restructuring in the competitive landscape of the telecommunications industry in Mainland China, would not have a material adverse effect on our business, financial condition and results of operations.

Moreover, the PRC government has implemented a number of measures that permit certain operators approved by the MIIT to lease and repackage mobile services for sale to end customers. On May 17, 2013, the MIIT announced that it would accept applications from non-State-owned companies to, on a trial basis, lease mobile services from China Unicom, China Telecom or us and provide mobile services to end customers after repackaging these services. The trial period ended on December 31, 2015. We may face intense competition from these new mobile network operators in light of such policy and decisions by the MIIT. In particular, increased competition may cause tariff rates to decline significantly, which may materially and adversely affect our business, financial condition and results of operations.

Our ability to compete effectively also will depend on how successfully we respond to various factors affecting the telecommunications industry in Mainland China, including changes in consumer preferences and demand for existing services. We cannot assure you that the measures we are taking in response to these competitive challenges will achieve the expected results.

Implementation of value-added tax in Mainland China has had, and is expected to continue to have, a negative impact on our operating revenue and profit.

Our business operations in China are currently subject to PRC value-added tax, or VAT. On November 16, 2011, the Ministry of Finance and the State Administration of Taxation issued a pilot tax program under which VAT instead of business tax will be levied on the provision of certain services that were previously subject to business tax in China. The telecommunications industry became subject to the pilot tax program effective from June 1, 2014. For telecommunications enterprises, our output VAT rate for the provision of basic telecommunications services (including voice communication, lease or sale of network resources) is 11%, while our output VAT rate for the provision of value-added telecommunications services (including Internet access services, short and multimedia messaging services, transmission and application service of electronic data and information) is 6%. Our output VAT for sales of telecommunications terminals and equipment is 17%. Our input VAT rate depends on the type of services received and the assets purchased as well as the VAT rate applicable to a specific industry, and ranges from 6% to 17%. For comparison, business tax applicable to us prior to June 1, 2014 was at 3% imposed on the revenue.

-7-

As the operating revenue is presented in our financial statements after excluding any output VAT in accordance with IFRS, the implementation of VAT has a negative impact on our revenue. Our input VAT, which is incurred as a result of our receipt of services and purchases of telecommunications equipment and materials, is excluded from operating expenses or the original cost of equipment purchased and can be netted against our output VAT, arriving at the net amount of VAT recoverable or payable. To the extent that the decrease in our operating revenue is larger than the decrease in our operating expenses due to the implementation of VAT in the PRC telecommunications industry, there is a negative impact on our net profit. Our operating revenue and net profit in 2014 and 2015 were adversely affected by the implementation of VAT. See “Item 5. Operating and Financial Review and Prospects — Results of Operations.” We expect that the implementation of VAT will continue to have a negative impact on our operating revenue and profit in the short term. Furthermore, the impact from the implementation of VAT, such as the degree to which the VAT input credits may offset VAT output tax obligation, may cause our reported financial information not necessarily indicative of our future operating results or financial condition. See “Item 4. Information on the Company — Business Overview — Regulation — VAT Reform Application to the Telecommunications Industry.”

Our financial condition and results of operations have been adversely affected by the reduction in tariffs as a result of PRC national policies, and may continue to be affected by further reduction in tariffs due to future policy developments in the telecommunications industry.

From time to time, we need to adjust our tariff plans in accordance with PRC national policies, and such adjustments may have a material negative impact on our revenue and profitability. In May 2015,” Additionally, the PRC government introduced the new national policy of “speed upgrade and tariff reduction”. Since May 2015, in response to the expectations of the general public and customers and in order to implement the said national policy, we, in addition to continue enhancing network capacity and increasing network speed, offered discounts to our tariff plans. In addition, in October 2015, we launched an unused data traffic carry-over program for our mobile monthly plans that are charged based on pre-determined data traffic, according to which customers could carry over their monthly plan’s remaining unused data traffic to the following month. Furthermore, in light of the national policy of achieving coordinated development of Beijing Municipality, Tianjin Municipality and Hebei Province issued by the PRC government, we cancelled the long-distance and roaming tariffs for voice services within the tariff zones of Beijing Municipality, Tianjin Municipality and Hebei Province in August 2015 so that our customers are only charged with local usage tariff for our voice services provided within the tariff zones. See “Item 4. Information on the Company — Business Overview — Tariffs.” Such measures have resulted in reduced tariffs of our data traffic services and voice services in 2015, which in turn had a negative impact on our revenue and profitability. We believe that any prospective reduction in tariffs could continue to have an adverse impact on our financial condition and results of operations. Furthermore, we cannot assure you that we would not be required to further reduce our tariffs or make other initiatives to further implement the national policy of “speed upgrade and tariff reduction” or other similar national policies, which may materially and adversely affect our financial condition and results of operations.

Current or future asymmetrical and other regulatory measures adopted by the PRC regulatory authorities could materially harm our competitive position, which would in turn significantly reduce our revenues and profitability, and our financial condition and results of operations may be materially and adversely affected.

The PRC government has extended favorable regulatory policies to some of our competitors in order to help them become more viable competitors to us. For example, the MIIT has decided to make asymmetrical changes, effective January 1, 2014, to the public telecommunications network interconnection settlement standards of basic telecommunications operators in Mainland China. As a result of these changes, when mobile users of China Telecom and China Unicom and our mobile users in Mainland China (excluding TD-SCDMA users with certain specified prefix numbers) make calls to each other, the settlement charges payable by China Telecom and China Unicom to us were adjusted from RMB0.06/minute to RMB0.04/minute, while the settlement charges payable by us to China Telecom and China Unicom remained at RMB0.06/minute. The MIIT will assess the above interconnection settlement policy once every two years based on the development conditions of the telecommunications market and will make adjustments when appropriate. See “Item 4. Information on the Company — Business Overview —Interconnection.” In addition, the MIIT has expanded the mobile number portability policy that has been implemented in Tianjin Municipality and Hainan Province to Jiangxi Province, Hubei Province and Yunnan Province. The PRC government may continue to expand the implementation of the mobile number portability policy to other areas of Mainland China. The implementation and expansion of the mobile number portability policy may have a greater impact on us, as a leading operator, than on our competitors.

-8-

The PRC government has adopted other regulatory measures that mayto encourage competition in the telecommunications industry. For example, the PRC government recently implemented a number of measures that permit certain operators approved by the MIIT to lease and repackage mobile services for sale to end customers. On May 17, 2013, the MIIT announced that it would accept applications from non-State-owned companies to, on a trial basis, lease mobile services from China Unicom, China Telecom or us and provide mobile services to end customers after repackaging these services. In recent years, the PRC governmental authorities have taken moreindustry, including stringent measures to enforce the PRC Anti-Monopoly Law, such as the anti-monopoly investigation in 2012 undertaken by the National Development and Reform Commission, or the NDRC, which remains ongoing, of other PRC telecommunication companies over certain pricing practices with respect to Internet dedicated leased line services provided by them to Internet service providers. Any amendments to the PRC Anti-Monopoly Law or any changes to the PRC anti-unfair competition regime, in particular those on the telecommunications industry, may subject us to more stringent anti-monopoly and anti-unfair competition regulation. As a result of the regulatory measures, the competitive landscape in the PRC telecommunications industry may further diversify, causing more intensified competition. The implementation

Furthermore, the evolution of asymmetrical and other regulatory measures could materially harm our competitive position, which could in turn significantly reduce our revenues and profitability, and our financial condition and results of operations also may be materially and adversely affected.

We may encounter difficulties and challenges in developing and implementing TD-LTEtelecommunication technologies and developing our 4G services.

We are developing and conducting our 4G business based onservices has changed the TDD mode long-term evolution, or TD-LTE, technology.competitive landscape in the telecommunications industry in Mainland China. On December 4, 2013, the MIIT granted to CMCC, China Telecom and China Unicom permissions to operate TD-LTE businesses, and CMCC received permission to operate a TD-LTE business through us. We have subsequently launched our 4G services and rapidly expanded our 4G network. As of March 31, 2016,one hand, the number of 4G customers reached 376.5 million. However, we expect that we will continue to face intenseintensified competition in the delivery of 4Gnew products and services from China Telecom and China Unicom, which have received permits to operate their 4G services based mainly on FDD-LTE technology. Since FDD-LTE technology is more widely used globally than TD-LTE technology and enjoys more mature value chains, we expect that our competitors’ use of FDD-LTE technology will continue to pose competitive challenges to our 4G business. Asas a result we cannot assure you that our implementation of TD-LTE technology and provision of telecommunications services based on TD-LTE technology will achieve the expected results.

In addition, we expect to make substantial investments in the development of our 4G services, including construction of infrastructure networks and base stations. Accordingly, the amount of our capital expenditures in future years could remain high. We incurred capital expenditures of approximately RMB79.1 billion in connection with 4G networks in 2015, and we estimate to incur capital expenditures of approximately RMB75.7 billion in 2016 for the same purpose. See “Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources — Capital Expenditures” for more information on our expected capital expenditures. If we are unable to provide 4G services in a commercially viable manner, our ability to realize benefits from our significant capital investment and expenses in our networks and 4G services will be limited, and our operating revenue and profit from operations could decrease materially.

There remain uncertainties in connection with the future operation of the China Tower Corporation Limited (or China Tower, formerly known as China Communications Facilities Services Corporation Limited).

China Tower was established in July 2014 by China Mobile Communication Co., Ltd. or CMC, our wholly-owned subsidiary, China United Network Communications Corporation Limited, a wholly-owned subsidiary of China Unicom (Hong Kong) Limited, or China Unicom, and China Telecom Corporation Limited, or China Telecom for, among others, the construction, maintenance and operation of telecommunications towers, the construction, maintenance and operation of ancillary facilities and the maintenance of base station equipment. On October 14, 2015, CMC entered into an agreement on transfer of telecommunications towers and related assets for issuance of consideration shares and payment in cash, or the Transaction Agreement, with China United Network Communications Corporation Limited, China Telecom Corporation Limited, China Reform Holdings Corporation Ltd. and China Tower, pursuant to which CMC, China United Network Communications Corporation Limited and China Telecom Corporation Limited shall transfer their telecommunications towers and related assets to China Tower, and China Reform Corporation shall subscribe for new shares in China Tower in cash. The transfer of telecommunications towers and related assets was completed on October 31, 2015. As of March 31, 2016, we indirectly owned 38% equity interest in China Tower through CMC. We are in the process of negotiating the definitive usage arrangements with China Tower with respect to telecommunications towers. See “Item 4. Information on the Company — The History and Development of the Company — Industry Restructuring and Changes in Our Shareholding Structure.”

-9-

The purpose of establishing China Tower is to reduce the overall capital expenditure and operational costs and redundant projects of the three major telecommunications operators and to improve network coverage of the operators. However, because the operations of China Tower are still at a preliminary stage and we do not control China Tower, China Tower may not act in the best interests of us, and there are uncertainties as to whether the services of China Tower can sufficiently support our business needs and plans, in particular, our plan to expand our 4G business, and whether China Tower can fulfill any usage arrangements to be agreed with us and properly operate, maintain and manage its assets.

Furthermore, since it is expected that none of us, China Unicom or China Telecom will construct any telecommunications tower after the establishment of China Tower, our business will rely on any usage arrangements with China Tower. We cannot assure you that we are able to use telecommunications towers and related assets on terms and conditions we desire. In particular, according to our preliminary discussion with China Tower, certain factors affecting usage pricing under discussion may be beyond our control, including inflation, real estate market and steel price fluctuation. In addition, the usage arrangements under discussion may provide for a pricing adjustment mechanism under which the fees to be charged to CMC may be adjusted upon the negotiation of the parties after considering all relevant facts and circumstances if there is a material change in the actual operations, operating data and forecast of China Tower. In addition, establishment of China Tower may allow our competitors to expand their 4G networks and businesses at a faster pace, which may, in turn, reduce our competitive advantages. Failure of China Tower to fulfill any usage arrangements to be agreed with us or properly operate, maintain and manage its assets or to provide stable services to us could adversely affect the quality of our networks, which may materially and adversely affect our business or competitiveness, as well as our financial condition and results of operations.

Rapid development of new technologies newcould reduce our tariff rates, increase our customer acquisition cost and decrease our market share as customers choose to receive telecommunications and related services and products, and new business models, including Over The Top products such as instant voice and messagingfrom other providers. On the other hand, the increased competition fromnon-traditional telecommunications services may have a material adverse effect on our business, financial condition and results of operations.

The rapid development ofproviders brought by new technologies newand services, and products, and new business models has resulted in distinctions between local, long-distance, wireless, cable and Internet communication services being lessened and has brought new competitors into the telecommunications market. As a result, we are subject to increasing competition from non-traditional telecommunications services providers, such as Internet service providers, mobile software and applications developers and equipment vendors, as they gain an increasing share of the telecommunications industry value chain.pose challenges to us in retaining existing customers and market position. These new competitors compete against us in both voice and data businesses by offering mobile Internet access and Over The Top productsservices, such as instant voicemessaging, Voice over Internet Protocol, or VoIP, services, or audio or video content services delivered over the Internet. In addition, the strategic cooperation between Internet service providers and messaging services, and other mobile services.telecommunications operators is reshaping the competition in the telecommunications market. See “— Changes in the technology and business models of the PRC telecommunications industry may render our current technologies and business model obsolete, and intensifywe may encounter difficulties and challenges in developing and implementing new technologies and services.” In addition, although currently we are rapidly expanding our wireline broadband services, we obtained permission to enter into the wireline broadband market later than the other two telecommunications operators, and we cannot assure you that our wireline broadband businesses may not be constrained by the first-mover advantages of our competitors or any other factors arising from the competition in the wireline broadband market.

-5-

As part of changes in our marketing model, we may, depending on the competitive environment, offer more tariff promotions to our customers, which may negatively impact our revenues and profit margins. In the meantime, our competitors are expanding their network coverage and offering discounts to their tariff plans, which may affect our ability to retain our customers. As a result of the above, we cannot assure you that we will not offer discounts comparable to, or more favorable than, those offered by our competitors or experience increases in churn rates as competition intensifies, which may materially reduce our results of operations and profit margin. Moreover, we cannot assure you that any potential change, and in particular, any further restructuring in the competitive landscape of the telecommunications industry in Mainland China, would not have a material adverse effect on our business, financial condition and results of operations.

Moreover, the PRC government has implemented a number of measures that permit certain operators approved by the MIIT, to lease telecommunications infrastructure and repackage mobile services for sale to end-customers. Since May 1, 2018, subject to MIIT’s approval,non-state-owned companies, state-owned companies and foreign invested enterprises are allowed to lease mobile services from China Unicom, China Telecom or us and provide mobile services to end-customers after repackaging these services. As of December 31, 2018, 17 companies had entered into agreements with us for provision of mobile services toend-customers. We face intense competition from telecommunications services providers that use alternative technologies,these new mobile network operators in light of such policy and decisions by the MIIT. In particular, increased competition may cause tariff rates to further decline, which could in turn materially and adversely affect our business, financial condition and results of operations.

Our ability to compete effectively will also depend on how successfully we respond to various factors affecting the development of the telecommunications industry in Mainland China, including changes in consumer preferences and demand for existing and new services. We cannot assure you that the measures we are taking in response to these competitive challenges will achieve the expected results.

Changes in the technology and business models of the PRC telecommunications industry may render our current technologies and business model obsolete, and we may encounter difficulties and challenges in developing and implementing new technologies and services.

In recent years, the telecommunications industry in Mainland China has been characterized by rapidly changing and increasingly complex technologies. Accordingly, although we strive to keep our technologies up to international standards, the mobile technologies that we currently employ may become obsolete. Moreover, the rapid development of new technologies, new services and products and new business models has also accelerated the convergence of local, long-distance, wireless, cable and Internet communication services, resulted in new competitors entering the telecommunications market position.”and changed customer behaviors. We are thus required to implement new technologies, develop new services and adjust our business strategies in order to adapt to and maintain our share of the evolving value chain of the telecommunications industry in Mainland China. In order to meet the challenges posed by changes in the technology and business models of the PRC telecommunications industry, we have striven to promote the transition from voice to data traffic operations, from mobile communication services to innovative full services, and from communication services to digital services. We cannot assure you that the measures we are taking in response to those challenges will achieve the results we expect.

Revenue generated from our wireless data traffic grew substantially in 2015, partly2018, mainly due to continued increased penetration of smartphones and improvements in our services provided on our upgraded networks with the developmentexpansion of our 4G technologynetwork, enhanced data service customer experience, widespread use of mobile applications and services.a number of preferential tariff plans launched in 2018. However, there is no guarantee that our wireless data traffic business will continue to grow rapidly or that any increase in revenue generated from wireless data traffic will offset any decrease in our voice services revenuerevenue. The development of 4G business and revenue generated from SMStechnology requires substantial investments. However, there is no guarantee that our investments and MMS and other services. We cannot assure you that the measures we are taking in response to these challengesefforts will achievedeliver the results we expect.

We face a numberdesire. See “— Our continued investments in the construction of risks relating to our Internet-related services.infrastructure network may not adequately address the issues resulting from the substantial increases in data traffic or otherwise achieve the desired outcomes.”

We currently provide certain Internet-related services, including mobile Internet,home digital services, mobile payment, digital content and certainother applications and information services. We face a number of risks in providing these services.

Our network may be vulnerable to unauthorized access, computer viruses and other disruptive problems. We cannot assure you that the security measures we have implemented will not be circumvented or otherwise can fully protect the integrity of our network, including our mobile network. Unauthorized access could jeopardize the security of confidential information stored in our customers’ computer systems and mobile phone systems and may subject us to litigation, liabilities for information loss and/or reputational damage. Eliminating computer viruses and other security problems may also require interruptions, delays or suspension of our services, reduce our customer satisfaction and cause us to incur costs.

In addition, because we provide connections to the Internet and host websites for customers and develop Internet content and applications, we may be perceived as being associated with the content carried over our network or displayed on websites that we host. We cannot and do not screen all of such content and may face litigations due to a perceived association with such content. These types of litigations have been brought against other providers of online services in the past. Regardless of the merits of the litigations, they can be costly to defend, divert management resources and attention, and may damage our reputation.

-10-

Moreover, theThe development of our Internet-related services depends on our ability to continue to expand and innovate our Internet-related services.services and take advantage of our strategic cooperation with renowned Internet service providers. However, our competitors, including telecommunications operators, Internet service providers and technology companies, have also been developing the same services, which has increased the competition in this area. If we cannot develop or expand our Internet-related services as we anticipated, or if we develop or expand our Internet-related services at a pace slower than that of our competitors, our Internet-related services may not be as successful and we may not be able to maintain steady growth in our revenue from our Internet-related services.

Failure to capitalize on

-6-

As the implementation of our business strategies, as well as the development of new business opportunitiesbusinesses, such as mobile Internet, Internet of Things, or IoT, information and communication technology, or ICT, cloud computing and big data, require significant time, financial and other resources and involve substantial risks, we may substantially reduce our growth potential.

We may pursue acquisitions or otherwise make investments in other business opportunities as such opportunities arise. We cannot assure you that we will be successful in pursuing such acquisitions or investments or will otherwisenot be able to successfully integrate any acquired business intoimplement our existing operations. Our ability to capturestrategies, launch or develop such new business opportunities may also depend on the availability of sufficient financing from internal as well as external sources. Any failure to capitalize on new business opportunities may materially harm our competitive position, as well as materially reduce our future profitability and growth.

We through our wholly-owned subsidiary China Mobile Group Guangdong Co., Ltd.,businesses in time, or Guangdong Mobile, hold a 18.98% equity interest in Shanghai Pudong Development Bank, or SPD Bank as of March 31, 2016. We also have a strategic cooperation agreement with SPD Bank, pursuant to which we cooperate with SPD Bank in the areas of Internet finance and mobile payment businesses. See “Item 4. Information on the Company — Business Overview — Investments and Acquisitions.” SPD Bank’s profitability is impacted to some extent by macroeconomic conditions and changes in monetary and fiscal policies in Mainland China, and we cannot assure you that our investment in SPD Bank will achieve the desired level of return. If we encounter difficulties in carrying out our cooperation with SPD Bank, the prospects of the Internet finance and mobile payment businesses contemplated to be jointly developed by us and SPD Bank may be materially and adversely affected. Furthermore, expected benefits from our investment in networks, licenses and new technologies may not be realized.

In August 2012, CMC entered into a share subscription agreement with IFLYTEK CO., LTD., or IFLYTEK, a company listed on the Shenzhen Stock Exchange. The share subscription was completed on April 24, 2013. Concurrent with the share subscription, we and IFLYTEK also entered into a strategic cooperation agreement and, in December 2015, renewed the agreement to cooperate in various areas, including smart voice businesses, content-based businesses, customer services, basic telecommunications businesses and informatization of the telecommunications industry and other areas upon the parties’ written agreement. In collaboration with IFLYTEK, we launched “Lingxi”, a smart voice assistant application. We cannot assure you that our investment in IFLYTEK will achieve the desired level of return or the strategic cooperation will produce the expected benefits, if at all.

In June 2014, China Mobile International Holdings Limited, or CMI Holdings, our wholly-owned subsidiary, entered into a share subscription agreement with True Corporation Public Company Limited, or True Corporation, a major national telecommunications provider in Thailand, pursuant to which CMI Holdings agreed to subscribe for ordinary shares of True Corporation representing, following the completion of the subscription, 18% of the total issued and outstanding shares of True Corporation, for a total consideration of Baht 28.57 billion (approximately RMB5.51 billion). The subscription was completed in September 2014. Also in June 2014, we entered into a cooperation memorandum, and, in September 2014, we entered into a strategic cooperation agreement with True Corporation to explore business cooperation opportunities in various areas, including products or value-added services or contents, international businesses, network, device procurement, general procurement and human resources. We cannot assure you that our investment in True Corporation will achieve the desired level of return or that the intended cooperation will produce the expected benefits, if at all.

In May 2015, CMC entered into a partnership agreement with State Development & Investment Corp., or SDIC and China Mobile Fund Management Co., Ltd., or CMFM, to establish China Mobile Fund, to make investments in companies with growth potential which are engaged in the mobile Internet and related upstream and downstream businesses. Pursuant to such partnership agreement, CMC has made capital commitments of RMB1,500 million and has become a limited partner of China Mobile Fund. As of December 31, 2015, CMC had contributed RMB360 million to China Mobile Fund and had a commitment to make a further investment in the amount of RMB1,140 million upon the request by China Mobile Fund. We cannot assure you that China Mobile Fund will achieve the desired level of return.

-11-

In November 2015, China Mobile TieTong Company Limited, or CM TieTong, our wholly-owned subsidiary, entered into an agreement on transfer of business and assets of China TieTong Telecommunications Corporation, or the Acquisition Agreement, with China TieTong Telecommunications Corporation, or China TieTong, a company engaging in wireline broadband telecommunications operations and a wholly-owned subsidiary of CMCC, pursuant to which CM TieTong has agreed to acquire Target Assets and Businesses of China TieTong, for a final consideration of RMB31,967 million. The acquisition was completed in December 2015. We expect that our acquisition of Target Assets and Businesses from China TieTong will facilitate our transformation into a full service operator offering both fixed-line and mobile services, enable us to seize the opportunities in the wireline broadband market, expand our customer base, offer integrated services consisting of the wireline broadband and the mobile services, and increase our wireline broadband network capacity, coverage and efficiency through an integrated network. We cannot assure you that such acquisition of Target Assets and Businesses from China TieTong will achieve the desired level of return or otherwise produce the expected benefits, if at all, and that our plan of achieving integrated development of wireline broadband and mobile services will be successful or we can maintain steady growth in our revenue from our wireline broadband services.

We have established certain subsidiaries to carry out specialized operations, such as China Mobile Group Device Company Limited, or China Mobile Device, China Mobile International Limited, or China Mobile International, China Mobile M2M Company Limited, China Mobile Online Services Company Limited, China Mobile (Suzhou) Software Technology Company Limited, China Mobile (Hangzhou) Information Technology Company Limited, MIGU Company Limited and China Mobile Internet Co., Ltd., and we expect to further enhance our operational efficiency by establishing other subsidiaries that operate certain other aspects of our businesses. We cannot assure you, however, that this business model would be sustainable or that we will achieve the expected benefits.

Changes in technology and business models We may render our current technologies and business model obsolete and intensify competition from providers offering telecommunications services using alternative technologies, which could materially and adversely affect our business and market position.

In recent years, the telecommunications industry in Mainland China has been characterized by rapidly changing and increasingly complex technologies. Accordingly, although we strive to keep our technologies up to international standards, the mobile technologies that we currently employ may become obsolete. In addition, the development and application of new technologies involve time, substantial costs and risks. We mayalso encounter unexpected technological difficulties in developing and implementing new technologies and, as a result, may incur substantial costs or services disruptions, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Moreover,Our tariff reduction and future policy developments in the rapidtelecommunications industry in relation to tariff reduction may continue to adversely affect our financial conditions.

From time to time, we need to adjust our tariff plans as part of our business strategy and in some cases in accordance with PRC national policies, and such adjustments may have a material negative impact on our revenue and profitability. In May 2015,the PRC government introducedthe new national policy of “speed upgrade and tariff reduction. ” Since May 2015, in response to the expectations of the general public and customers and in order to implement the said national policy, we have, in addition to continue enhancing network capacity and increasing network speed, offered discounts to our tariff plans. With respect to our data traffic tariff, we launched in October 2015 an unused data traffic carry-over program for our mobile monthly plans that are charged based onpre-determined data traffic, according to which customers could carry over their monthly plan’s remaining unused data traffic to the following month. In May 2017, we rolled out a series of preferential data traffic plans as one of our tariff reduction measures. In 2017, we also substantially reduced the Internet dedicated line tariffs for small and medium enterprises. Furthermore, in response to the government initiative in furtherance of the “speed upgrade and tariff reduction” policy in March 2017, we cancelled all handset domestic long-distance and roaming tariffs since September 1, 2017 and reduced international long-distance call tariffs. In March 2018, the PRC government announced additional policy on network speed upgrade and tariff reduction. Starting from July 1, 2018, we no longer charge tariffs for domestic data roaming. Additionally, in 2018, we launched a number of preferential tariff plans for our mobile data services, household broadband services, dedicated line services and international roaming services. See “Item 4. Information on the Company — Business Overview — Tariffs.”

Such measures have resulted in a decline in revenue from voice services in 2018 and asserted pressure on the growth of revenue from data services, which in turn had a negative impact on our overall revenue and profitability. In addition, in March 2019, the PRC government in its 2019 work report introduced further “speed upgrade and tariff reduction” measures, including directives to (i) further reduce the broadband tariffs for small and medium enterprises by 15% on average and the tariffs for handset data by no less than 20% on average, and (ii) implement mobile number portability programs, which allow customers to switch mobile carriers while retaining their numbers, in Mainland China by the end of 2019. See “Item 4. Information on the Company — Business Overview — Tariffs.” As we might be required to further adjust our tariffs or take other initiatives under the “speed upgrade and tariff reduction” policy or other similar policies to be issued by the PRC government in the future, we cannot assure you that our financial condition and results of operations would not be materially and adversely affected by these policies.

We may encounter difficulties and challenges in the research and development of new5G technologies newand commercializing 5G services.

We have been actively engaged in 5G-related research and development, or R&D, activities and are involved in setting 5G standards. In December 2018, the MIIT granted CMCC, our parent company, a permit to use the frequency bands of 2515MHz-2675MHz and 4800MHz-4900MHz for the trial of the 5G system in Mainland China. The MIIT allocated the frequency bands of 3500-3600MHz and 3400-3500MHz to China Unicom and China Telecom, respectively, for their own 5G trial programs. See “Item 4. Information on the Company — Business Overview — Research and Development — Setting Technical Standards and Promoting Industry Development.”

-7-

Our5G-related R&D efforts require us to devote financial and operational resources, and we expect to make substantial investments in the construction of the infrastructure of our future 5G network. We have been exploring optimal business models for our future 5G services. However, there exist significant uncertainties in the prospects of our R&D efforts, the amount of time and financial and operational resources needed to develop commercially viable technologies, the capital expenditures needed to construct the necessary infrastructure, our suppliers’ ability to manufacture equipment and devices supporting the infrastructure of 5G system as well as future expansion of 5G technologies in the vertical industries, therefore, we cannot assure you that we will be able to develop ideal business models and roll out 5G services in a timely and desirable way.

In addition, compared to the frequency bands allocated to China Unicom and China Telecom, those available to us are less technically developed and may pose more operational challenges initially. Therefore, we may not be in the best position in the development of 5G technologies. Further, China Unicom and China Telecom have been directed by the MIIT to cease to use certain frequency bands that overlap with those allocated to CMCC for the trial of the 5G system, for which, we have no control over whether the use of those frequency bands will be discontinued as scheduled. In the meantime, we are also in the process of making technical adjustments to our existing network and putting aside certain frequency bands currently being used for 4G services for the trial of the 5G system. Any significant delay in such reallocation of the frequency bands from other operators or among our own networks could add time pressure on or cause additional costs in our development of 5G technologies and our 4G services may also be temporarily discontinued in certain areas or otherwise disrupted during such transition. If we are unable to launch 5G services in a timely and commercially viable manner, the expected benefits from our significant investment in the R&D of 5G technologies and relevant infrastructure construction would not be fully realized or if at all, which in turn could materially and adversely affect our business, financial conditions and results of operations.

We are subject to risks associated with our telecommunications equipment suppliers and other business partners which could be adversely affected by restrictions, sanctions or other legal or regulatory actions under relevant laws and regulations in various jurisdictions which in turn could adversely affect the supply chain and our business operations.

We procure our telecommunications network equipment and related maintenance and technical support from certain PRC and overseas telecommunications equipment suppliers. See “Item 4. Information on the Company — Business Overview — Mobile Networks.” We also transact business with our business partners who may operate globally. As these parties operate globally and are therefore subject to the laws and regulations in various jurisdictions, any restrictions, sanctions or other legal or regulatory actions could cause disruptions or other material difficulties in their business activities to the extent any government of the relevant jurisdictions imposes any restrictions on their import and export activities, or sanctions or other legal or regulatory actions against the suppliers and other business partners in connection with their business activities. The relevant jurisdictions include, among others, the United States, the European Union and the United Nations Furthermore, as the supply of our telecommunications equipment relies on a global supply chain which is vulnerable to significant disruptions in the supply of parts and other items that are necessary for the relevant manufacturing activities. Such disruptions could prevent those affected suppliers from delivering equipment and services to us in accordance with the agreed terms of supply, which in turn could negatively affect our business operations. For example, we may not be able to find suitable alternative suppliers for the affected equipment in a timely manner. Even if we are able to find alternative suppliers, the commercial terms may not be comparable, and we could therefore be subject to a higher procuring cost. Furthermore, if any of our suppliers raises their prices due to an increase in international trade tariffs, we could be subject to a higher cost in procuring the relevant products. We may experience a significant delay in implementing the part of our business plans that relies on delivery of the affected network equipment and difficulties in timely improving our services that rely on those suppliers for upgrading our networks and related software and applications. Any of these and other consequences could materially adversely affect our business, results of operations, financial condition and prospect and cause a significant volatility in and a decline in our share price.

-8-

Current or future asymmetrical and other regulatory measures adopted by the PRC regulatory authorities could materially harm our competitive position or enhance competition in the telecommunications industry.

The PRC government has extended favorable regulatory policies to some of our competitors in order to help them become more viable competitors to us. For example, the MIIT has decided to make asymmetrical changes, effective January 1, 2014, to the public telecommunications network interconnection settlement standards of basic telecommunications operators in Mainland China. As a result of these changes, when mobile users of China Telecom and China Unicom and our mobile users in Mainland China (excludingTD-SCDMA users with certain specified prefix numbers) make calls to each other, the settlement charges payable by China Telecom and China Unicom to us were adjusted from RMB0.06/minute to RMB0.04/minute, while the settlement charges payable by us to China Telecom and China Unicom remained at RMB0.06/minute. The MIIT expects to assess the above interconnection settlement policy once every two years based on the development conditions of the telecommunications market and will make adjustments when appropriate. See “Item 4. Information on the Company — Business Overview — Interconnection.” Additionally, in 2016, the MIIT approved China Telecom and China Unicom to refarm their respective spectrum by reallocating the frequencies initially allocated to 2G and 3G services to 4G services. Compared to the higher frequencies allocated to 4G, frequencies allocated to 2G and 3G services are lower, therefore they can reach farther and have less penetration loss. As a result, the spectrum refarming would facilitate such operators to raise the overall network quality at a lower cost. We received the permission to provide 4G services based on the LTE FDD technology on April 3, 2018 and our parent company, CMCC, was approved by the MIIT to refarm the frequency band of 1800 MHz, which was initially allocated to 2G services, and productsdeploy such frequency band for use in LTE FDD, IoT and new business models has also acceleratedNarrowband Internet of Things, orNB-IoT services nationwide prior to the convergenceexpiration of local, long-distance, wireless, cablesuch approval at the end of 2019. We cannot assure you that we will be able to get more spectrum or maintain the existing spectrum at that time. Constrained by the frequency spectrum available to us, we may not effectively compete with these operators in our provision of 4G services. See “— Our future network capacity growth may be constrained by the frequency spectrum available to us.” Moreover, in December 2018, the MIIT granted CMCC, our parent company, a permit to use the frequency bands of 2515MHz-2675MHz and Internet communication services4800MHz-4900MHz for the trial of the 5G system in Mainland China. CMCC plans to conduct such trial through us. The MIIT allocated the frequency bands of 3500-3600MHz and resulted3400-3500MHz to China Unicom and China Telecom, respectively, for their own 5G trial programs. Compared to frequency bands allocated to China Unicom and China Telecom, those available to us are less technically developed and may pose more operational challenges initially. Therefore, we may not be in new competitors enteringthe best position in the development of 5G technologies. See “— We may encounter difficulties and challenges in the research and development of 5G technologies and commercializing 5G services.”

The implementation of asymmetrical and other regulatory measures could materially harm our competitive position or enhance competition in the telecommunications market. See “— Rapid developmentindustry, which could in turn significantly reduce our revenues and profitability, and our financial condition and results of new technologies, new servicesoperations also may be materially and products, and new business models, including Over The Top products such as instant voice and messaging services, mayadversely affected.

-9-

Cyber attacks could have a material adverse effect on our business, financial condition and results of operations.”operations and financial condition.

The intensified competitive landscape requires usCyber attacks, including through the use of malware, computer viruses, distributed denial of services attacks, credential harvesting and other means for obtaining unauthorized access to implement new technologies and develop new businesses in order to adapt to and maintain our share ofor disrupting the evolving value chain of the telecommunications industry in Mainland China. In order to meet the challenges posed by changes in technology and business models, we have striven to promote the development and transition from voice to data traffic operations, from mobile communication services to innovative full services, and from communication services to digital services. However, as the implementation of the componentsoperation of our strategy,telecommunications networks and systems and those of our suppliers, vendors and other service providers, could have an adverse effect on our business. Cyber attacks may cause equipment failures, loss of information, data security breaches, including sensitive personal information of customers or employees or valuable technical and marketing information, as well as disruptions to our operations or our customers’ operations. As a telecommunications operator, we are considered a critical information infrastructure operator under the development of new businesses,relevant PRC law and therefore may be more likely to be targeted by cyber-attack activities. We devote significant resources to telecommunications network security, data security and other security measures to protect our systems and data, such as mobile Internet, Internet of Thingsdeploying network protection devices, performing regular security assessment and cloud computing, require significant time, financial and other resources and involve substantial risks, we may not be able to successfully implementanonymizing personal data. See “Item 4. Information on the components of our strategy, launch or develop such new businesses within a short time period, or otherwise achieve the expected benefits.

-12-

Company — Business Overview — Information Systems” for details. We cannot assure you that the security measures we have implemented will not be bypassed or otherwise can fully protect the integrity of our telecommunications network, including our mobile network. The economic costs to us to eliminate or alleviate cyber attacks could be significant and may be difficult to estimate or calculate because the loss may differ based on the identity and motive of the programmer or hacker, which are often difficult to identify. Further, the perpetrators of cyber attacks are not restricted to specific groups or persons. These attacks may be committed by company employees or external actors operating in any geography, including jurisdictions where law enforcement measures to address such attacks are unavailable or ineffective, and may even be launched by or at the behest of nation states. While, to date, we have not been subject to cyber attacks which, individually or in the aggregate, have been material to our operations or financial condition, the preventive actions we take to reduce the risks associated with cyber attacks, including protection of our systems and networks, may be insufficient to repel or mitigate the effects of a major cyber attack in the future.

The inability to operate our telecommunications networks and systems or those of our suppliers, vendors and other service providers as a result of cyber attacks, even for a limited period of time, may result in significant expenses to us, and a loss of market share to other telecommunications operators. The potential costs associated with these attacks could exceed the insurance coverage we maintain. In addition, if we fail to prevent the theft of valuable information such as financial data, sensitive information about our intellectual property, or if we fail to protect the privacy of customer and employee confidential data against cyber attacks or any other types of data security breaches, it could result in lawsuits, government claims, investigations or proceedings, and damage to our reputation, which could adversely impact customer and investor confidence. Any of these occurrences could result in a material adverse effect on our results of operations and financial condition.

Our continued investments in the construction of our infrastructure network may not adequately address the issues resulting from the substantial increasessubstantial increases in data trafficor otherwise achieve the desired economic returnsoutcomes..

Our wireless data traffic business has experienced significant growth in recent years, which has contributed to the growth of our operating revenue and provides our business with further opportunities for development. In addition, we have launchedexpect our TD-LTE4G services which are expectedto continue to drive further growth in data traffic. The continued substantial increase in data traffic resulting from the growth of our wireless data traffic business, our TD-LTE business and the proliferation of smartphones significantly strains the existing capacity of our telecommunications network infrastructure, which we expect to make continuous investments to improve. Accordingly, the amount of our capital expenditures in future years could remain high. We incurred capital expenditures of RMB167.1 billion in 2018, which was spent primarily for the purposes of strengthening 4G network capacity in targeted areas, boosting broadband quality and speed, reinforcing the corporate market, bolstering transmission, improving IT support and so forth. We expect to incur capital expenditures of approximately RMB149.9 billion in 2019 (excluding 5Gpre-commercial use) and the total capital expenditure for 2019 (including 5G pre-commercial use) will be less than the total capital expenditure for 2018. Capital expenditure in 2019 will serve for a variety of purposes which primarily include catering for the growth of 4G data traffic, raising broadband quality and speed, securing investments for the corporate market, laying a solid foundation for our transformational development and promoting network evolution and upgrades. See “Item 5. Operating and Financial Review and Prospects — Liquidity and Capital Resources — Capital Expenditures” for more information on our expected capital expenditures. Moreover, our increased efforts to facilitate the commercialization of 5G technologies and services require investment in the construction of relevant network infrastructure. As a result, we have made and will continue to make substantial investments in the construction of our infrastructure network, including our TD-LTE infrastructure, to carry the increasing data traffic.traffic in the new generation of technology. We cannot assure you that these investments would successfully address the issues resulting from the substantial increases in data traffic or otherwise achieve the desired economic returns.outcomes.

-10-

We may suffer damage to our reputation and financial losses due to communications fraud carried out on our network.

Communications fraud in Mainland China poses a risk to our business. As we provide connections to the network and host websites for customers and develop Internet content and applications, we may be perceived as being associated with the content distributed through our network or displayed on websites that we host. If communications fraud is committed over our network, we may incur liability as a result of the inadequacy in our measures to prevent such fraud under relevant PRC laws and regulations, including but not limited to the Announcement on Preventing and Cracking Down on Telecom and Internet Frauds jointly released by the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, the MIIT, the People’s Bank of China and the China Banking Regulatory Commission on September 23, 2016, the Implementation Opinions on the Work of Further Prevention and Crack Down on Communications Fraud issued by the MIIT on November 7, 2016 and the Opinions on Several Issues concerning the Application of Law to the Handling of Criminal Cases Involving Telecom and Internet Frauds jointly released by the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on December 19, 2016. We have carried out various technical and administrative measures to control and prevent such fraud. For example, we have implemented the real-name registration system for our customers in accordance with the requirements of government authorities, developed a number of anti-fraud systems to detect and intercept fraud calls, spam SMS and smartphone malware, refined our customer service to facilitate the instant reporting of fraud, and strengthened the protection of customers’ personal data from unauthorized access and leakage. See “Item 4. Information on the Company — Business Overview — Sales and Customer Services — Service Quality.” However, we cannot and do not screen all of the information distributed through our network or websites. There is no assurance that our measures to prevent or detect fraud will work effectively. Litigations arising from the claims of communications fraud have been brought against other providers of online services in the past. Regardless of the merits of the litigations, they can be costly to defend, divert management resources and attention, which could in turn damage our reputation and have an adverse effect on our business and results of operations.

We face risks relating to our acquisitions, investments and specialized subsidiaries.

We made acquisitions of and hold investments in other entities, with some of which we also established contractual arrangements such as the strategic cooperation. Such investments and acquisitions include our equity interest in Shanghai Pudong Development Bank, or SPD Bank, China Tower, IFLYTEK CO., LTD., or IFLYTEK, True Corporation Public Company Limited, or True Corporation and China Mobile Innovative Business Fund (Shenzhen) Partnership (Limited Partnership), or China Mobile Fund, ShiJinShi Credit Information Services Co. Ltd., our joint venture with China Merchants Group, ChannelSoft (Beijing) Technology Co., Ltd., or ChannelSoft, and Xiaomi Corporation, or Xiaomi, and our acquisitions of business and assets of China Tietong, see “Item 4. Information on the Company — Business Overview — Investments and Acquisitions.” In the future, we may pursue additional acquisitions or otherwise make new investments in other business areas as such opportunities arise.

Furthermore, we have established certain subsidiaries to carry out specialized operations, such as China Mobile Financial Technology Company Limited, or China Mobile FinTech, China Mobile Group Device Company Limited, or China Mobile Device, China Mobile International Limited, or China Mobile International, China Mobile IoT Company Limited, China Mobile Online Services Co., Ltd., China Mobile (Suzhou) Software Technology Co., Ltd., China Mobile (Hangzhou) Information Technology Company Limited, MIGU Co., Ltd., or MIGU, China Mobile Internet Company Limited and China Mobile Investment Holdings Co., Ltd., or CMI Holdings. We expect to further enhance our operational efficiency by establishing other subsidiaries that operate certain other aspects of our businesses in accordance with our business development strategies.

We cannot assure you that our abovementioned investments will achieve the desired level of return, or that any strategic cooperation and integration will produce the expected benefits, if at all. The profitability of entities held by us is impacted to some extent by macroeconomic conditions and changes in monetary and fiscal policies in the countries and regions in which they operate. Moreover, if we encounter difficulties in carrying out our cooperation with our strategic cooperation partners or the integration with the target companies we acquired, the prospects of relevant business operations may be materially and adversely affected. In addition, we cannot assure you that the business model of each of the entities we held would be sustainable, and the expected benefits from our investment in networks, licenses and new technologies may not be realized.

-11-

Any failure to achieve and maintain effective internal controls could have a material adverse effect on our reputation, business, results of operations and the market prices of our shares and ADSs.

Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to prevent fraud. We are required to comply with various Hong Kong and U.S. laws, rules and regulations on internal controls, including the Sarbanes-Oxley Act of 2002. In particular, Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include a report of management on our internal control over financial reporting in our annual reports on Form20-F that contains an assessment by our management of the effectiveness of our internal control over financial reporting. In addition, our independent registered public accounting firm must issue an auditor’s report on the effectiveness of our internal control over financial reporting.

Internal controls may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. In addition, projections of any evaluation of the effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in operating conditions or a deterioration in the degree of compliance with our policies or procedures. As a result, even effective internal controls are able to provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal control over financial reporting, our management may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may disagree. If our independent registered public accounting firm is not satisfied with our internal control over financial reporting or the level at which our controls are designed or operated, or if the independent registered public accounting firm interprets the requirements, rules or regulations differently from us, it may decline to express an opinion on the effectiveness of our internal control over financial reporting or may issue an adverse opinion. Any of these possible outcomes could result in a loss of investor confidence in the reliability of our consolidated financial statements, which could cause the market prices of our ordinary shares and ADSs to decline significantly. In addition, any deficiency in our internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the New York Stock Exchange, regulatory investigations and civil or criminal sanctions.

Some employee misconduct, including misconduct by senior management, may not be detected or prevented in a timely manner, and such misconduct may damage our reputation and cause the trading price of our ordinary shares and ADSs to decrease significantly.

Certain of the management personnel of certain subsidiaries of our company and our subsidiariesCompany were alleged to have engaged in unlawful conduct in recent periods. Such allegations of unlawful conduct include the acceptance of bribes. While some of these incidents are still under investigation, we believe that such management misconduct are isolated incidents resulting from individual misconduct.

In order to further strengthen our internal system and policies for detecting and preventing similar and other misconduct, we havere-examined our policies and procedures and have implemented additional operational measures. In particular, with respect to our business cooperation arrangements with third parties, we have adjusted the model of business cooperation and have implemented more stringent policies and processes. These efforts are expected to reduce the probability of third parties engaging in improper business relationships with our employees. We have also further expanded the type of equipment, products and services that are subject to centralized procurement. Furthermore, we have implemented a rotation policy under which the management of our major operating subsidiaries will rotate among different subsidiaries every few years. In addition, we have revised our policy in relation to, and strengthened control over, the material investment projects. We have also provided ongoing compliance and ethics trainings to our employees.

-13-

As described above, we have taken various measures to prevent employee misconduct. We cannot assure you, however, that all misconducts or allegations of misconduct by our management and staff willcan be detected or prevented in a timely manner. If various measures we have taken prove ineffective in preventing employee misconduct, our reputation may be severely harmed, and the trading price of our ordinary shares and ADSs could decrease significantly.

-12-

Our success depends on the continued services of our senior management team and other qualified employees.

Our continued success and growth depends on our ability to identify, hire, train and retain suitably skilled and qualified employees, including management personnel, with relevant professional skills. The services of our directors and members of senior management are essential to our success and future growth. The loss of a significant number of our directors and senior management could have a material adverse effect on our business if we are unable to find suitable replacements in a timely manner. We also face fierce competitions with other telecommunication operators and technology companies in hiring and retaining qualified employees or other talents with skills tailored to our development. Therefore, we cannot assure you that we will always be able to attract and retain our desired personnel, and any failure to recruit and retain the necessary management personnel and other key personnel for our operations could have a material adverse impact on our business and results of operations.

We are controlled by CMCC, which may not always act in our best interest.

As of March 31, 2016,2019, CMCC indirectly owned approximately 72.72% of our outstanding shares. Accordingly, CMCC is, and will be, able to (i) nominate substantially all of the members of our board of directors and, in turn, indirectly influence the selection of our senior management; (ii) control the timing and amount of our dividend payments; and (iii) otherwise control or influence actions that require approvals of our shareholders.

The interests of CMCC as our ultimate controlling person may conflict with the interests of our minority shareholders. In particular, CMCC may take actions with respect to our business that may not be in our other shareholders’ best interest.

In addition, CMCC provides our operating subsidiaries in Mainland China with services that are necessary for our business activities. See “Item 5. Operating and Financial Review and Prospects—Prospects — Overview of Our Operations—Operations — Our Operating Arrangements with CMCC Have Affected and May Continue to Affect Our Financial Results.” Furthermore, we operate our 3G and 4G businesses pursuant to arrangements with CMCC, which was granted licenses by the PRC government to operate a 3G business based onTD-SCDMA technology and a 4G business based onTD-LTE technology and LTE FDD technology. The interests of CMCC as the provider of these services to our operating subsidiaries in Mainland China may conflict with the interests of us or our other shareholders.

We may conduct a public offering and listing of our shares in Mainland China, which may result in increased regulatory scrutiny and compliance costs as well as increased fluctuations in the prices of our ordinary shares and ADSs listed in overseas markets.

We may conduct a public offering and listing of our shares on a stock exchange in Mainland China. We have not set a specific timetable or decided on any specific form for an offering in the PRC. The precise timing of the offering and listing of our shares in Mainland China would depend on a number of factors, including relevant regulatory developments and market conditions. If we complete a public offering in Mainland China, we would become subject to the applicable laws, rules and regulations governing public companies listed in Mainland China, in addition to the various laws, rules and regulations that we are currently subject to in Hong Kong and the United States. The listing and trading of our securities in multiple jurisdictions and multiple markets may lead to increased compliance costs for us, and we may face the risk of significant intervention by regulatory authorities in these jurisdictions and markets.

In addition, under current PRC laws, rules and regulations, our ordinary shares listed on The Stock Exchange of Hong Kong Limited, or the Hong Kong Stock Exchange, will not be interchangeable or fungible with any shares we may decide to list on a Mainland China stock exchange, and there is no trading or settlement between these two markets. As a result, the trading prices of our ordinary shares listed on the Hong Kong Stock Exchange may not be the same as the trading prices of any shares we may decide to list on a Mainland China stock exchange. The issuance of a separate class of shares and fluctuations in its trading price may also lead to increased volatility in, and may otherwise materially and adversely affect, the prices of our ordinary shares and ADSs listed in overseas markets.

On November 17, 2014, the China Securities Regulatory Commission, or the CSRC, and the Hong Kong Securities and Futures Commission, or the SFC, launched a pilot scheme to allow investors in Mainland China to trade shares in designated companies listed on the Hong Kong Stock Exchange, including constituent stocks of the Hang Seng Composite LargeCap Indexes such as our ordinary shares, subject to certain quota limitations. We cannot predict the impact that this initiative will have on cross-border investment by investors in Mainland China or on the trading prices of our ordinary shares and ADSs.

-14-

Our future network capacity growth may be constrained by the frequency spectrum available to us.

Mobile network capacity is to a certain extent limited by the amount of frequency spectrum available for its use. Since the MIIT controls the allocation of frequency spectrum to mobile operators in Mainland China, the capacity of our mobile network is limited by the amount of spectrum that the MIIT allocates to our parent company, CMCC. For our Global System for Mobile Communications, or GSM, network, the MIIT has allocated a total of 45x2 MHz of spectrum in the 900 MHz and 1800 MHz frequency bands to be used nationwide for transmission and reception to our parent company, CMCC. In connection with our 3G business, the MIIT has allocated to CMCC, in various frequency bands, a total of 35 MHz of spectrum to be used for nationwide coverage and an additional 50 MHz of spectrum to be used for indoor coverage. In connection with our 4G business, the MIIT has allocated to CMCC, in various frequency bands, a total of 145210 MHz of spectrum to be used for nationwide coverage, including 2035 MHz of spectrum previously allocated for use by our 3G business for outdoor coverage and 50 MHz of spectrum previously allocated for use by our 3G business for indoor coverage. In addition, CMCC was approved by the MIIT to refarm the frequency band of 1800 MHz, which was initially allocated to 2G services, and deploy such frequency band for use in LTE FDD, IoT andNB-IoT services nationwide prior to the expiration of such approval at the end of 2019. There will be an uncertainty that we can get more spectrum or maintain the existing spectrum at that time. In addition, the refarming process could lead to discontinuation in certain services and affect customer experience, which may adversely affect our business and reputation. Under the existing agreement between CMCC and us, we have the right to use the allocated frequency spectrum in Mainland China. Additionally, the frequency bands that we are permitted to use for 5G trial programs may also constrain the development of our future network for 5G. See “— We may encounter difficulties and challenges in the research and development of 5G technologies and commercializing 5G services.” Furthermore, part of the frequencies initially allocated to our 4G services are expected to be reallocated for the 5G trial programs and we cannot assure you that our existing 4G services will not be negatively interfered during such process.

We believe that our current spectrum allocation is sufficient for anticipated customer growth in the near term. However, we may need additional spectrum to accommodate future customer growth or to further develop our 4G services.services, and the quality of spectrum available to us may affect our competitive position. We cannot assure you that we will be able to obtain additional spectrum from the MIIT that would meet our expectations or business needs on a timely basis. Our network expansion or upgrade plans may be affected if we are unable to obtain additional spectrum. This could in turn constrain our future network capacity growth and our market share, which would in turn materially and adversely affect our business and prospects as well as our financial condition and results of operations.

-13-

There remain uncertainties in connection with the future operation of China Tower.

China Tower was established in July 2014 by China Mobile Communication Co., Ltd, or CMC, our wholly-owned subsidiary, China United Network Communications Corporation Limited, or CUCL, a wholly-owned subsidiary of China Unicom, and China Telecom and as of March 31, 2019, we indirectly owned approximately 28% equity interest in China Tower through CMC. The purpose of establishing China Tower is to reduce the overall capital expenditures and operational costs and redundant projects of the three major telecommunications operators and to improve network coverage of the operators. We believe that participating in the establishment of China Tower will benefit our operation and business development in the following significant aspects: (i) to enhance our telecommunications network coverage ability, (ii) to save capital expenditures and optimize cash management, and (iii) to realize investment return from the equity investment in the long run. In order to achieve such purpose, on October 14, 2015, CMC entered into a transaction agreement on transfer of its then-owned telecommunications towers and related assets to China Tower. CMC entered into the Commercial Pricing Agreement, or the Lease Agreement on July 8, 2016 and a supplemental agreement on January 31, 2018 to lease from China Tower telecommunications towers and related assets. See “Item 4. Information on the Company — The History and Development of the Company — Industry Restructuring and Changes in Our Shareholding Structure” and “Item 7. Major Shareholders and Related Party Transactions — Related Party Transactions —Telecommunications Towers and Related Assets Lease Arrangement.”

China Tower has been benefiting us as desired since its establishment and is expected to continue to run smoothly, however, as we do not own a majority interest of, or otherwise control, China Tower, China Tower may not always act in the best interests of us, and there are uncertainties as to whether the services of China Tower can sufficiently support our business needs and plans, in particular, our plan to expand our 4G business, and whether China Tower can fulfill any usage arrangements to be agreed with us and properly operate, maintain and manage its assets. Additionally, since it is expected that none of us, China Unicom or China Telecom will construct any telecommunications tower after the establishment of China Tower, our business will rely on these telecommunications towers usage arrangements with China Tower. We cannot assure you that we are able to use telecommunications towers and related assets on terms and conditions we desire. In particular, the Lease Agreement provides for a pricing adjustment mechanism under which the fees may be further negotiated or agreed upon after considering any effects of inflation, significant fluctuations in the real estate market or the steel price, many of which are beyond our control. Furthermore, prior to the expiration of lease periods of individual towers, we have to negotiate with China Tower new leases of such towers. If we are unable to enter into any new leases or if we are able to enter into new leases but the lease terms are less favorable to us, our business operations, financial condition and results of operations may materially and adversely affected. Moreover, establishment of China Tower may enable our competitors to expand their 4G networks and businesses at a faster pace, which may, in turn, reduce our competitiveness and market share. Failure of China Tower to fulfill any usage arrangements with us or properly operate, maintain and manage its telecommunications tower assets or to provide stable services to us could adversely affect the quality and uninterrupted services of our networks, which would in turn materially and adversely affect our business operations as well as our financial condition and results of operations.

We are subject to reviews and inspections by governmental authorities and regulatory agencies.

We are subject to reviews and inspections by various governmental authorities and regulatory agencies. These reviews and inspections could cover a broad range of aspects in relation to our business and operations, including financial reporting, tax reporting, internal control and compliance with applicable laws, rules and regulations. For example, in 2017, the National Audit Office of the PRC, or the NAO, conducted an audit (the “Audit”) mainly on the financial revenue and expenditures for the year 2016 of CMCC, our parent company, and its subsidiaries. The Audit found that there were still some issues with CMCC requiring further improvement in areas such as its financial management and accounting as well as operations management, including certain isolated items involving several subsidiaries of us. While issues identified in the Audit have no material impact on the overall operating results, financial reports and effectiveness of internal controls of CMCC or its subsidiaries, we cannot predict the impact of any findings of other reviews, inspections and investigations to be carried out by the NAO or other governmental authorities and regulatory agencies in the future, and we cannot assure you that the outcome of any such reviews or inspections would not have a material adverse effect on our business, financial condition, results of operations, prospects and reputation.

We are currently subject to an on-going investigation by the State Administration for Market Regulation over alleged violation of the PRC Anti-Monopoly Law and we cannot assure you that the outcome of this investigation would not result in regulatory actions against us.

The State Administration for Market Regulation, or SAMR, which is the anti-monopoly regulatory authority in China, has been conducting an investigation (the “Investigation”) on four of our provincial subsidiaries over alleged violation of the PRC Anti-Monopoly Law in their sales activities involving customized 4G+ handsets. The Investigation concerns those sales activities, which are alleged to have restricted competition, involving paying subsidies to our distributors and setting sales performance targets on our handset manufacturers for purposes of increasing the sales of our specially customized 4G+ handsets. We have suspended such sales activities pending the on-going Investigation. The SAMR is responsible for the enforcement of the PRC Anti-Monopoly Law and relevant regulations, including promulgating related regulatory policies and guidelines, reviewing monopoly agreements, investigating into abuse of dominant market position and examining concentration of enterprises. It also has the power to issue orders and fines and confiscate gains deemed illegal or take other regulatory actions against wrongdoings. See “ Item 4. Information on the Company — Business Overview — Regulation — Market Regulation.” We have been cooperating with the SAMR during the Investigation and responding to SAMR’s formal requests for information and documents in a timely manner. While we currently cannot predict whether or when the SAMR will issue its decision, in the event that the SAMR issues a decision against us, we could be subject to regulatory actions, including administrative fines and orders, among others. While we could rely on procedures available to us under the PRC law to contest SAMR’s decision, including applying to the appropriate authorities for administrative reconsideration or initiate an administrative litigation, we cannot assure you that the outcome of the administrative reconsideration or the administrative litigation would be in favor of us. Additionally, we could also be subject to litigation involving claims under the PRC Anti-Monopoly Law and relevant regulations. Any SAMR’s findings of wrongdoings by us including any of our subsidiaries or any judicial decisions against us could damage our reputation and cause a decline in our stock price, and any fines or monetary damages that we might be required to pay could negatively affect our results of operations and financial condition.

-14-

Since our services require interconnection with networks of other operators, disruption in interconnections with those networks could have a material adverse effect on our business, profitability and growth.

Our mobiletelecommunications and related services depend, in large part, upon our interconnection arrangements and access to other networks. Interconnection is necessary in the case of all calls between our customers and customers of other networks. We have entered into interconnection and transmission line leasing agreements with other operators. Any disruption in our interconnection with the networks of other operators with which we interconnect due to technical or competitive reasons may affect our operations, service quality and customer satisfaction, and in turn our business and results of operations. In addition, any obstacles in existing interconnection arrangements and leased line agreements or any change in their terms, as a result of natural events, accidents, or for regulatory, technological, competitive or other reasons, could lead to temporary service disruptions and increased costs that could severely harm our operations and materially decrease our profitability and growth.

Compliance with the SEC’s new rule for disclosures on “conflict minerals” may be time-consuming and costly and could adversely affect our reputation.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted a new rule that applies to companies that use certain minerals and metals, known as conflict minerals, in their products, including certain products manufactured for them by third parties. The new rule will require companies that use conflict minerals in the production of their products to conduct due diligence as to whether or not such minerals originate from the Democratic Republic of Congo and adjoining countries and to file certain information with the SEC about the use of these minerals. We filed our conflict minerals report for the years ended December 31, 20132014, 2015, 2016 and December 31, 20142017 with the SEC, on May 30, 2014 and May 29, 2015, respectively, and our conflict minerals report for the year ended December 31, 20152018 is due May 31, 2016.2019. We will incur additional costs to comply with the new due diligence and disclosure requirements. In addition, depending upon our findings, or our inability to make reliable findings, about the source of any possible conflict minerals that may be used in any products manufactured for us by third parties, our reputation could be harmed, and there may also be disruptions to our business and strategy.

Risks Relating to the Telecommunications Industry in Mainland China

We are subject to extensive government regulation and any change in the regulatory environment in the PRC, especially with respect to the telecommunications industry, may materially impact us.

As a telecommunications operator in China, we are subject to regulation by, and under the supervision of, the MIIT, the primary regulator of the telecommunications industry in China. Other PRC government authorities also take part in regulating the telecommunications industry in areas such as tariff policies and foreign investment. For example, in recent years, PRC government authorities have required the implementation of real name registration for mobile users. The regulatory framework within which we operate may limit our flexibility to respond to changes in market conditions or competition including changes inand could negatively affect our cost structure. We cannot predict when or if changes in tariff policies may occur.structure, profit margin and market share. For example, in lightrecent years, PRC government authorities have required the implementation of the national policy of achieving coordinated development of Beijing Municipality, Tianjin Municipality and Hebei Province issued byreal name registration for mobile users. Furthermore, since 2015, the PRC government we cancelled the long-distance and roaming tariffs for voice services within the tariff zonesannounced a number of Beijing Municipality, Tianjin Municipality and Hebei Province in August 2015 so that our customers are only charged with local usage tariff for our voice services provided within the tariff zones. In addition, since May 2015, the central government has been promoting a national policy of “speedpolicies on network speed upgrade and tariff reduction”reduction, and we introduced, and will continue to introduce, corresponding measures. See “Item 4. Information on the Company — Business Overview — Tariffs.” The PRC government may issue similarannounce additional tariff reduction policies in the future.future, and we cannot predict to what extent we may be required to further reduce tariffs. Future changes in tariff policies could significantly decrease our revenues and materially reduce our profitability. See “— Risks Relating to Our Business — Our tariff reduction and future policy developments in the telecommunications industry in relation to tariff reduction may continue to adversely affect our financial conditions.” Additionally, following pilot mobile number portability programs in Tianjin, Hubei, Jiangxi, Yunnan and Hainan, the PRC government announced in March 2019 a directive to implement mobile number portability programs in Mainland China by the end of 2019. As a result, the competition among telecommunication operators may significantly intensify. In response, we may offer more tariff promotions to attract and retain customers. In addition, the tight timeline set by the PRC government and the complexity of the technologies involved in implementing mobile number portability programs nationwide may pose significant operational challenges. As a result of such intensified competition and operational challenges, our results of operations, profitability and market share may suffer. Any change in the regulatory environment in the PRC, especially with respect to the telecommunications industry, may have a material adverse effect on our business, financial condition, results of operations and prospects.

-15-

The MIIT, under the direction of the State Council, has been preparing a draft telecommunications law, which, once adopted, will become the fundamental telecommunications statute and the legal basis for telecommunications regulations in Mainland China. In 2000, the State Council promulgated a set of telecommunications regulations, or the Telecommunications Regulations, that apply in the interim period prior to the adoption of the telecommunications law. Although we expect that the telecommunications law will positively affect the overall development of the telecommunications industry in Mainland China, we do not fully know what will be its nature and scope. The telecommunications law and other new telecommunications regulations or rules may contain provisions that could have a material adverse effect on our business, financial condition, results of operations and prospects.

We operate our businesses with approvals granted by the State Council and under licenses granted by the MIIT. We also have arrangements with CMCC, our parent company, under which we operate a 3G and 4G telecommunications businessbusinesses based on the 3G licenseand 4G licenses granted to CMCC by the MIIT. Furthermore, CMCC has received permission to operate a 4G business through us. Any future adverse change in the conditions or other obligations relating to these approvals and licenses could have a material adverse effect on our business, financial condition, results of operations and prospects.

Furthermore, personal privacy, cyber security, and data protection are becoming increasingly significant issues in China. The regulatory framework governing the collection, processing, storage and use of business information and personal data is rapidly evolving. The recently enacted Cyber Security Law of the PRC, or the Cyber Security Law, which came into effect on June 1, 2017, sets forth an overarching framework regulating the network products, equipment, and services, as well as the operation and maintenance of information networks, the protection of personal information, and the supervision and administration of cyber security in Mainland China. See “Item 4. Information on the Company — Business Overview — Regulation — Cyber Security.” These requirements could increase our costs of compliance. Given the implementation of Cyber Security Law is at an early stage and may be subject to uncertainties in interpretations and enforcement, we are unable to determine its impact on our business. In furtherance of the Cyber Security Law, the PRC government also published “Information Security Technology — Personal Information Security Specification” in 2018, setting forth detailed guidelines on the collection, utilization and retention of personal information and privacy protection. Although we have taken and will continue to take measures to comply with the Cyber Security Law, we cannot assure you that we will comply with the regulatory requirements in all aspects at all times. Any inability to comply with the Cyber Security Law and the relevant regulations and policies, could result in additional cost and liability to us, damage our reputation and adversely affect our business. Moreover, increased costs to comply with and other burdens imposed by the Cyber Security Law and relevant regulations and policies that are applicable to the businesses of our suppliers, vendors and other service providers, as well as our customers, may inhibit our business development or curb the demand of our products and services. If we are unable to respond to changing laws, regulations, policies and guidelines related to privacy or cyber security, our business, financial condition, results of operations and prospects may be materially and adversely affected.

The PRC government may require major operators, including us, to provide universal services with specified obligations, and we may not be compensated adequately for providing these services.

Under the Telecommunications Regulations, telecommunications operators in Mainland China are required to fulfill universal service obligations in accordance with relevant regulations to be promulgated by the PRC government, and the MIIT has the authority to delineate the scope of these service obligations. In December 2015, the Ministry of Finance, or MOF, and the MIIT jointly issued a notice on the pilot program to promote basic universal telecommunications services in rural areas where telecommunications operators in Mainland China, including us, are encouraged to support the broadband development in rural and remote areas, so as to facilitate the achievement of certain strategic goals relating to “Broadband China”.China.” This includes achieving, by 2020, the goal of broadband access in 98% of the villages by administrative division and the rural broadband access capacity of more than 12Mbps. As of December 31, 2018, we have provided broadband access to over 38,000 villages by administrative division under the universal service program. We cannot predict whether we will be required to provide other universal services in the future and, if so, whether we will be adequately compensated by the government or by the universal service fund. We also cannot assure you whether we will be required to make contribution to the universal service fund. Any of these events could reduce our revenues and/or profitability.

-16-

Our share price has been and may continue to be volatile in response to conditions in the global securities markets generally and in the telecommunications and technology sectors in particular.

Our share price has been subject to significant volatility, due in part to highly volatile securities markets, particularly for publicly traded shares of telecommunications companies, as well as variations in our sales and profit from operations. Factors other than our results of operations that may affect our share price include, among other things, overall market conditions and performance, market expectations of our performance, projected growth in the mobile market in Mainland China and changes in our brand value. In addition, our share price may be affected by factors such as the level of business activity or perceived growth (or the lack thereof) in the telecommunications market in general, the performance of other telecommunications companies, announcements by or the results of operations of our competitors, customers and suppliers, announcements by and information released by governmental entities, and new technologies, products and services. See “Item 9. The Offer and Listing” for information regarding the trading price history of our ordinary shares and ADSs.

Actual or perceived health risks associated with the use of mobile devices could materially impair our ability to retain and attract customers, reduce wireless telecommunications usage or result in litigation.

There continues to be public speculation about possible health risks to individuals from exposure to electromagnetic fields from base stations and from the use of mobile devices. While a substantial amount of scientific research conducted to date by various independent research bodies has shown that radio signals, at levels within the limits prescribed by public health authority safety standards and recommendations, present no adverse effect to human health, we cannot be certain that future studies, irrespective of their relative reliability or trustworthiness, will not impute a link between electromagnetic fields and adverse health effects. Research into these issues is ongoing by government agencies, international health organizations and other scientific bodies in order to develop a better scientific understanding and public awareness of these issues. In addition, several wireless industry participants were the targets of lawsuits alleging various health consequences as a result of wireless phone usage or seeking protective measures. While we are not aware of any scientific studies or objective evidence which substantiates such alleged health risks, we cannot assure you that the actual, or perceived, risks associated with radio wave transmission will not materially impair our ability to retain customers and attract new customers, significantly reduce wireless telecommunications usage or result in litigation.

-16-

Risks Relating to Mainland China

An economic slowdown in Mainland China may reduce the demand for our services and have a material adverse effect on our business, financial condition, results of operations and prospects.

We conduct most of our business and generate substantially all our revenues in Mainland China. As a result, economic, political and legal developments in Mainland China have a significant effect on our financial condition and results of operations, as well as our future prospects. Though Mainland China has been one of the world’s fastest growing economies in recent years in terms of gross domestic product, or GDP, growth, it may not be able to sustain the same growth rate. For example, China’s real GDP growth rate declined from approximately 7.7% in 2012 to 6.9%6.6% in 2015.2018. There is no assurance that the GDP growth rate of Mainland China will not further decline. A deterioration in Mainland China’s business environment as a result of the slowdown in economic growth could reduce business activities and demand for our services, which could materially and adversely affect our business, financial condition and results of operations.

We are subject to reviews and inspections by governmental authorities and regulatory agencies.

We are subject to reviews and inspections by various governmental authorities and regulatory agencies. These reviews and inspections could cover a broad range of aspects in relation to our business and operations, including financial reporting, tax reporting, internal control and compliance with applicable laws, rules and regulations. We are currently being inspected with respect to, among other things, our accounting and financial reporting practices. We cannot predict the impact of any findings of these reviews and inspections, and we cannot assure you that the outcome of any such reviews and inspections would not have a material adverse effect on our business, financial condition, results of operations and prospects.

Fluctuation of the Renminbi could materially affect our financial condition, results of operations and cash flows.

We receive substantially all of our revenues, and our financial statements are presented, in Renminbi. The value of the Renminbi against U.S. dollar and other currencies fluctuatesmay fluctuate and is affected by, among other things, changes in the PRC and international politicaleconomic conditions and economic conditions. Since 1994, theforeign exchange policies. The conversion of Renminbi into foreign currencies, including U.S. dollars and Hong Kong and U.S. dollars, has beenis based on rates set by the People’s Bank of China, or PBOC, which are set daily based on the previous business day’s inter-bank foreign exchange market rates and current exchange rates on the world financial markets. On July 21, 2005, thePBOC. The PRC government introduced a managed floating exchange rate system to allow the value ofallowed the Renminbi to fluctuate within a regulated band based on market supply and demand andappreciate by reference to a basket of currencies. In April 2012, the PRC government expanded the floating band of Renminbi trading pricesmore than 20% against the U.S. dollar inbetween July 2005 and July 2008. Between July 2008 and June 2010, this appreciation halted and the inter-bank spot foreign currency exchange market from 0.5% to 1.0%.rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. In August 2015, PBOC announced that themid-point exchange rate for the floating range of Renminbi against the U.S. dollar will be determined based on market maker submissions that take into account theRenminbi-U.S. dollar exchange rate at the previous day’s closing of the inter-bank spot foreign exchange market, the supply and demand dynamics and the movements of other major currencies. Since October 1, 2016, the Renminbi depreciatedhas joined the International Monetary Fund’s basket of currencies that make up the Special Drawing Right, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and there is no guarantee that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar by 3.7% by March 2016 following this August 2015 announcement by PBOC. in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

-17-

Fluctuations in exchange rates may adversely affect the value, translated or converted into U.S. dollars or Hong Kong dollars, of our net assets, earnings and any declared dividends payable on our ordinary shares in foreign currency terms. Our financial condition and results of operations may also be affected by changes in the value of certain currencies other than the Renminbi, in which certain of our cash and cash equivalents and bank deposits are denominated. If we incur, in the future, debt denominated in currencies other than the Renminbi, such as in the U.S. dollar, the fluctuation of the Renminbi against the other currencies could adversely affect our financial condition and results of operations. For further information on our foreign exchange risks and certain exchange rates, see “Item 3. Key Information — Selected Financial Data” and “Item 11. Quantitative and Qualitative Disclosures aboutAbout Market Risk.” We cannot assure you that any future movements in the exchange rate of the Renminbi against the U.S. dollar or other foreign currencies will not adversely affect our results of operations and financial condition.

-17-

The PRC legal system contains uncertainties which could limit the legal protections available to our shareholders.

Most of our operating subsidiaries are organized under the laws of the PRC and are subject to laws, rules and regulations in the PRC. The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases may be cited for reference but have limited precedential value. The PRC government has promulgated laws, rules and regulations dealing with economic matters, such as corporate organization and governance, commerce, property, taxation, trade and foreign investment. However, because some of these laws, rules and regulations remain relatively untested, and because of the relatively limited volume of published cases and theirnon-binding nature, interpretation and/or enforcement of these laws, rules and regulations involve potentially significant uncertainties, which may limit the remedies available to our investors and to us in the event of any claims or disputes with third parties. In addition, any litigation in the PRC may be protracted and result in substantial costs and diversion of resources and management attention. Consequently, the protection provided by the PRC legal system may not be the same as the legal protection available to investors in the United States or elsewhere. Furthermore, various uncertainties involved in the rulemaking, interpretation and enforcement process of the laws, rules and regulations in the PRC that are related to our business and operations particularly those relating to telecommunications and taxation, may also materially and adversely affect our financial condition, resultresults of operations and prospects.

Natural disasters, terrorist acts, acts of war and health hazards in China may cause damage to our infrastructure and severely disrupt our business and operations and may have a material adverse effect on our financial condition and results of operations.

SeveralOur business operations are subject to interruption by natural disasters, power outages, terrorist attacks or other hostile acts, health hazards, among others, which are beyond our control. Such events could cause significant damage to our infrastructure upon which our business operations rely, resulting in degradation or disruption of service to our customers. For example, several natural disasters have struck Mainland China in recent years. Our network equipment, including our base stations, in the affected areas sustained extensive damages in some of these natural disasters, leading to service stoppage and other disruptions in our operations in those areas. We are unable to predict the effect, if any, that any future natural disasters and health hazardsor other similar events may have on our business. While we maintain insurance coverage for some of these events, the potential liabilities associated with these events could exceed the insurance coverage we maintain. Our system redundancy may be ineffective or inadequate, and our disaster recovery planning may not be sufficient for all eventualities. These events could also damage the infrastructure of the suppliers, vendors and service providers that provide us with the equipment and services we need to operate our business and provide products to our customers. Any future natural disasters and health hazardsor other similar events may, among other things, significantly disrupt our ability to adequately staff our business, and may generally disrupt our operations. Furthermore, such natural disasters and health hazardsother similar events may severely restrict the level of economic activity in affected areas, which may in turn materially and adversely affect our business and prospects. As a result, any natural disasters or health hazardsother similar events in China may have a material adverse effect on our financial condition and results of operations.

-18-

You may experience difficulties in effecting service of legal process and enforcing judgments against us and our management.

Substantially all of our assets and our subsidiaries are located in the PRC. In addition, most of our directors and officers reside within the PRC, and substantially all of the assets of our directors and officers are located within the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside the PRC upon most of our directors or officers, including with respect to matters arising under applicable laws and regulations. Moreover, the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom or most other Western countries, and Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States.

As a result, recognition and enforcement in the PRC or Hong Kong of judgments of a court in the United States and any of the other jurisdictions mentioned above in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

Our investors may be deprived of the benefits of PCAOB’s oversight of our independent registered public accounting firm through inspections.

Under the Sarbanes-Oxley Act of 2002, the Public Company Accounting Oversight Board, or PCAOB, has the authority and is required to conduct continuing inspections of registered public accounting firms that provide audit services to public companies subject to the reporting requirements of the SEC. Our external auditor is registered with the PCAOB and is subject to inspections by the PCAOB. TheOn December 7, 2018, the SEC and the PCAOB is currently unable to inspectissued a registered public accounting firm’s audit work relating to a company’sjoint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China whereChina. However, it remains unclear what further actions, if any, the documentation of such audit work is located in China, such as our registered public accounting firm’s audit work relatingSEC and PCAOB will take to our operations in China.address the problem. As a result, our investors may be deprived of the benefits of PCAOB’s oversight of our independent registered public accounting firm through such inspections.

-18-

If additional remedial measures are imposed on thePRC-based network firms of the Big Four accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging the firms’ failure to meet specific criteria set by the SEC, we could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.

In December 2012, the SEC instituted administrative proceedings against thePRC-based network firms of the Big Four accounting firms, including our independent registered public accounting firm, alleging that these firms had violated U.S. securities laws and the SEC’s rules and regulations thereunder by failing to provide to the SEC the firms’ audit work papers with respect to certainPRC-based companies that are publicly traded in the United States. On January 22, 2014, the administrative law judge, or ALJ, presiding over the matter rendered an initial decision that each of the firms had violated the SEC’s rules of practice by failing to produce audit work papers to the SEC. The initial decision censured each of the firms and barred them from practicing before the SEC for a period of six months. These firms subsequently appealed the ALJ’s initial decision to the SEC. The ALJ’s decision does not take effect unless and until it is endorsed by the SEC. On February 6, 2015, the fourPRC-based accounting firms each agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC and audit U.S.-listed companies. The settlement required the accounting firms to follow detailed procedures and to seek to provide the SEC with access to firms’ audit documents via the CSRC. If future document productions fail to meet specified criteria or there is a problemUnder the terms of the settlement, the underlying proceeding against the four China-based accounting firms was deemed dismissed with prejudice four years after entry of the process betweensettlement. The four-year mark occurred on February 6, 2019. While we cannot predict if the SEC and CSRC,will further challenge the four China-based accounting firms’ compliance with U.S. law in connection with U.S. regulatory requests for audit work papers or if the results of such a challenge would result in the SEC retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure. Ifimposing penalties such as suspensions, if the accounting firms are subject to additional remedial measures, imposed by the SEC or other regulatory authorities, our ability to file our financial statements in compliance with SEC requirements could be impacted. A determination that we have not timely filed financial statements in compliance with SEC requirements could ultimately lead to the delisting of our ADSs from the New York Stock Exchange or the termination of the registration of our ADSs under the Exchange Act, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States.

We provide a full range of mobiletelecommunications and related services in all 31 provinces, autonomous regions and directly-administered municipalities in Mainland China as well as in Hong Kong. Based on publicly available information, we are the leading provider of mobiletelecommunications and related services in Mainland China and the largest provider of mobiletelecommunications and related services in the world as measured by total number of mobile customers as of December 31, 2015.2018. As of March 31, 2016,2019, our total number of mobile customers reached approximately 833.9931.4 million.

-19-

The History and Development of the Company

We were incorporated under the laws of Hong Kong on September 3, 1997 under the predecessor of the Companies Ordinance as a limited liability company under the name “China Telecom (Hong Kong) Limited”.Limited.” We changed our name to “China Mobile (Hong Kong) Limited” on June 28, 2000 and then to “China Mobile Limited” on May 29, 2006.

Our ordinary shares are listed on the Hong Kong Stock Exchange, and our ADSs, each currently representing the right to receive five ordinary shares, are listed on the New York Stock Exchange.

Expansion Through Acquisitions

At our inception, our mobile operations included those in Guangdong Province and Zhejiang Province, conducted by Guangdong Mobile Communication Company Limited (currently(formerly known as China Mobile Group Guangdong Co., Ltd.), or Guangdong Mobile, and Zhejiang Mobile Communication Company Limited (currently known asLimited), and China Mobile Group Zhejiang Co., Ltd.) (formerly known as Zhejiang Mobile Communication Company Limited), or Zhejiang Mobile, respectively. As part of the restructuring in preparation for our initial public offering in 1997, the former Ministry of Posts and Telecommunications transferred to us a 100% equity interest in Guangdong Mobile and a 99.63% equity interest in Zhejiang Mobile. We subsequently increased our shareholding in Zhejiang Mobile to 100%.

We carried out a series of acquisitions between 1998 and 2004, through which we acquired from CMCC, our parent company, mobile operations conducted by its other regional subsidiaries. As a result, we significantly expanded the geographical coverage of our operations to all 31 provinces, autonomous regions and directly-administered municipalities in Mainland China.

-19-

In addition, we acquired all of the issued and outstanding shares of China Resources Peoples Telephone Company Limited (currently known as China Mobile Hong Kong Company Limited, or Hong Kong Mobile), a mobile services provider based in Hong Kong, in 2006. As a result, we expanded the geographical coverage of our operations to Hong Kong.

In 2011, we, through our wholly-owned subsidiary, CMC, acquired 100% of the share capital of China Topssion Communication Co., Ltd., or Topssion, a company primarily engaged in the sale of mobile phone handsets and devices, for an aggregate purchase price of RMB237,070,000 (approximately US$36,597,302)37,667,000). CMC subsequently transferred 1% of the share capital of Topssion to CMCC, and further subscribed forto additional share capital of Topssion. Topssion thereafter changed its name to China Mobile Device. As of March 31, 2016,2019, we held a 99.97% equity interest in China Mobile Device.

In 2015, we, through our wholly-owned subsidiary, China Mobile Tietong Company Limited, or CM TieTong,Tietong, acquired Target Assets and Businesses of China TieTong,Tietong, for a final consideration of RMB31,967 million (approximately US$4,934.9 million). The acquisition was completed in December 2015. We expect that our acquisition of Target Assets and Businesses from China TieTongTietong will facilitate our transformation into a full servicefull-service operator offering both fixed-line and mobile services.

These acquisitions have significantly enlarged our customer base and expanded the geographical coverage and scope of our business. The integration of these acquired operations has also enabled us to realize synergies and economies of scale.

Industry Restructuring and Changes in Our Shareholding Structure

Prior to 1993, all public telecommunications networks and services in Mainland China were controlled and operated by the former Ministry of Posts and Telecommunications through the former Directorate General of Telecommunications, provincial telecommunications administrations and their city and county level bureaus.

Between 1993 and 2008, the telecommunications industry of Mainland China underwent significant reforms and restructuring that resulted in an improved competitive environment and enhanced regulation of the industry.

In March 2008, the MIIT was created as the industry regulator providing industry policy guidance and exercising regulatory authority over all telecommunications services providers in Mainland China, including, among others, formulating and enforcing industry policy, standards and regulations, granting telecommunications licenses and permits, formulating interconnection and settlement standards for implementation between telecommunications networks, formulating tariff and service charge standards for certain telecommunications services together with other relevant regulatory authorities, supervising the operations of telecommunications services providers, promoting fair and orderly market competition among operators, and allocating and administering public telecommunications resources.

-20-

On May 24, 2008, the MIIT, the National DevelopmentNDRC and Reform Commission, or the NDRC, and MOF jointly issued a joint announcement relating to the further reform of the telecommunications industry in Mainland China, which led to a future restructuring of the then-existing telecommunications services providers. The restructuring resulted in the consolidation of the telecommunications industry in Mainland China into three service providers: China Telecom, China Unicom and CMCC.

As a result of the industry restructuring in 2008 and early 2009, principal participants in the telecommunications industry in Mainland China, other than China TieTongTietong and us, also include China Telecom and China Unicom. China Telecom and China Unicom since then operate both mobile and fixed-line services. On November 27, 2015, CM TieTong,Tietong, our wholly-owned subsidiary, entered into the Acquisition Agreement with China TieTong,Tietong, pursuant to which CM TieTongTietong has agreed to acquire Target Assets and Business. The acquisition was completed in December 2015.

On July 11, 2014, CMC entered into a promoters’ agreement with China United Network Communications Corporation Limited,CUCL, a wholly-owned subsidiary of China Unicom, and China Telecom to establish China Tower.Tower, which had a registered capital of RMB10 billion. Pursuant to the promoters’ agreement, we have made an investment of RMB4,000 million and indirectly owned a 40% equity interest in China Tower. InOn October 14, 2015, CMC entered into an agreement on transfer of its then-owned telecommunications towers and related assets, or Tower Assets, for issuance of consideration shares and payment in cash, or the Transaction Agreement, with China United Network Communications Corporation Limited,CUCL, China Telecom, China Reform Holdings Corporation Ltd.Limited, or CRHC, and China Tower. Following the completion of the transaction on October 31, 2015, China Tower pursuant to whichwas owned by CMC, China United Network Communications Corporation Limited andUnicom, China Telecom shall transfer their telecommunications towers and related assetsCRHC as to China Tower, China Tower shall issue38%, 28.1%, 27.9% and allot shares in China Tower and/or pay certain cash as consideration for such transfers, and China Reform Corporation shall subscribe for new shares in China Tower in cash.6%, respectively. CMC transferred its existing telecommunications towers and related assets to China Tower for a final consideration of RMB102.736 billion.RMB102,736 million (approximately US$15,859.7 million). On July 8, 2016, CMC entered into the Lease Agreement, with China Tower, pursuant to which CMC agreed to lease from China Tower telecommunications towers and related assets acquired and newly constructed by China Tower. On January 31, 2018, the parties entered into a supplementary agreement to the Lease Agreement. China Tower completed its initial public offering and listed on the main board of the Hong Kong Stock Exchange, in August 2018, and as a result, our equity interest was diluted from 38% to approximately 28%. As of March 31, 2016,2019, we indirectly owned 38%approximately 28% equity interest in China Tower. We are in the process of negotiating the definitive usage arrangements with China Tower with respect to telecommunications towers.

-20-

Organizational Structure

As of March 31, 2016,2019, CMCC owned 72.72% equity interest in us through intermediate holding companies. We operate in all 31 provinces, autonomous regions and directly-administered municipalities throughout Mainland China and in Hong Kong. As of March 31, 2016,2019, we owned, directly or through intermediate holding companies, 100% equity interests in the following companies:

-21-

For detailed information about our significant subsidiaries, see note 18 to our consolidated financial statements included elsewhere in this annual report on Form20-F.

In addition, we own a 99.97% equity interest in China Mobile Device, a 92% equity interest in China Mobile Group Finance Co., Ltd., or China Mobile Finance, and a 66.41% equity interest in Aspire Holdings Limited, or Aspire, a company incorporated in the Cayman Islands.

-21-

Set out below is a chart illustrating our corporate structure and wholly-owned subsidiaries as of March 31, 2016:

General Information

Our principal executive offices are located at 60^th Floor, The Center, 99 Queen’s Road Central, Hong Kong, China; telephone:852-3121-8888. We also maintain a regional headquarters in each of our regional mobile companies in Mainland China and Hong Kong. Our web site address is www.chinamobileltd.com. The information on our web site is not a part of this annual report on Form20-F.

The United States Securities and Exchange Commission, or SEC, maintains a website at www.sec.gov which contains in electronic form each of the reports and other information that we have filed electronically with the SEC.

Business Overview

Over the past several years, we have achieved a number of technological improvements and upgrades to our core mobile network, which has evolved into an integrated network that is capable of supporting transmissions using the 2G standard, 3G standard and 4G standard. We have built an Internet Protocol based core network that is capable of supporting the GSM,TD-SCDMA, WLANTD-LTE and TD-LTELTE FDD networks, which we believe could also evolve into a network that supports other future generations of mobile technologies. See “— Mobile Networks” below.

In addition, our acquisition from China TieTongTietong of Target Assets and Businesses, is expected to facilitatehas facilitated our transformation into a full servicefull-service operator offering both fixed-line and mobile services, enableenabling us to seize the opportunities in the wireline broadband market, expand our customer base, and increase our wireline broadband network capacity, coverage and efficiency through an integrated network.network and seize growth opportunities in the wireline broadband market. See “— The History and Development of the Company — Industry Restructuring and Changes in Our Shareholding Structure.” We continue

-22-

On April 3, 2018, the MIIT granted to increase our reserves of basic resources, such as metropolitan area transmission networks, public Internet and broadband access networks in Mainland China, promoteCMCC the construction of North and South Bases, data centers and call centers, accelerate Internet Data Center, or IDC, development and focuspermission to provide 4G services based on LTE FDD technology through us. In accordance with the permission, we have been promoting the development of mobile IoT and Industrial Internet nationwide; in rural areas, we have been implementing the scale application ofTD-LTE/LTE FDD convergence network and enhancing the quality of our high-speed broadband and mobile communications services. In addition, we continuously devote substantial resources in the innovation of our products and services such as dedicated lines for corporate customers.to deliver better customer experience. We believe our efforts in implementing our business strategies will advance our transformation into a full-service provider and our development toward a world’s leading telecommunications operator in digital innovation.

-22-

Our Business Strategy

As a pioneer and market leader in the world’s largest mobile market, we have aligned ourselves with mobile Internet development trends. We aim to maintain our leading position in 4G development in Chinaand lead the research and application of 5G technologies and have fully embraced the transition from voice to data traffic operation. We aim to provide direction and leadership for 5G development, exploring suitable 5G products and business models with industry partners. In particular, we will pursue long-termco-existence of 5G and 4G services to promote synergistic development, facilitate convergence of new information technologies to provide applications in more devise forms and varieties and construct an ecosystem that is fully assimilated into all society sectors. We have also striven to enhance our wireline broadband services and promote the transition from mobile communication services to innovative full services.

In 2015,response to the development of the “Internet of Everything”, we had focusedlaunched the “Big Connectivity” strategy to expand the scope of connections from those among people to connections joining people and things as well as connections among things. In our efforts to implement this strategy, we have shifted focus from the traditional operating model to an integrated development driven by “four growth engines”, namely, to capitalize on the momentum in the personal mobile market, the household market, the corporate market and the emerging business. In 2018, the “four growth engines” strategy continued to improve our revenue structure, and the respective proportions of revenues from household, corporate and emerging businesses to our total revenue have increased.

Personal Mobile Market.We have been dedicated to the development of our 4G network. As of December 31, 2015,2018, we cumulatively put in use 1.12.41 million 4G base stations, which covered aover 99% of the population of over 1.2 billion.China. In 2015,2018, the number of our 4G customers increased by 2229.7%, reaching approximately 712.65 million reaching over 312 million byat the end of the year. AsOur robust network capabilities and industry-leading customer service quality contributed to the rapid growth in data traffic. Our handset data traffic reached 35,453 petabytes in 2018, significantly increased from that of March 31, 2016, our 4G12,569 petabytes in 2017. Our Voice over LTE, or VoLTE, customers reached 376.5 million. We have continued to improve our quality management for 4G network to increase the average download speed and improve customer experience380 million as of our 4G network.December 31, 2018. In 2016,2019, we will continue to focus the development of our 4G networkendeavor to maintain our market leading position in China in terms of wide, continuoushandset data traffic and deep coverage. We will take proactive measures to speed up the migration of our customers from 2G and 3G networks to 4G networks. We also plan tofurther enhance 4G network quality and customer perception through accleratingthe continued promotion of VoLTE and customer information protection. We also intend to maintain our leading position in the research and application in respect of 5G technologies.

Household Market.In 2018, we sped up the development of VoLTE and carrier aggregation, or CA.our household broadband business. We aim to achieve the commercialization of VoLTE and establish our first mover advantage in this field.

Data traffic has become the primary drive for our revenue growth. In 2015, data services revenue increased by 17.4% from RMB258,462 million in 2014 to RMB303,425 million (US$46,841 million) in 2015, surpassing our voice services revenue for the first time. Since May 2015, in response to the expectations of the general public and customers and in order to implement the national policy of “speed upgrade and tariff reduction”, we, in addition to continuefocused on enhancing network capacityspeed and quality, differentiating our products and services, securing customer groups with high loyalty and revenue contribution, and increasing network speed, offered discountscustomer value through our home digital services, such as Mobaihe, our home digitalset-top box providing high-definitionvideo-on-demand service, Smart Home Gateway and“and-Mu” family surveillance camera. For example, subscribers to Mobaihe, reached 96.81 million at the end of 2018. The expansion in both our tariff plans.household broadband customer base and market share continued in 2018. Our household broadband customers exceeded 146.83 million at the end of 2018, increasing by 34.2% from 109.40 million at the end of 2017, 67.0% of which subscribe to broadband products with bandwidth of 100 Mbps or higher. Our household broadband market share grew from 37.0% at the end of 2017 to 41.5% at the end of 2018. In 2016,2019, we plan to continue to strike a balance between tariff reductionbuild an integrated household product portfolio, enhance our brand awareness and increase the value preservation, and striveproposition to enhance network capacity and increasing network speed for our data service customers.customers, through which we can further expand the market share, especially in areas where we have low penetration.

With respect to corporate customers, weCorporate Market.We have focused on key services such as Internet dedicated lines, voice and data dedicated lines and Internet Data Center, or IDC, services, built a network-wide coordinated sales system to target major corporate customers and have developed product seriesproducts targeting governmental and corporate customers in key industries such as manufacturing, energy, agriculture, business, education, public administration, finance, education, transportation logistics and healthcare. We further improved the transmission capacity of our fiber optic cable and the accessibility of Internet dedicated lines. Moreover, in order to meet the specific needs of small- and medium-sized enterprises, we offered Internet dedicated line service to these customers at reduced tariffs. The number of our corporate customer dedicated lines.customers reached 7.18 million as of December 31, 2018. In 2016,2019, we will continue to expand our corporate customer base. We plan to seize opportunities in “Internet+”, and target government, medical, transportation, logistics and education sectors with tailored information technology products and services.

Furthermore, we have striven to promote our transition from mobile communication services to innovative full services. In 2016, in line with Chinese government’s strategy to provide high quality broadband services, develop smart cities and increase smart home capabilities, we will emphasizeexpedite the development of high-standard, high-qualityproducts and high-value wireline broadband services. We will also optimizesolutions tailored for key industries, enhance our investment in wireline broadband by providing products featuring high connection speed, premiumservice quality and brand.bolster our capabilities in developing services based on the integrated information and communication technology.

-23-

Emerging Business.We have been engaged in developing innovative applications and information services, making a number of achievements in 2018. Our centralized public IoT networks had 551 million connections as of December 31, 2018, which was one of the largest dedicated IoT network in the world in terms of the number of connections. In some provinces and cities across China, the number ofmachine-to-machine connections has exceeded that ofhuman-to-human connections. Additionally, our mobile payment service“and-Wallet” exceeded RMB2.5 trillion in transaction value, and we further promoted our “MIGU Video” service, which provides streaming media andvideo-on-demand on mobile, and “MIGU Reading” services, which offers a mobile-based platform of digital books and magazines. In 2019, we plan to accelerate the development and application of IoT and further expand our home digital services.

In terms of long-term strategy, we will continue to focusimplement our efforts on expanding“Big Connectivity” and “Four Growth Engines” strategies, striving to become a world-leading operator offering innovative digital services and leading technological innovations. We plan to increase investments in technological innovation, establish new businesses and develop new business models, including strengthening the content business and expanding smart technology and applications for some key industries.services. We also planendeavor to achieve a leading position in the markets brought by technologies such as 5G, big data, IoT and artificial intelligence or AI. To this end, we will adopt a market-responsive business development model to align our strategic growth targets with market progress, improve the cost-efficiency of our operations, enhance our customer service, and advance institutional reforms that will infuse vitality into our operations. We strive to strengthen our leadership in mobile communications and build uponup our existing customer base to boost connectivity scaleadvantages in the household, corporate and expand connections among people to connections among people and things, and among things,IoT markets, through which may allow us to provide connection support to an Internetwe can accelerate our development of Everything market where the number of connections may reach the level of ten-billion.digital content business.

Customers and Usage

Our mobile customer base has grown substantially from approximately 806.6887.2 million at the end of 20142017 to approximately 826.2925.1 million at the end of 2015.2018. As of March 31, 2016,2019, our total number of mobile customers reached approximately 833.9931.4 million, and our 4G customers reached 376.5approximately 723.3 million. Our total number of wireline broadband customers achieved a substantial growth from 112.7 million by the end of 2017 to 156.7 million by the end of 2018, and further reached approximately 60.6167.0 million as of March 31, 2016, compared to 55.0 million by the end of 2015.2019. Our customer growth is primarily attributable to a number of factors, including:

Our total voice usage was 4,220.83,485.2 billion minutes in 2015,2018, representing a decrease of 1.7%by 8.6% from 2014.2017. Our short message services, or SMS usage totaled 559.9616.7 billion messages in 2015, representing2018, a decrease of approximately 8.4%increase by 14.0% from 2014.2017. The decrease in our voice usage and the decrease in SMS usage are partlyis mainly due to the increasing competition from providers offeringsubstitution effect of Over The Top productsservices, such as instant voicemessaging, VoIP services, or audio or video content services delivered over the Internet while the increase in our SMS usage is primarily resulted from the development of SMS and messaging services.MMS services for corporate customers.

Our total mobilehandset data traffic was 2,760.6 billion megabytessignificantly increased to 35,453 petabytes in 2015,2018, representing an increase of 143.7%182.1% from 2014.2017. Our average handset data traffic per user per month reached 3,725MB in 2018, representing an increase of 166.2% from 2017. The increasesignificant rise in our mobilehandset data traffic usage is due toprimarily driven by our continuedpreferential tariff plans, more comprehensive product offerings of mobile applications, robust network capabilities, enhanced customer service quality and increased efforts to promote data traffic services operations, with a focus on the expansion of our 4G network.in precision marketing.

The following table sets forth selected historical information about our customer base and customer usage as of or for the periods indicated.

Our voice usage services focus on enabling our customers to make and receive calls with a mobile phone at any point within the coverage area of our mobile networks. The services include local calls, domestic long distancelong-distance calls, international long distancelong-distance calls, domestic roaming and international roaming. Our voice usage services experienced a declinedecrease due to a decline in total voice usage by 8.6% in 2018 from 2017, as a result of the substitution effect of Over The Top productsservices and reduced voice tariff as a decline inresult of the cancellation of handset domestic long-distances roaming tariffs and total voice usage decreased by 1.7% in 2015 compared to 2014.since September 1, 2017.

Our voice value-added services mainly include caller identity display, caller restrictions, call waiting, call forwarding, call holding, voice mail, conference calls and other services.

Data Business. Our data businesses include short message and multimedia message services, or SMS and MMS, wireless data traffic services, wireline broadband services and applications and information services. OurIn 2018, our data servicesbusiness revenue, which has become the primary driver for our revenue growth since 2016, increased to RMB303,425by 9.9% from RMB493,350 million in 2015, representing an increase of 17.4% from 2014.2017 to RMB542,083 million (US$78,843 million). As a percentage of revenue from telecommunications services, our data services revenue increased to 52.0%80.8% in 20152018 from 43.7%73.8% in 2014.2017.

SMS and MMS.SMS refers to services that employ the existing network resources and the corresponding functions of mobile terminals to deliver and receive text messages. SMS offers convenience and multi-functionality to our customers. MMS is a technology that allows users to exchange multimedia communications, such as graphics, animated color pictures, sound files and short text messages, over wireless networks. Our SMS usage decreasedincreased from 611.4541.0 billion messages in 20142017 to 559.9616.7 billion messages in 2015,2018, and our revenue generated from SMS and MMS decreasedincreased from RMB34,780RMB28,058 million in 20142017 to RMB31,244RMB28,800 million (US$4,189 million) in 20152018 due to the increasing competitionsignificant increase in revenue generated from SMS and substitution effect of providers offering Over The Top products such as instant voice and messaging services.MMS services for corporate customers.

Wireless Data Traffic Services.Our wireless data traffic business primarily includes mobilehandset data traffic service and WLAN service.services. Revenue generated from our wireless data traffic business reached RMB200,857RMB383,297 million (US$55,748 million) in 2018, compared to RMB364,906 million in 2015, compared to RMB153,926 million in 2014.2017, representing 57.1% of revenue from telecommunications services.

Mobile Data Traffic.Our mobilehandset data traffic service is a service that we provide to our customers that enables mobile access to the Internet through 2G, 3G or 4G networks. We experienced significantnetworks via handsets. The growth in the provision of mobile data traffic services in 2015, with mobile data traffic reaching 2,760.6 billion megabytes in 2015, representing a 143.7% increase compared to 2014. Revenue generated from mobilehandset data traffic service in 2018 was primarily driven by our preferential tariff plans, continuous enrichment of data products, more comprehensive product offerings of mobile applications, robust network capabilities, enhanced customer service quality and increased efforts in precision marketing. Our handset data traffic reached RMB198,270 million35,453 petabytes in 2015, compared to RMB150,571 million2018, significantly increased from that of 12,569 petabytes in 2014.2017.

WLAN.Wireline Broadband Services.WLAN service refers to a service that provides high-speed Internet access through WLAN.

Our wireline broadband business offers primarily the wireline broadband data traffic service.service, including household broadband services and Internet dedicated lines for corporate customers. Revenue generated from our wireline broadband business reached RMB18,339increased to RMB54,285 million (US$7,895 million) in 2018, representing an increase by 36.6% from RMB39,731 million in 2015.

We closely monitor and follow the industry trend in 2014.

In 2015, we established MIGU, focusing on explorations inour development of applications and information services, and have extended our business into various emerging areas, such as IoT, home digital contentservices, mobile payment, digital contents and applications, including music, reading, video, gaming and animation areas.

other services. We have been making effortsestablished several specialized companies, including, among others, China Mobile IoT Company Limited, China Mobile Internet Company Limited and MIGU to build up open platforms through our “Mobile Market” in the past few years. “Mobile Market” serves as a platform for software developers and their applications as well as our own businesses so that our customers may use their terminals to download applications and subscribe for our businesses.

focus on these areas. In 2015,2018, we expandedadvanced the application of Internet of Things to various areasIoT in aspects such as urban management, smart transportation and industrial control, and have developed standardized Internet of ThingsIoT products including home security services, automobile fleet management services and remote surveillance. We also established high quality and centralized public InternetIoT networks with IoT connections reaching 551 million, which is one of Things networks. Thethe largest dedicated network for IoT in the world in terms of the number of Internetconnections. Our home digital services include high-definitionvideo-on-demand services provided through Mobaiheset-top box, Smart Home Gateway,“and-Mu” family surveillance camera and IMS fixed line services. Subscribers to Mobaihe reached 96.81 million at the end of Things connections2018, compared to 57.25 million at the end of 2017. Moreover, in 2018, our mobile payment service“and-Wallet” exceeded RMB2.5 trillion in transaction value, increased to over 60 millionfrom that of RMB2.1 trillion in 2015.

In addition, we have endeavored to develop personal digital services.2017. We have established various specialized companies, including, among others, MIGU, CM Internet, CM M2M, Virtue Intelligent Network, allalso promoted our “MIGU Video” service, which recorded 4.3 billion views of its 2018 FIFA WorldCup-related contents, and “MIGU Reading” service, the revenue from which focus on digital contents, mobile Internet, Internet of Things, Internet of Vehicles and other digital services. Furthermore, we established a fund to invest in a range of industries along the value chain and also collaborated with innovative companies to establish integrated operating platforms. Nonetheless, this is an area that we believe to be in its initial stage of development, and we can make more achievements by continuing our efforts in digital services.2018 exceeded RMB2.3 billion. We will continue to promote our digital services, and explore new operating models for China Mobile, in order togrowth drivers, further advance our the market-orientated mechanism andinnovation, so as to strengthen our position in the competitive digital landscape through continuous innovation.landscape.

Please see “Item 5. Operating and Financial Review and Prospects — Results of Operations — Year Ended December 31, 2018 Compared to Year Ended December 31, 2017” and “Item 5. Operating and Financial Review and Prospects — Results of Operations — Year Ended December 31, 2017 Compared to Year Ended December 31, 2016” for more information about our service revenue.

Tariffs

Our tariffs are subject to regulation by various government authorities, including the MIIT, the NDRC and the relevant price regulatory authorities in Mainland China. The MIIT has continued encouraging mobile operators in Mainland China to implement the caller-party-pays regime, and mobile operators, including us, have been implementing the caller-party-pays regime. In particular, all of the new calling plan packages that we offer in Mainland China are generally based on tariffs equivalent to the caller-party-pays regime. In March 2008, the Ministry of Information Industry, predecessor of MIIT, reduced the maximum domestic roaming usage charges that a mobile services provider may charge on roaming services. In December 2009, the PRC regulators promulgated policies to eliminate domestic roaming usage charges on outgoing international long distance calls when domestic roaming services are used, as well as eliminate local usage charges on outgoing domestic and international long distance calls when roaming services are not used. In May 2014, the PRC regulators further promulgated policies to permit mobile services providers to set the tariffs of all telecommunications services. Our international roaming usage charges are set in accordance with agreements with the relevant foreign mobile operators.

We offer our customers a variety of tariff packages that have varied monthly charges, minimum charges for basic usage, charges for usage exceeding the covered basic usage, fixed charges for selected features and functions, as well as charges for voice value-added services. We offer tariff packages with respect to wireless data traffic business, or charge the tariff by the actual data traffic usage. We also offer different tariff packages with respect to SMS and MMS, and applications and information services.

We have flexible tariff plans distinguishing between peak time andnon-peak time usage, and offer tailored service plans based upon the needs of different customer groups as well as our network resources. Given the rapid growth in mobile penetration ratesrate and increased competition, in order to remain competitive in terms of price and performance with other mobile operators we provide certain discounts and promotional offers, including large data packages, in and during certain service areas and call periods targeting various customers.

In 2013, we introduced mix-and-match plans, which allow our customers greater flexibility in customizing the voice, data traffic and applications components of their plans. For middle-to-high-end customers, we created a “single price” plan for local, long distance and roaming calls. In 2014, we introduced new 4G mix-and-match plans and actively sought to reduce the unit price for international roaming. We introduced RMB3/6/9 per 3 megabytes international roaming plans and RMB30/60/90 per day unlimited international data traffic plans and also expanded our 4G international roaming services. In 2015, we promoted the restructuring of tariff plans and launched innovative services such as corporate-sponsored data tariff plans and data traffic sharing service.

-26-

Since May 2015, in response to the expectations of the societygeneral public and customers and in order to implement the relevant national policy, we, in addition to continue enhancing network capacitiescapacity and increasing network speed, launched customized voice and data tariff plans at lower rates for both peak and non-peak time. We also provided certain amountto meet a variety of free non-peak time datacustomer needs, particularly, to customers, and reducedreduce the tariffs forout-of-plan data usage and international data roaming in certain countries and regions. In addition, in October 2015,With respect to our data traffic tariff, we launched an unused data traffic carry-over program for our mobile monthly plans that are charged based onpre-determined data traffic, according to which customers could carry over their monthly plan’s remaining unused data traffic to the following month. Furthermore,month in October 2015. In May 2017, we rolled out a series of preferential data traffic plans as one of our tariff reduction measures.

-27-

In addition, we took an orderly and balanced approach in reducing voice tariff. In August 2015, we cancelled the domestic long-distance and roaming tariffs for voice services within the tariff zones of Beijing Municipality, Tianjin Municipality and Hebei Province in August 2015 so that our customers are only charged with local usage tariff for our voice services provided within the tariff zones. TheseSimilarly, we extended the same tariff policies to the tariff zones of Sichuan Province and Chongqing Municipality in October 2016. In March 2018, the PRC government announced additional policy requirements relating to network speed upgrade and tariff reduction, including, among other things, to achieve full coverage of high-speed broadband in urban and rural areas, to expand free Internet access in public places, to significantly reduce the tariffs of household broadband and Internet dedicated line services, to cancel domestic data “roaming” charges, namely, to unify the charges for data consumed within and outside of the province of the customers’ residence, and to reduce handset data traffic tariff by at least 30% in the year of 2018. Accordingly, we launched a number of preferential tariff plans, including large data packages, for our mobile data services, household broadband services, dedicated line services and international roaming services in 2018. Starting from July 1, 2018, we no longer charge tariffs for domestic data roaming. Additionally, as a result of our efforts in cooperation with overseas telecommunications operators, our international roaming tariffs further decreased in 2018. The foregoing policies and measures have had certain adverse impact on our financial condition and results of operations, resulting in decreases in the overall tariffs of our data traffic services and voice services in 2015,2016, 2017 and 2018 respectively, as compared to those in 2014.previous years. In March 2019, the PRC government in its 2019 work report introduced further “speed upgrade and tariff reduction” measures, including directives to (i) further reduce the broadband tariffs for small and medium enterprises by 15% on average and the tariffs for handset data by no less than 20% on average, and (ii) implement mobile number portability programs in Mainland China by the end of 2019. We may be required to further adjust our tariff under the “speed upgrade and tariff reduction” policy or implement other similar policies to be issued by the PRC government in the future. We will implement these state policies while striving to further integrate our businesses and promote product innovation.

The reduction in tariffs as a result of these measures, on the one hand, has had, and we expect that it will continue to have, adverse impact on our financial condition and results of operations. See “Risk“Item 3. Key Information — Risk Factors –— Risks Relating to Our Business –— Our financial conditiontariff reduction and results of operations have been adversely affected by the reduction in tariffs as a result of PRC national policies, and may continue to be affected by further reduction in tariffs due to future policy developments in the telecommunications industry.industry in relation to tariff reduction may continue to adversely affect our financial conditions.” On the other hand, we have implemented a number of measures to enhance our data traffic operations in response to the “speed upgrade and tariff reduction” initiatives. For example, in our efforts to enhance customer experience, we continued to increase our network speed. We believe these initiatives will, in the long run, facilitate the transformation of our business model to focus on data traffic and digital services.

For our wireline broadband services and applications and information services, we determine tariffs mainly according to market conditions.

Interconnection

Interconnection refers to various arrangements that permit the connection of our networks to other mobile or fixed-line networks. These arrangements provide for the sharing and settlement of revenues from the base usage charges and, if applicable, roaming charges and long-distance charges.

Under the current telecommunications regulations, parties seeking interconnection must enter into an interconnection agreement. In addition, major telecommunications services providers that have control over essential telecommunications infrastructure and possess significant market share must allow interconnection to their networks by other operators. These telecommunications services providers must also establish interconnection rules and procedures based on the principles ofnon-discrimination and transparency and submit such rules and procedures to the MIIT for approval. The termination of any interconnection arrangements will require prior approval by the MIIT. The applicable regulations provide that interconnection related equipment must conform to the technical standards approved by the MIIT. See “ —“— Regulation — Technical Standards” below.

Our networks interconnectinterconnection arrangements with the networks of other telecommunications operators which enablesenable our customerssubscribers to communicate with the customerssubscribers of those operators.operators through making and receiving local, domestic and international long-distance calls. Each of our operating subsidiaries has interconnection agreements with those operators in its service area. The economic terms of these agreements are generally standardized from province to province.

-28-

The MIIT has made adjustments to the public telecommunications network interconnection settlement standards of basic telecommunications operators in Mainland China. With effect from January 1, 2014, when mobile users of China Telecom and China Unicom in Mainland China and our mobile users in Mainland China (excludingTD-SCDMA users with specified prefix numbers of 157 and 188) make calls to each other, the settlement charges payable by China Telecom and China Unicom to us were adjusted from RMB0.06/minute to RMB0.04/minute, while the settlement charges payable by us to China Telecom and China Unicom remained at RMB0.06/minute. The MIIT willexpects to assess the above interconnection settlement policy once every two years based on the development conditions of the telecommunications market and will make adjustments when appropriate. The interconnection settlement policies forTD-SCDMA remain unchanged, meaning that when mobile users of China Telecom and China Unicom in Mainland China and ourTD-SCDMA users with specified prefix numbers of 157 and 188 make calls to each other, the settlement charges payable by China Telecom and China Unicom to us are RMB0.06/minute, and the settlement charges payable by us to China Telecom and China Unicom are RMB0.012/minute. When users of different basic telecommunications operators in Mainland China send SMS or MMS to each other, the settlement charges for SMS were adjusted from RMB0.03/message to RMB0.01/message, and the settlement charges for MMS were adjusted from RMB0.10/message to RMB0.05/message.

Roaming

We provide roaming services to our customers, which allow them to access mobile services while they are physically outside of their registered service area or in the coverage areas of other mobile networks in other countries and regions with which we have roaming arrangements.

-27-

A mobile customer using domestic roaming services is charged at our roaming usage charges or, for outgoing international long distancelong-distance calls, international long distancelong-distance charges. A mobile customer using international roaming services incurs charges based on tariffs that vary depending on whether it is an incoming call or an outgoing call and on the destination of the call. In recent years, our international and domestic roaming usage charges have generally declined, resulting in lower average revenue per minute from roaming services. For example, insince 2015, we reduced the international data roaming charges in certain countries and regions and cancelled the domestic long-distance and roaming charges for voice services within the Beijing-Tianjin-Hebei tariff zones in orderBeijing-Tianjin-Hebei and other designated regions and the tariff zones in Sichuan Province and Chongqing Municipality. We cancelled all handset domestic long-distance and roaming tariffs since September 1, 2017. In addition, we further lowered our international roaming charges since 2016 in response to implement relevant national policies.customers’ expectation, and our international roaming voice usage increased. See “ —“— Tariffs.”

In December 2016, we initiated the“Hand-in-Hand Program,” a cooperation program among international telecommunications operators to jointly enhance network functionality and interconnection, aiming at delivering better international roaming experience for customers.

Research and Development

Our research and development, or R&D, functions are undertaken jointly by our research institute, our research centers in Suzhou and Hangzhoudifferent cities and other relevant business units. The responsibilities of our research institute include defining our network and technology evolution roadmap, supporting the operation of existing networks and services, engaging in international standard setting activities and defining corporate specifications, leading the development and field testing of new products and services, cooperating with industry partners, procurement testing and certification of network devices, mobile terminals and information technology systems. In 2015,2018, we also set up three industrial research institutes in Chengdu, Shanghai and Xiong’an New Area, respectively, to explore collaboration opportunities with various participants in other industries, including finance, healthcare, transportation and smart city, among others, enhance our research capabilities and competitiveness in the vertical industries.

We also work closely with industry partners for R&D in various areas, such as telecommunication, business service, Internet, IoT, smart home services, digital content and industry applications. In November 2017, we announced the“1-3-9 Cooperative Initiatives,” which promote (i) an IoT network with extensive coverage and advanced technologies; (ii) three industry alliances including IoT, home digital business and 5G; and (iii) nine capabilities applications in furtherance of industry development, including our communication capacity open platform, which served more than 150,000 enterprises as of December 31, 2018, our unified authentication platform, which processed an average of more than 670 million accreditations per day in 2018, and our OneNET platform, an open IoT platform launched in 2014 intended to nurture the IoT ecosystem, which connected 79.9 million devices as of December 31, 2018.

-29-

In 2018, our main R&D efforts were focused on a number of aspects:

Improving Networks and Services. In 2015,2018, we strengthenedput efforts in the developmentresearch of GSM/FDD LTE spectrum sharing, massive MIMO and optimizationfull-band antenna as part the upgrade of our 4G network. In particular, we improved our network performance by enhancing indoor coverage and CA, and enhanced and optimized Voice over LTE, or VoLTE, technology. We also promotedstrengthened our R&D efforts inNB-IoT andend-to-end IPv6 Scheme and accelerated the research on the strategy of network transition to Network Function Visualization, or NFV, and software defined network, concept, or SDN, announced NovoNet technological outlook at GSM Association, launched pilot programs using NFV,SDN. We refined the target architecture of the next generation network, streamlined the overall structure, deployment strategy and recommendations of NFV/SDN and reducedproposed VoLTE technology architecture for centralized management and control. In addition, we initiated the connection time for corporate customers by 70%.NovoNet trial network (Phase III) and set up an open laboratory with 34 industrial partners to advance the development of edging computing technologies.

Setting Technical Standards and Promoting Industry Development for 5GPre-Commercialization. We participated in the draftingIn 2018, we actively promoted5G-related standard-setting initiatives by participating and publication of three white papers on Mainland China’s fifth generation, or 5G, technology in the IMT-2020 (5G) Promotion Group. We actively promoted 5G related work incollaborating with international organizations, such as the 3rd Generation Partnership Project, the International Telecommunication Union, or ITU and the Next Generation Mobile Networks. In 2015,Networks, where we led the formulation of 5G core network architecture standards, advance relevant researches and promote the overall development of the 5G industry. Additionally, China Mobile Research Institute entered into a memorandum of understanding5G Innovation Center has attracted over 400 industrial partners and is currently equipped with each of Nokia Solutions and Networks System Technology (Beijing) Co., Ltd., or Nokia, and Ericsson (China) Communication Co., Ltd., or Ericsson, to collaborate on 5G research and development, particularly in the areas of 5G radio technology, architecture evolution towards 5G, Internet of Things and technological experiments to promote global standardization and industrialization of 5G. We presented NFV at international conferences and technology forums on multiple occasions and demonstrated VoLTE high definition audio and video based on NFV. We also won a Gold Award of Chinese Patents for our LTE related patents, which demonstrated our technological influence and innovation capability.22 open laboratories.

Building Independent R&D Capabilities in Terms of Cloud Computing and Big Data. In order to deepen thetop-level design of the information technology systems and to promote the maturity of independently-developedindependently developed products, we formulated plans for the construction and evolution of enterprise-level big data centers, data control and professional operations, improved the independent R&D product lines in the areas of cloud computing and big data, strengthened the application of relevant products and realized the independent integration of cloud services to the general public.

Promoting Independent InnovationAdvancing Development of Internet-related Key Products.Artificial Intelligence Platform. We formulated a complete setIn November 2017, we commenced the construction of technical schemes and standards for unified communication, realized the independent R&Dan artificial intelligence platform. In 2018, we continued to explore innovative application of certain key modules, supported the industry chains and realized the interconnected testing with international communications service providers. In addition, we expanded the use of multi-connectionartificial intelligence in various areas, established the technological system for family-oriented products, and developed through independent R&D products such as Mobaihe and Internet of Things eSIM. We also materialized products of cloud services in the healthcare and education industries, promoted the unified authentication of independent R&D efforts, intra-application billing security systems andmarketing, online setting of R&D service platforms for applications, and improved our competitiveness to provide differentiated services. Moreover, we built an ecosystem of platforms, unified the technological standards for vertical open platforms for our various affiliated companies and attempted to independentlyintelligent interactions, digital assets analysis, financial research and develop the centralized open platform.legal compliance.

-28-

Sales and Customer Services

We continue to optimize our customer service system that separate frontfront- and back lineback-line services and have established sales and services channels tailored to the needs of customers by providing electronic and mobile Internet channels.

Sales Channels. We offer our services through an extensive network of proprietary sales outlets, retail outlets and electronic sales and marketing channels. Our proprietary sales outlets, in addition to providing retail sales and network connection services, also offer differentiated services to customers, including, among others, billing information and payment collection, services consultation and sale of terminals. Most of our proprietary sales outlets provide training and service demonstrations to retail outlets, which, in turn, offer our services to customers according to agency agreements with us. In connection with these sales, all applicable fees payable after initial connection are paid to us. Our electronic channels offer services including, among others, subscription of voice value-added services and data business, change of tariff plans, credit loading forpre-paid services, sales of SIM cards and terminals and redemption of “Customer Reward” points. Sales effected through our electronic channels have increased consistently in recent years and the percentage of our business transactions that were processed through our electronic channels further increased in 2015. In addition, we are able to establish sales and service networks at lower cost by utilizing existing resources in rural areas to serve and expand our customer base in these areas. We have also established concept stores in major cities within Mainland China to showcase our services and products, particularly our data services, and to facilitate certain sales and marketing activities. In addition, we have undertaken further transformation of our marketing channels and rendered more traditional services via intelligent, Internet-based channels. In 2018, 62.3% of our key business transactions were processed via electronic channels, compared to 57.5% in 2017. We have also launched experiential and interactive marketing and services at some of our physical retail outlets in effort to transition to the “new retail” model.

-30-

Market Segmentation Strategy. As customers’ demands for mobile telecommunications become more varied and complex, we have conducted research on market segmentation and have launched products which cater to the specific needs of different customer groups to increase awareness of our brand and products and maintain our customer base. Our marketing efforts focus on retainingmiddle-to-high-end customers. We have developed products, service packages and advertising and distribution channels unique to certain groups of customers, such as corporate customers and customers in the rural areas. With respect to corporate customers, we have focused on key services such as voice and data dedicated lines and IDC services, built a network-wide coordinated sales system targeting major corporate customers and have developed product series targeting governmental and corporate customers in key industries, such as public administration, finance, transportation, education, transportation, logisticshealthcare and healthcare.agriculture. In terms of customers in the rural areas, in order to lower the barrier of using mobile phones, we have encouraged handset producers to introduce inexpensive handsets with moderate functions. We have also rebuilt our “GoTone” brand and adopted a more sophisticated brand management strategy stressing customer segmentation to reinforce a sense of loyalty and gain among our customers.

Our strategy in attracting new customers and retaining existing customers is to continue to implement our customer classification and customer bonus points program. We classify our customers according to their level of value contribution and match them with differentiated service resources according to their level, with higher-level customers enjoying premium services. Our customer bonus points program is an important measure to this end, under which customers receive bonus points based on their service consumption and loyalty and may exchange their accrued bonus points for tariffs, data and other benefits.

Customer Services.Our customer support service centers offer24-hour staff-answering and automatic-answering service hotlines in Mainland China, dealing with customer enquiries regarding services and billing, as well as handling customer complaints. Our main strategy in retaining customers isIn 2018, we established a customer services department to classifycoordinate our customers according to their level of value contribution and to match them with differentiated service resources according to their level, with higher-level customers enjoying premium services. Our “Customer Point Reward Program” is an important measure to this end, under which customers receive bonus points based on their service consumption and loyalty. Customers may exchange their accrued bonus points for tariffs, data and other benefits. In order to retain high-value and corporate customers and enhance customer satisfaction, we offer a series of personalized and differentiated services targeted at high-value and corporate customers, including dedicated account executives, on-site visits and systems for collecting comments and handling complaints.efforts.

In 2015,2018, we continued to optimize our customer service processes through efforts such as improving service quality at our sales outlets, 10086 hotline and online portal.portal, in particular our online-based customer service. We have actively promoted electronic channels, including expanding the scope of services provided through our electronic channels and shortening the processing time at the electronic channels. In addition, we implemented service measures such as increasing transparency in the billing process, inquiry and data services unsubscription function through SMS to ensure our customers would be fully informed of the payments they would make. We continued to filterblock spam SMS and malicious software that were sent tofor our customers. Our continuedongoing improvement in customer services resulted in broader customer satisfaction in 2015.2018.

Service Quality.We strive to improve the quality of our services through improvements in the quality of our infrastructure network.network and customer perception. We continue to upgrade our service quality management system and have created a transparent and secure communication platform. In particular, we continuedstarted to lead the industry in 2015 in terms of low voice call drop rate ofintegrate customer services resources to our 2G, 3G10086 customer service hotline operation, which increased our service efficiency and 4G networks and highly successfuloverall hotline connection rate, which significantly improved customer perception and laid a solid foundation for developing the 4G market.rate. We have also improved our business support capabilities, especially in the areas of billing and data business subscription support.

Additionally, we have devoted significant resources to network security to implement high standards of data privacy protection for our customers, aiming at creating a secure communication platform for our customers. We introduced resilient and protected features, such as our anti-fraud system utilizing big data technology and anonymization of personal data, so as to strictly protect the privacy of our customers. We implemented policies and procedures that target phishing, spam SMS and malware in order to reduce the spam, improper SMS and malware transmitted to our customers. We also implemented measures such as adopting the real-name registration system, refining our service process, providing instant channels to report spam and fraud, for purpose of early detection of, and quick response to, fraud.

-29-

Churn Management. We have devised internal monitoring systems to detect customers who are prone to discontinue their subscriptions. In particular, our churn alert system prompts customer service representatives to proactively approach those customers, and customers who have recently discontinued their service, to improve customer relations and minimize churn.

-31-

Credit Control. We have implemented customer identity and information checks during the customer registration procedures to assist in credit control. Direct debit services are available in each geographical area. The accounts of contract customers are required to be settled on a monthly basis, and a customer will be subject to late payment fees for amounts overdue and subject to account deactivation if the customer’s account remains overdue. As a majority of our existing customerspre-pay for our services, we have limited credit risk exposure to our customers. We make an allowanceimpairment loss for doubtful accounts based on our assessmentassumptions on the risks of the recoverability of accounts receivable.default and expected loss rates.

Corporate Social Responsibility and Sustainable Development.Development

We are committed to fulfilling our responsibilities to stakeholders and proactively implementing apursuing shared and sustainable development strategywith stakeholders while striving to meetcontribute to the challenges brought about by climate change. achievement of the Sustainable Development Goals for 2030.

We have focused on energy conservation and environmental protection in many aspects of our operations. We furthered our “Green Action Plan” and realized a reduction in overall energy consumption per unit of information flow by 17.5%57% in 20152018 compared withto 2017. We have also actively promoted the previousapplication of new technologies in pollution prevention, control and monitoring and devoted to offering innovative solutions towards the development of environment-friendly industries. In 2018, we were still the first and the only company from Mainland China named on the Global Carbon Disclosure Project’s Climate A List and were awarded “Climate Leadership Award” by Carbon Disclosure Project China for the fifth consecutive year.

Through our China Mobile Charity Foundation, we continued to carry out philanthropic activities such as poverty alleviation and education support. We have cumulatively sponsored treatments for 2,7445,358 children in poverty diagnosed with congenital heart disease, and provided trainings to 80,981115,782 principals of rural primary and secondary schools in villages in central and western China. In addition, in response to growing phishing and spam SMS practices, we implemented policies and procedures that target phishing and spam SMS in order to reduce the spam and improper SMS sent to our customers, so as to strictly protect the privacy of our customers. In 2015, we were listed in the Dow Jones Sustainability Indices for the eighth consecutive year and were also listed in the Hang Seng Corporate Sustainability Index Series for the sixth consecutive year.

Terminals

Our 4G services based onTD-LTE services technology have been developing rapidly, and the quality and value ofTD-LTE models continue to improve. Since launching ourTD-LTE services, we have focused on the development of multi-mode, multi-band terminals,low-costTD-LTE terminals and low cost TD-LTE terminals with new technology, as well as self-brandself-branded terminals. In 2015,2018, we launched three self-branded smartphones, namely A1, N1A4, A5, A4s, N3, N5 serials. A4 and N1 Max. A1 features a five-inch screenA5 are entry-level VoLTE-compatible phones. A4s and N5 serials aremid-level VoLTE-compatible phones, support GSM, TD-SCDMA, WCDMA, TD-LTEdual cameras and LTE-FDD networks. N1 is the first VoLTE-compatible smartphonefull-screen. We also launched more than 20 IoT devices, including smart TV boxes and gateways. To expand our global presence, in the PRC2018, we cooperated with overseas operators (including those in Asia, Africa and Europe) and launched 15 models of terminal products, which is priced below RMB1,000 per unit, within the lower price range of smartphones in the PRC. N1 Max adopts NFChave been exported to 12 countries and real-name authentication technologies.regions and received 1.18 million purchase orders. In 2016,2019, we plan to develop fourself-branded 5G smartphones and data devices to support 5G user trial. We will continue to develop self-branded smartphones, including A series and N series terminals, all of which will be VoLTE-compatible and support CA technology.RCS feature. N series terminals target themid-level market while A series terminals target the entry level market. In the field of IoT, we plan to develop more IoT devices, such as smart audio speaker, door locks, and other business-oriented devices in addition to smart TV boxes, gateways and kids watches. In terms of overseas market, we plan to launch international terminal product portfolio to explore opportunities in international terminal markets, with a focus on smart devices. We have devoted ourselves to promoting the long-term development of the TD-LTE4G terminal supply chain and have focused on the sales of 4G terminals, which strongly drove growth in data traffic. We have also entered into a long-term cooperation agreement with Apple Inc. and successfully introduced iPhone models that support TD-LTE and TD-SCDMA.

Information Systems

Our information systems primarily consist of a network management system, a business support system and a management information system. The network management system collects and processes the operating data from each network, and manages, supervises and controls our networks for safe and efficient operation. The business support system providesday-to-day operational support to each business unit, and is a unified and comprehensive system that enables the sharing of information resources. This system standardizes and integrates each of our sales, billing, settlement, customer service and network failure handling databases in a centralized and orderly manner. The management information system collects and processes our management information and provides support to our management personnel. In addition, this system has computerized and automated our management in finance, inventory, procurement and human resources. Furthermore, we have an internal communications network, which consists of our office automation system, our internal computer network, video conference system, telephone system and others, the combination of which supports our internal communications.

-30--32-

We devote significant resources to telecommunications network security, data security and other security measures to protect our systems and data, such as deploying network protection devices, performing regular security assessments and anonymizing personal data. In recent years, we have led the development of the Security Framework for VoLTE Network Operation and the Code of Practice for Personally Identifiable Information Protection, which have been adopted by ITU Telecommunication Standardization Sector. Our protection scheme against harassment or fraud calls and artificial intelligence-based spam messages and calls prevention solution have been awarded the WSIS Prizes Champion for two consecutive years (2018 and 2019). We will further strengthen cyber security to provide support for our operations.

Trademark

We hold rights to various trademarks and other intellectual property rights necessary to conduct our business. We actively pursue the filing and registration of trademarks within Mainland China and abroad.

We market our services under the “CHINA MOBILE” trademark, which is the trademark we use throughout Mainland China. “CHINA MOBILE” is a registered trademark in the PRC owned by our parent company, CMCC. On January 1, 2013,In December 2017, we entered into a trademark license agreement, or the 20132018 Trademark License Agreement, to replace the trademark license agreement that we entered into in 2008,on January 1, 2013, or the 20082013 Trademark License Agreement. Under the 20132018 Trademark License Agreement, we and our operating subsidiaries have anon-exclusive right to use the “CHINA MOBILE” trademark in Mainland China and Hong Kong. The term of the 2018 Trademark License Agreement shall be five years, effective from January 1, 2018 and expiring on December 31, 2022. No license fee is payable by us to CMCC during the term of the 20132018 Trademark License Agreement.

In addition, the “CHINA MOBILE” name has been registered as a trademark by CMCC in Australia, Brunei, Cambodia, Canada, Hong Kong, India, Indonesia, Macau, New Zealand, Pakistan, South Africa, South Korea, Taiwan, Thailand, the United States and Yemen. Furthermore, CMCC has filed applications to register the “CHINA MOBILE” name as a trademark in Malaysia, in connection with certain goods and services. CMCC has also registered the “CHINA MOBILE” name as a trademark under the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks.

In 2013, we unveiled our new corporate logo. An application for registration of theThe new logo has been filedregistered as a trademark in Mainland China, Hong Kong, Macau, Taiwan, United Arab Emirates, Peru and Saudi Arabia and an application as a trademark under the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks has been approved in the United Kingdom and the United States. In addition, individual applications have been filed in Hong Kong, Macau, Pakistan16 countries and Taiwan.an application as a trademark under the Protocol Relating to the Madrid Agreement has been filed in 45 countries.

Mobile Networks

We offer mobile services using the Global System for Mobile Communications, or GSM standard, whichor the 2G standard, theTD-SCDMA standard, or the 3G standard, theTD-LTE standard, or the 4G standard and the LTE FDD standard.

The GSM standard is apan-European mobile system based on digital transmission and mobile network architecture with roaming capabilities. This standard is also referred as the 2G standard. Each of our GSM networks consists of base stations, base station controllers, mobile switching centers, transmission lines and software applications. We intend to use our GSM network to primarily carry voice usage and certain data traffic from mobile phones. Our GSM networks reach virtually all cities and counties and major roads and highways, as well as a substantial part of rural areas, throughout Mainland China and, through the network of Hong Kong Mobile, a substantial part of Hong Kong.

We also offer mobile services using the TD-SCDMA standard, or the 3G standard. We operate our 3G business based on an Internet Protocol based core network that is shared by our 2G, 3G and 4G services as well as theTD-SCDMA network capacity leased from CMCC.

In addition, we provide our customers with high-speed Internet access through our WLAN access points located throughout Mainland China. WLAN connects computers using wireless communication technology. Our customers may use mobile terminals such as handsets and notebooks to gain wireless access to the Internet or a corporate intranet.

On December 4, 2013, the MIIT granted to CMCC, China Telecom and China Unicom permission to operate TD-LTE businesses, and CMCC received permission to operate a TD-LTE business through us. Subsequently, we launched our TD-LTE business. TD-LTE is one of two models of LTE a mainstream standard for the evolution of 3G technology, and a standard for the evolution ofTD-SCDMA technology. We intend to use theTD-LTE network to primarily carry high bandwidthhigh-bandwidth and high qualityhigh-quality wireless broadband businesses. AsIn 2017, we further improved the performance of December 31, 2015,our 4G network by fixing the interference of atmospheric waveguide and optimizing3D-MIMO performance and continued to promote the standardization of VoLTE international roaming services. Furthermore, we cumulatively put in use 1.1 million 4G base stations whichcontinue to grow our content delivery network to cover a population of over 1.2 billion, realizing nationwide continuous coverage inmore cities and towns, effective coverage of data hotspot in villages, as well as full coverage of high speed rail, subways and key scenic areas, inexpandNB-IoT to achieveend-to-end scale commercial use. On April 3, 2018, the PRC.MIIT granted to CMCC permission to operate a LTE FDD business through us. As of March 31, 2016,2019, the number of our 4G customers had reached 376.5approximately 723.3 million. We aim to achieve the commercialization of VoLTE and establish our first mover advantage in this field.

In addition, we have been providing 4G services in Hong Kong since 2012 with the LTE FDD andTD-LTE bandwidths we previously obtained from the Office of the Telecommunications Authority of Hong Kong.

-33-

Our customers currently use our 2G services, our 3G services, our WLAN services, our 4G services or all of them. We intend to continue our network expansion and optimization with an emphasis on improving network utilization and operating efficiency, facilitating a smooth transition between, and integration of, our 2G, 3G and 4G services, and expanding the coverage and capacity of our integrated network. We believe that we have considerable network operation and maintenance experience and technical expertise.Day-to-day traffic management, troubleshooting, system maintenance and network optimization are conducted by our experienced team of engineers and technicians. Technical staffs are available for emergency repair work 24 hours a day and we employ specialist teams for central maintenance of the networks. Most technical difficulties relating to the networks are resolved by our staff and the maintenance service providers with which we have business relationships, while our equipment suppliers also provideback-up maintenance and technical support. We procure our network equipment and related maintenance and technical support mainly from a number of PRC and overseas telecommunications network equipment manufacturers and suppliers which include Huawei Technologies, ZTE Corporation, Nokia and Ericsson, among others.

-31-

Spectrum. A mobile network’s capacity is to a certain extent limited by the amount of frequency spectrum available. In coordination with the relevant provincial authorities, the MIIT regulates the allocation of radio frequency. The frequency assigned to an entity is not allowed to be leased or, without approval of the MIIT, transferred by the entity to any other third party. In accordance with a joint circular from the NDRC and the MOF, CMCC has entered into an agreement with us that specifies the amount of fees to be paid to the MIIT for spectrum usage by each mobile network operator based on the bandwidth of the frequency used.

SpectrumSince July 2017, spectrum usage fees were no longer charged based on different generations of telecommunications but on the particular frequency bands used. Meanwhile, the NDRC and the MOF adjusted the fees charged for GSM networks are currently charged ateach frequency band. The annual rate for frequency band below 960 MHz was reduced from RMB17 million to RMB16 million per MHz while the annual rate of RMB17 million perfor 960 MHz for the 900to 2,300 MHz frequency band andbands was reduced from RMB15 million to RMB14 million per MHz for the 1800 MHz frequency band. Spectrum usage fees are charged on the basis that uplink and downlink frequencies are separately charged. Spectrum usage fees for TD-SCDMA networks are currently charged atMHz. Additionally, the annual rate of RMB15for frequency band above 2,300 MHz was adjusted from RMB12 million to RMB 8 million per MHz for the 960 MHz to 2300 MHz frequency bands and RMB12 million per MHz for the 2300 MHz to 2690 MHz frequency bands, while rates for indoor-only frequency bands are set at 30% of the corresponding full rates. As of March 31, 2016, no detailed standards have been promulgated for spectrum usage fees for TD-LTE networks. The relevant regulatory authorities in China may review these fee arrangements in the future.MHz.

Our network expansion and optimization plans depend to a large extent upon the availability of sufficient spectrum. In December 2018, the MIIT granted CMCC, our parent company, a permit to use the frequency bands of 2515MHz-2675MHz and 4800MHz-4900MHz for the trial of the 5G system in Mainland China. For our GSM network, the MIIT has allocated a total of 45x2 MHz of spectrum in the 900 MHz and 18001,800 MHz frequency bands to be used nationwide for transmission and reception to our parent company, CMCC. In connection with our 3G business, the MIIT has allocated to CMCC, in various frequency bands, a total of 35 MHz of spectrum to be used for nationwide coverage, and an additional 50 MHz of spectrum to be used for indoor coverage. In connection with our 4G business, the MIIT has allocated to CMCC, in various frequency bands, a total of 145210 MHz of spectrum to be used for nationwide coverage, including 2035 MHz of spectrum previously allocated for use by our 3G business for outdoor coverage and 50 MHz of spectrum previously allocated for use by our 3G business for indoor coverage. In addition, CMCC was approved by MIIT to refarm the frequency band of 1800 MHz, which was initially allocated to 2G services, and deploy such frequency band for use in LTE FDD, IoT andNB-IoT services nationwide prior to the expiration of such approval at the end of 2019. Under the existing agreement between CMCC and us, we have the right to use CMCC’s allocated frequency spectrum in Mainland China.

Transmission Infrastructure. The physical infrastructure linking our network components and interconnecting our networks to other networks consists of transmissions lines, which provide the backbone infrastructure through which voice and data traffic is carried. We have directed efforts to establishing high-speed backbone transmission network and improving its overall transmission capabilities. As of December 31, 2018, the bandwidth of our backbone network has expanded by 48% as compared to December 31, 2017.

Leased Lines. The MIIT determines the standard lease tariffs to be paid by telecommunications operators with respect to the leasing of transmission lines that facilitate interconnection between telecommunications networks.Transmission lines constructed by us reached a sizeable scale through the continuous optimization of our network structure in recent years. In addition to our own transmission lines, we also lease intra-provincial and local transmission lines from other operators and pay them fees based on tariff schedules stipulated by the relevant regulatory authorities after adjusting for the discounts that we have negotiated. For the inter-provincial transmission lines we lease through CMCC from other providers, CMCC collects leasing fees from us and pays fees to the relevant transmission line providers.

-34-

Base Stations. In urban areas, our base stations are located mostly on existing structures, typically at the top of tall buildings. In rural areas, masts or towers are often constructed for locating base stations. In 2015,2018, we focused on constructing 4G base stations and put in use 1.10.54 million additional 4G base stations, which cover aincreasing the total number of stations to 2.41 million, covering more than 99% of the total population of over 1.2 billion in the PRC.China. We utilize the telecommunications towers from China Tower to construct our base stations.

Equipment Suppliers. We select our principal suppliers from leading international and domestic manufacturers of mobile equipment and in accordance with technical standards set by the MIIT. In 2015,2018, we purchased our networks equipment primarily from Huawei Technologies, ZTE Corporation, Ericsson, Nokia, FiberHome and Alcatel-Lucent Shanghai Bell.

In May 2015, CMC, our wholly-owned subsidiary, entered into a partnership agreement with SDIC,State Development & Investment Corp., Ltd., and CMFM,China Mobile Fund Management Co., Ltd., to establish China Mobile Fund to make investments in companies with growth potential which are engaged in the mobile Internet and related upstream and downstream businesses. Pursuant to such partnership agreement, CMC has made a capital commitment of RMB1,500 million (approximately US$231.6 million) and became a limited partner of China Mobile Fund. As of December 31, 2015,2018, CMC had contributed RMB360RMB1,134 million to China Mobile Fund and has a commitment to make further investment in an amount of RMB1,140RMB366 million upon the request by China Mobile Fund.

In November 2015, CM TieTong,Tietong, our wholly-owned subsidiary, acquired Target Assets and Businesses of China TieTong,Tietong, for a final consideration of RMB31,967 million (approximately US$4,934.9 million). Target Assets and Businesses acquired include approximately 99,000 cable kilometers of nationwide backbone networks, approximately 1,822,000 cable kilometers of metro fiber, approximately 24.71 million IPv4 addresses, 1,814 real properties and 685 land assets, approximately 11.98 million customers of fixed broadband services, and approximately 18.29 million customers for wireline services. The acquisition was completed in December 2015. The aforementioned acquisition ofBecause we and Target Assets and Businesses were under common control of China TieTongCMCC both prior to and after the acquisition, the acquisition was considered as a business combination under common control as CM TieTong and China TieTong are both ultimately controlled by our parent company, CMCC. Under IFRSs, such acquisition was accounted for using merger accounting in accordance with the Accounting GuidelineAG 5 “Merger Accounting for Common Control Combinations” (“AG 5”) issued by the HKICPA. Accordingly, the acquired Target Assets and Businesses arewere stated at predecessor values,their historical cost, and were included in the consolidated financial statements from the beginning of the earliest period presentedincluded in this annual report on Form20-F as if Target Assets and Businesses had always been part of the Group. As a result, the Group has restated the 2011, 2012, 2013 and 2014 comparative amounts of the consolidated statements of comprehensive income by including the operating results of Target Assets and Businesses and eliminating its transactions with Target Assets and Businesses, as if the acquisition had been completed on the earliest date ofour company during all the periods being presented, i.e., January 1, 2011. The consolidated balance sheets ofpresented. In 2018, partially due to the Group as at December 31, 2011, 2012, 2013benefit from the integration and 2014 was restated to include the assetssynergy brought by CM Tietong, our wireline broadband services experienced a rapid growth in both revenue and liabilities of Target Assets and Businesses.market share. See Note 2(b) to our consolidated financial statements.

“— Businesses — Data Business.” We expect that our acquisition of Target Assets and Businesses will further facilitate our transformation into a full servicefull-service operator offering both wireline broadband and mobile services, enable us to seize the opportunities in the wireline broadband market, expand our customer base, offer an integrated services consisting of the fixed-line and the mobile services, and increase our wireline broadband network capacity, coverage and efficiency through an integrated network.

In March 2016, CMC, our wholly-owned subsidiary, entered into a joint venture agreement with China Merchants Group to establish ShiJinShi Credit Information Services Co. Ltd., in Qianhai, Shenzhen of China with a registered capital of RMB300 million, in which we held a 42% equity interest. As of December 31, 2018, we had contributed RMB63.0 million (approximately US$9.2 million) to the joint venture. The joint venture is intended to provide credit reporting services and products for individuals, utilizing our competitive strengths in big data.

In November 2017, CMI Holdings, our wholly-owned subsidiary, entered into an agreement, pursuant to which it acquired an 11.43% equity interest in ChannelSoft, a software service provider, for a total consideration of RMB400 million (approximately US$61 million). Following our equity investment, ChannelSoft began working with our provincial operating subsidiaries and ShiJinShi Credit Information Services Co. Ltd., our joint venture with China Merchants Group, in call center infrastructure and big data-driven precision marketing.

-33-In July 2018, CMI Holdings, our wholly-owned subsidiary, participated in Xiaomi’s initial public offering as a cornerstone investor and subscribed for 46,164,600 shares, representing 0.2% of Xiaomi’s issued and outstanding share capital upon the completion of the offering, for a total consideration of HK$784.8 million. In July 2018, we entered into a strategic cooperation framework agreement with Xiaomi to explore new opportunities to collaborate, including in joint marketing, sales channel transformation, smart hardware, government and corporate businesses, overseas businesses, and industrial investment.

Competition

We compete with other market players in the telecommunications services providers. and related industries.

We are one of the three licensed telecommunications services providers in Mainland China. The PRC government encourages orderly and fair competition in the telecommunications industry in Mainland China. We may also face intense competition from existing operators from time to time. Our competitors launch, from time to time, promotional offers such as handset subsidies and tariff packages, to attract customers.

In May 2008, the MIIT, the NDRC and the MOF jointly announced a policy initiative to further reform the PRC telecommunications industry by encouraging the formation of three telecommunications services providers of comparable scale and standing, each with nationwide network resources, full-service capabilities and competitive strength, by way of a series of restructuring transactions. See “Item 4. Information on the Company — The History and Development of the Company — Industry Restructuring and Changes in Our Shareholding Structure.”

After completion of the industry restructuring in January 2009, China Telecom and China Unicom have been benefiting from, among other things, broader customer bases, more extensive networks, greater financial and other resources and more comprehensive technological capabilities, as compared to their customer bases, networks, resources and technological capabilities prior to the industry restructuring. These factors have intensified, and could further intensify, competition. On November 27, 2015, CM TieTongTietong entered into the Acquisition Agreement with China TieTongTietong to acquire Target Assets and Business, which we expect will facilitatehas facilitated and is expected to continue to benefit our transformation into a full servicefull-service operator offering both wireline broadband and mobile services. Having each operated

-36-

In the area of basic telecommunications services, the PRC government allows operators approved by the MIIT to lease and repackage mobile services for sale to end-customers on a wireline broadbandtrial basis and we face increasing competition from these new mobile network operators. In light of our recent permission to provide 4G services business for a numberbased on LTE FDD technology, we expect that the competition will intensify in the delivery of years,4G services against China Telecom and China Unicom, have advantagewhich operate their 4G services based mainly on LTE FDD technology for several years. Furthermore, in terms of the wireline broadband services. In January 2016, China Unicom and China Telecom entered into a strategic cooperation agreement to promote resource-sharing between the two companies. The areas of strategic cooperation include sharing capital expenditureexpenditures such as their new rural 4G network, promoting a new smartphone standard, and jointly negotiating international roaming rates. Such cooperation as contemplated by our two major competitors, if materialized, may significantly change the competitive landscape of the telecommunications industry in Mainland China.

In addition, Additionally, the PRC government has begun to allow certain operators approvedrequired the implementation of mobile number portability programs in Mainland China by the MIIT to lease and repackage mobile services for sale to end customers onof 2019. As a trial basis and weresult, the competition among telecommunication operators may face increasing competition from these new mobile network operators. be further intensified.

We also face increasinga variety of competition from competitors in related industries, generally Internet service providers and technology companies. They compete against us in both voice and data businesses by offering telecommunicationsmobile Internet access and Over The Top services, using alternative technologies. Furthermore,such as instant messaging, VoIP services, or audio or video content services delivered over the Internet. As we expect thatdiversify our offerings to become a full-service provider, we will face intense competitionalso compete with them in the delivery of 4Gemerging business, including home digital services, from China Telecommobile payment, IoT, smart home services, streaming media and China Unicom, which have received permits to operate their 4G services based mainly on FDD-LTE technology. on-demand video and other digital content business.

See “Risk“Item 3. Key Information — Risk Factors — Risks Relating to Our Business — CompetitionThe increasing competition from other telecommunications services providers and competitors in other related industries may further increase, which may reduce our market share and decrease our profit margin, and we cannot assure you that any potential changechanges in the competitive landscape of the telecommunications industry in Mainland China would not have a material adverse effect onmay reduce our business, financial conditionmarket share and results of operations.” And “Riskdecrease our profit margin” and “Item 3. Key Information — Risk Factors — Risks Relating to Our Business — Current or future asymmetrical and other regulatory measures adopted by the PRC regulatory authorities could materially harm our competitive position which wouldor enhance competition in turn significantly reduce our revenues and profitability, and our financial condition and results of operations may be materially and adversely affected.the telecommunications industry.”

Regulation

The telecommunications industry in Mainland China is highly regulated. Regulations issued or implemented by the State Council, the MIIT and other relevant government authorities, including the NDRC and, the Ministry of Commerce, or MOFCOM, encompass all key aspects of telecommunications network operations, including entry into the telecommunications industry, scope of permissible business, interconnection and transmission line arrangements, technology and equipment standards, tariff standards, capital investment priorities, foreign investment policies and spectrum and numbering resources allocation.

The MIIT, under the supervision of the State Council, is responsible for formulating policies and regulations for the telecommunications industry, granting telecommunications licenses, allocating frequency spectrum and numbers, formulating interconnection and settlement arrangements between telecommunications operators, and enforcing industry regulations.

-34-

In order to provide a uniform regulatory framework to encourage the orderly development of the telecommunications industry, the MIIT, under the direction of the State Council, has been preparing a draft telecommunications law. We expect that, if and when the telecommunications law is adopted by the National People’s Congress, it will become the basic telecommunications statute and the legal source of telecommunications regulations in Mainland China. In addition, the State Council promulgated a set of telecommunications regulations on September 25, 2000. These regulations apply in the interim period prior to the adoption of the telecommunications law. Although we expect that the telecommunications law will have a positive effect on the overall development of the telecommunications industry in Mainland China, we cannot predict what will be the ultimate nature and scope of the telecommunications law.

On December 25, 2015, the MIIT issued the Catalog of Telecommunications Services (2015 Edition), which became effective on March 1, 2016. It sets out classifications of various telecommunicationtelecommunications services for regulatory and licensing purposes.

-37-

Entry into the Industry. Under the current regulations, operators of mobile networks, providers of other basic telecommunications services such as local and long distancelong-distance fixed-line telephone services, and data service providers whose telecommunications services cover two or more provinces, directly-administered municipalities or autonomous regions in Mainland China must apply for specific permits from the MIIT in order to provide such services. Granting of permits for providing basic telecommunications services will be through a tendering process. In addition to us, China Telecom and China Unicom are currently also authorized to provide mobile services in all provinces, directly-administered municipalities and autonomous regions in China.

Pursuant to China’s commitments under the WTOWorld Trade Organization and the Provisions on the Administration of Foreign-Funded Telecommunications Enterprises, which became effective on January 1, 2002, foreign investors may invest in joint ventures that provide telecommunications services in Mainland China. However, these investments will presumably bear no direct relation to the issuance of licenses to providers of telecommunications services in Mainland China, as the issuance of new licenses by the relevant authority is governed by a separate set of rules and regulations. Pursuant to the Provisions on the Administration of Foreign-Funded Telecommunications Enterprises, as amended in September 2008,February 2016, foreign ownership in a telecommunications enterprise may be gradually increased to 49% if such enterprise provides basic telecommunications services and 50% if such enterprise provides value-added telecommunications services.

The MIIT has promulgated the Administrative Measures for the Licensing of Telecommunication Business Operations, which became effective on April 10, 2009.September 1, 2017. Those regulations apply to the application for, approval of, use and examination and approvalmanagement of telecommunications business licenses in the PRC.

The PRC government implemented a number of measures that permit certain operators approved by the MIIT to lease telecommunications infrastructure and repackage mobile services for sale to end customers.end-customers. On May 17, 2013, the MIIT announced that it would accept applications fromnon-State-owned companies to, on a trial basis, lease mobile services from China Unicom, China Telecom or us and provide mobile services to end customersend-customers after repackaging these services. The trial period ended on December 31, 2015. On January 24, 2018, the MIIT released a notice for public comment regarding the conversion of pilot license to an official license for the mobile services leasing and repackaging. On May 5, 2016, the MIIT officially issued a telecom license to China Broadcasting Network Ltd, making it the nation’s fourth telecommunications operator. In 2016, the MIIT also approved certain operators to refarm their respective frequency spectrum used for 2G and 3G services to provide 4G services. Since May 1, 2018, subject to MIIT’s approval, non-state-owned companies, state-owned companies and foreign invested enterprises are allowed to lease mobile services from China Unicom, China Telecom or us and provide mobile services to end-customers after repackaging these services.

Numbering Resources. The MIIT is responsible for the administration of the telecommunications numbering resources within Mainland China, including the telecommunications network numbers and customer numbers. The use of numbering resources by any telecommunications operator is subject to the approval by the MIIT. In addition, a user of numbering resources is required to pay a usage fee to the PRC government by the 10^th day of the first month of each quarter. Moreover, under the applicable regulations, mobile companies are required to pay an annual usage fee of RMB12RMB6 million for each network number.

Technical Standards. Certain regulatory authorities in Mainland China, including the MIIT, set technical standards and control the type, quality, manufacturing and sales of mobile equipment used in or connected to public networks, all radio telecommunications equipment and all interconnection related equipment.

The establishment of base stations requires the approval of the relevant provincial regulatory authorities. We have not experienced and do not expect to experience material difficulty in obtaining permission to establish additional sites.

Capital Investment. We may be required to obtain approvals from relevant regulatory authorities in Mainland China with respect to some of our investment projects.

-35-

Sharing of Telecommunications Infrastructure. In December 2014,June 2018, the MIIT and the SASACState-owned Assets Supervision and Administration Commission of the State Council jointly issued the 20152018 Implementation Opinions on Promoting the Joint Construction and Sharing of Telecommunications Infrastructure, or the Opinions. TheFirst, the Opinions requiredcontinued the implementation of the joint construction and sharing of three types of facilities, including transmission poles, pipelines,telecommunications infrastructure and indoor distribution systems, and identified four types of key sites, including public transportation, scenic areas and parks, buildings and other sites designated by local communications authorities, and two key areas of construction, namelyrequired that the inter-provincial trunk cables and domestic extensions of international transmission systems. The Opinions require that: the primary telecommunications enterprises, in principle, should not construct on their own supporting facilities for base stations, such as the telecommunications towers, and the indoor distribution systems for public transportation and buildings; whichbuildings, shall generally be uniformly planned, constructed and delivered by China Tower, with the exception that certain facilities may be constructed by China Tower; regarding thea telecommunications operator if serving only such operators’ demand. The Opinions also provided requirements for joint construction and sharing of broadband access network, transmission poles and pipelines. In particular, for new transmission poles and pipelines, for the four types of key sites and the two key areas of construction, both joint construction is mandatory if condition permits, and jointfor existing transmission poles, pipelines, base station areas and access network of base stations and international fibers, sharing are mandatory whenever conditions allow; regarding the construction of Fiber to the Home, or FTTH, in newly-built residential areas, the two national standards applicable to FTTH construction should be strictly implemented; asimplemented. Moreover, the Opinions attached significant importance to the Internet facilities for the broadband accessconstruction safety in existing residential areas, joint sharing is mandatory whenever conditions allow.connection with telecommunications infrastructure and set up relevant principles.

-38-

Convergence of Telecom, Broadcasting and Internet Businesses. In January 2010, the PRC government announced a policy decision, or the Three-Network-Convergence Policy, to accelerate the advancement of the convergence of television and radio broadcasting, telecommunications and Internet access businesses in order to realize interconnection and resource sharingresource-sharing between the three networks and further develop the provision of voice, data, television and other services. The PRC government may amend the relevant regulations or promulgate new regulations in order to implement the Three-Network Convergence Policy. In September 2012, we received an audio and video transmission license from the former State Administration of Radio, Film and Television of the PRC, or SARFT, which enables us to provide audio and video programs through broadband Internet and mobile Internet. In June 2018, we were granted by the SARFT an Internet protocol television transmission license, which allows us to carry out Internet protocol television business.

VATValue-added Tax Reform Applicable to the Telecommunications Industry. Effective from June 1, 2014, the PRC business tax was replaced with a value-added tax, or VAT, in the telecommunications industry. The pilot tax raterates for basic telecommunications services, is 11% and the pilot tax rate for value-added telecommunications services isand sales of products and others were 11%, 6%. The application of and 17%, respectively. According to Cai Shui [2018] No.32, the VAT at the rate of 11% applicable to our basic telecommunications services was reduced to 10%, and the telecommunications industry has had,VAT at the rate of 17% applicable to our sales of products and is expectedothers was reduced to continue to have, an adverse16%, which came into effect on May 1, 2018. On March 20, 2019, the MOF, the State Taxation Administration, and the General Administration of Customs issued Announcement [2019] No. 39, which reduced the VAT rate applicable to our operating revenuebasic telecommunications services from 10% to 9% and profits in the short term. See “Item 3. Key Information — Risk Factors — Risks RelatingVAT rate applicable to Our Business — Implementationour sales of value-addedproducts and others from 16% to 13% as well as promulgated supporting policies regarding input tax in Mainland China has had,on real estate, input tax on domestic passenger transport services, VAT credits and is expectedtax refund to continue to have, a negative impactdeepen such VAT tax reform. Announcement [2019] No. 39 came into effect on our operating revenue and profit.”April 1, 2019.

Our output VAT is excluded from operating revenue while our input VAT, which is incurred as a result of our receipt of services and purchases of telecommunications equipment and materials, is excluded from operating expenses or the original cost of equipment purchased and can be netted against our output VAT, arriving at the net amount of VAT recoverable or payable. As the VAT obligations are borne by our branches and subsidiaries, input and output VAT are set off at branches and subsidiaries levels, and the net amount of VAT recoverable or payable of branches and subsidiaries are not offset at the consolidation level. Such net amount of VAT is recorded in the line item of prepayments and other current assets and accrued expenses and other payables, respectively on the face of consolidated balance sheets.

Cyber Security.We will striveare subject to reduce the short-term adverseCyber Security Law, which came into effect on June 1, 2017. The Cyber Security Law sets forth an overarching framework regulating the network products, equipment, and services, as well as the operation and maintenance of information networks, protection of personal information, and supervision and administration of cyber security in Mainland China.

According to the Cyber Security Law, the Cyberspace Administration of China, or the CAC, has a central role in planning, coordination, supervision, and management of network security measures while the MIIT, the Ministry of Public Security and other relevant authorities are in charge of network security protection, supervision and management within the scope of their respective responsibilities. While several related regulations, including the Measures for the Security Review of Network Products and Services (for Trial Implementation) and the Provisions for the Administration of Internet News Information Services, published by the CAC came into effect on the same day as the Cyber Security Law, the implementation of the applicationCyber Security Law is still at an early stage. The PRC government may amend the relevant regulations or promulgate new regulations to clarify and further implement the Cyber Security Law. Although we expect that the Cyber Security Law will have a positive effect on the overall development of VAT to the telecommunications industry and enhance information protection in Mainland China, we currently cannot predict the scope of any specific requirements that may be imposed on us and their implications for our revenuesoperations under the Cyber Security Law and profits. Through various measures, including optimizationrelevant regulations.

E-Commerce Law.Effective from January 1, 2019, theE-Commerce Law of the developmentPRC, or theE-Commerce Law, stipulates requirements in connection with the registration and licensing ofe-commerce operators, taxation, electronic payment ande-commerce dispute resolution. It also addresses other important aspects ofe-commerce, such as false advertising, consumer protection, data protection and cybersecurity, as well as the protection of intellectual property. TheE-Commerce Law definese-commerce operators as natural and legal persons that engage in the business of selling merchandise and/or providing services on the internet or other information networks and coverse-commerce platform operators, vendors of goods and services on thee-commerce platforms of others, and those who operate their self-built websites or through other network services. TheE-Commerce Law provides that wheree-commerce platform operators know, or should know, that goods or services provided on the platform do not comply with requirements for personal or property security, or otherwise violate the lawful rights and interests of consumers, and they do not take necessary measures such as deleting, blocking links or stopping transactions, they will be jointly and severally liable with the online vendor.

Market Regulation. The principal regulations governing the market in China include the PRC Anti-Unfair Competition Law, which was promulgated in September 1993 and amended in November 2017, and the PRC Anti-Monopoly Law, which took effect in August 2008. The PRC Anti-Unfair Competition Law imposes stringent requirements on various promotional activities, such as prize-giving sales and marketing models, implementation of enhanced management over cost, procurement and vendors’ tax qualifications, obtaining more input VAT credits on capital expenditure, we may receive more input VAT credits to offset our VAT output tax obligation. Besides, we can optimize our revenue structure by actively promoting value-added telecommunications services, which are subject to a lower VAT rate. As a result, our overall VAT obligation could be further reduced.

As the application of VAT is expected to expand to other industries nationwide from May 1, 2016, such as construction industry and other service industries, more capital expenditures and operating expenses, such as commission and service expenses for third parties will be entitled to input VAT credits in the future, and in turn, further offset our VAT output tax obligations. This will be beneficialbundling sales. Pursuant to the developmentPRC Anti-Monopoly Law, monopolistic conduct, including entering into monopoly agreements, abuse of our businessdominant market position and further reduceconcentration of undertakings that have the adverse impacteffect of eliminating or restricting competition, is prohibited. Sanctions for violation of the implementationprohibition on monopoly agreements and the abuse of VAT on our operating revenuesdominant market position include an order to cease the relevant activities, confiscation of illegal gains and profitability.

Forfines, while for failure of declaration prior to concentration, the regulations in relationantitrust authority is empowered to tariff setting, spectrum usage, interconnection arrangementsterminate and/or unwind the transaction, dispose of relevant assets, shares or businesses and lease line arrangements, see “ —Tariffs”, “ —Interconnection”, “ — Mobile Networks — Spectrum” and “ — Mobile Networks — Leased Lines”.

Employees.

As of December 31, 2013, 20142016, 2017 and 2015,2018, we had 197,030, 241,550460,647, 464,656 and 438,645459,152 employees, respectively. The significant increase in the number of the employees in 2015 was attributable to the requirement of reducing the proportion of labor sourced by third parties that provide services to us among the total labor under the Labor Contract Law of the People’s Republic of China, as amended, and its associated regulations, as a result of which we have made an adjustment on the structure of employees and outsourcing labor, leading to the significant increase in the number of employees and the significant decrease in number of outsourcing labor in 2015. Substantially all of our employees are located in Mainland China. The employees as of December 31, 20152018 are classified in the following table. Approximately 56.56%63.9% of our permanent employees have college or graduate degrees. Set forth below is a breakdown of our employees by function as of December 31, 2015.2018: