Analysis of China Mobile's 'Existing Customer Exploitation' Phenomenon and Its Valuation Impact

Recently, the issue of existing customer exploitation by China’s three major telecom operators has attracted widespread attention. In December 2025, multiple mainstream media outlets reported intensively on this phenomenon: People’s Daily publicly criticized the numerous tricks of operators’ packages being ‘easy to upgrade but hard to downgrade’ [1], 36Kr published an in-depth report titled “Why Are Old Users Always Ripped Off? What Operator Exploitation Secrets Did Luo Yonghao Reveal?” [2], and Sina Finance published a comment titled “Packages Turn into Tricks: We Must Crack Down on Operator Exploitation of Existing Customers” [3].

This public opinion situation has the following characteristics:

Dimension	Specific Situation
Media Level	Central media, authoritative financial media, and self-media form a reporting matrix
Public Opinion Heat	Formed a public opinion focus in a short time, with a surge in readership and discussions
Regulatory Signal	The criticism from People’s Daily sends a clear signal of stricter regulation

Based on report summaries, current operator exploitation of existing customers mainly manifests in the following aspects:

• ‘Easy to upgrade, hard to downgrade’ phenomenon
  : Users can upgrade packages easily and quickly, but face many obstacles when downgrading, often told to pay liquidated damages or directly refused
• Differential treatment between new and existing users
  : New users can choose more cost-effective packages, while existing users are restricted to ‘less cost-effective’ old packages

• Misleading定向流量
  : Claiming ‘unlimited massive data usage’, but in reality most are定向流量 that cannot be used universally
• Free phone trap
  : Luring users into signing high-priced long-term contracts with the gimmick of ‘free phones’
• Hidden upgrades
  : Upgrading packages without users’ knowledge, or misleading through vague terms

• After signing long-term contracts, users face high liquidated damages to change packages
• High exit costs for packages form de facto user ‘lock-in’

From the capital market performance, China Mobile (0941.HK) currently has a share price of HK$82.80, with a 52-week trading range of HK$73.50-HK$90.60, currently in the lower middle of the range [4]. The P/E valuation is approximately 11.08 times, which is reasonable in the telecom industry [4]. Observing recent share price performance, public opinion has not caused significant stock price fluctuations.

1. Stable performance support
   : The company’s revenue maintained growth in the first three quarters of 2025, with a net profit margin of 13.66% (healthy level) and ROE reaching 10.27% [4]
2. Large user base
   : As one of the world’s largest telecom operators, China Mobile has nearly 1 billion users, with a solid existing user base
3. Institutional investor focus
   : Professional institutions such as public funds pay more attention to financial indicators, cash flow, and dividend capacity; user complaint issues are unlikely to become core selling reasons in the short term
4. Special status of central enterprise
   : As a central enterprise, China Mobile has a certain ‘moat’ effect in the capital market

Although the short-term impact is limited, from a long-term perspective, the ‘existing customer exploitation’ phenomenon may have a gradual negative impact on the company’s valuation:

• As the official newspaper of the CPC Central Committee, People’s Daily’s critical articles usually signal upcoming stricter regulation
• The Ministry of Industry and Information Technology may introduce stricter package management norms and impose quantitative penalties for violations
• Regulatory penalties and rectification requirements may affect short-term performance

• With the in-depth implementation of number portability policies, the cost for users to switch operators has been significantly reduced
• Competition among operators intensifies in the 5G era, expanding user choices
• Accumulation of negative word-of-mouth may accelerate user migration to competitors

• Damaged brand image affects new user acquisition capabilities
• Corporate reputation has an increasing weight in ESG (Environmental, Social, Governance) assessments by institutional investors
• May be included in the negative list of ‘social responsibility investment’

• The current ‘existing customer exploitation’ strategy is essentially a short-sighted behavior under stock competition
• In the long run, competition strategies centered on user experience are more sustainable
• Stricter regulation and technological changes may end the existing arbitrage space

Risk Scenario	Potential Impact	Valuation Adjustment Range
Mild regulation (criticism, window guidance)	Reputation damage, marketing restrictions	-2% to -5%
Moderate regulation (fines, business rectification)	Short-term performance pressure, accelerated user churn	-5% to -10%
Severe regulation (package restructuring, competitive pattern changes)	Business model adjustment, valuation system reshaping	-10% to -20%

: The above adjustments are professional judgments; actual fluctuations depend on multiple factors

China Mobile’s current P/E is approximately 11 times, lower than the historical average; EV/OCF is about 5.82 times, with a certain margin of safety [4]. From a fundamental perspective, the company has stable cash flow and attractive dividend yield.

• Regulatory dynamics
  : Closely monitor subsequent policy trends of the Ministry of Industry and Information Technology and relevant departments
• User data
  : Track net user growth/churn in quarterly reports
• Package adjustments
  : Pay attention to whether the company proactively optimizes package structures in response to public opinion
• Competitive pattern
  : Observe the response strategies and market share changes of China Telecom and China Unicom

1. Regulatory policy uncertainty may exceed expectations
2. Accelerated user churn may affect long-term growth logic
3. The valuation system may be reshaped due to changes in the business model

The short-term impact of China Mobile’s existing customer exploitation phenomenon on the company’s valuation is limited, mainly due to stable performance, a large user base, and the buffer provided by its central enterprise status. However, from a long-term perspective, if this issue is not effectively resolved, it may trigger multiple risks such as stricter regulation, user churn, and brand damage, putting gradual pressure on valuation.

: The current valuation has a certain margin of safety, but it is necessary to closely monitor regulatory developments and user data to evaluate the risk evolution path. If the company can proactively optimize package structures and improve user experience, it is expected to resolve valuation risks; if it continues to ignore user demands, investors should be alert to the possibility of a downward shift in the valuation center.

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[1] Phoenix Tech - People’s Daily: Mobile packages are easy to upgrade but hard to downgrade, with many tricks that can’t ‘tie’ users’ hearts (https://tech.ifeng.com/c/8pLYNkZp96M)

[2] 36Kr - Why Are Old Users Always Ripped Off? What Operator Exploitation Secrets Did Luo Yonghao Reveal? (https://m.36kr.com/p/3609210349617921)

[3] Sina Finance - Commentary | Packages Turn into Tricks: We Must Crack Down on Operator Exploitation of Existing Customers (https://finance.sina.com.cn/jjxw/2025-12-20/doc-inhcmnmp1412606.shtml)

[4] Jinling API Market Data