China Mobile AI Revenue Grows Less Than 1% As 9% VAT Hits Telecoms
Light Reading reported that China Mobile's first-half net income fell 6% as a VAT rise pressured communications revenue, while AI revenue grew by less than 1%.
China Mobile's AI growth has flattened while a higher value-added tax cuts into its core telecoms business, Light Reading reported, turning the operator's first-half results into a measure of how slowly new digital revenue can offset a saturated connectivity market.
Net income fell 6% from a year earlier.
Revenue declined 1.1% to RMB538 billion, or $79.8 billion, and sales from the communications, computing and AI businesses dropped 3.1% to RMB453 billion, or $67.2 billion.
Net profit was RMB79 billion, equal to $11.7 billion.
The earnings filing placed the pressure on both market conditions and policy changes.
China Mobile said the first half of 2026 brought "external headwinds and multifaceted challenges," and the telecoms businesses were affected by the shift from conventional to new growth drivers, the market environment and changes to the scope of VAT.
Mobile data, SMS and broadband moved into a 9% VAT bracket at the start of the year after previously being taxed at 6%.
Communications revenue, covering broadband, mobile and IoT, fell 5.7% to RMB350.4 billion, or $52 billion, and mobile average revenue per user dropped 9% to RMB45.1, or $6.70.
Computing was the only main unit to expand.
That business generated RMB53 billion, or $7.9 billion, after 14% growth, helped by a 13% increase in data centre sales.
Non-core revenue, mostly handset sales, increased 11%.
The AI line did not match the broader market acceleration around model training and inference demand.
AI revenue grew by less than 1%, and the company gave no detail for the token business even though that segment is also associated with high-growth demand.
The customer base still gives China Mobile a large distribution surface.
The operator listed 1.01 billion mobile customers, including 687 million 5G customers, alongside 117 million gigabit broadband connections and 1.51 billion IoT connections.
SIM distribution has also tightened.
Online channels such as JD.com and Taobao had offered steeply discounted mobile packages, including 200GB for as little as RMB20, before the three national operators ended third-party sales at the start of the month.
Online orders now run through operators' own websites or apps.
Equity performance shows the same pressure across the sector.
China Telecom and China Unicom have fallen 14% and 18% this year, while China Mobile is down 1.7% after closing 1% higher on Friday.
The first-half figures leave China Mobile with a scale advantage but a weaker conversion story for AI.
Computing is expanding, the legacy communications base is shrinking, and the company has not yet shown that AI or token services can carry enough disclosed revenue to offset tax and pricing pressure in mobile and broadband.
