##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549





FORM 20-F







| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------------------

OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2015

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
 to

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Date of event requiring this shell company report

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:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange on Which
Registered
|Ordinary shares     |  | New York Stock Exchange*                 



|* | Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares representing the ordinary shares.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------

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 ordinary 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 Regulation S-T 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, or a non-accelerated filer. See definition
of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |                         
|-------------------------- |  | -------------------- |  | ------------------------
|Large accelerated filer  x |  | Accelerated filer   ̈ |  | Non-accelerated filer   ̈

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



|             |  |                                                                                                          |  |         
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | --------
|U.S. GAAP   ̈ |  | International Financial Reporting Standards as issued
by the International Accounting Standards Board  x |  | Other   ̈

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 Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x









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TABLE OF CONTENTS

China Mobile Limited



|                           |  |                                                                              |   |      |    | 
|-------------------------- |  | ---------------------------------------------------------------------------- | - | ---- | -- | 
|                           |  |                                                                              |   | Page |   
|Forward-Looking Statements |  |                                                                              | 1 |     
|                           |  |                                                                             
|                           |  | PART I                                                                       |   |      |    | 
|                           |  |                                                                             
|Item 1.                    |  | Identity of Directors, Senior Management and Advisers                        |   |      | 2  | 
|Item 2.                    |  | Offer Statistics and Expected Timetable                                      |   |      | 2  | 
|Item 3.                    |  | Key Information                                                              |   |      | 2  | 
|Item 4.                    |  | Information on the Company                                                   |   |      | 19 | 
|Item 4A.                   |  | Unresolved Staff Comments                                                    |   |      | 37 | 
|Item 5.                    |  | Operating and Financial Review and Prospects                                 |   |      | 38 | 
|Item 6.                    |  | Directors, Senior Management and Employees                                   |   |      | 52 | 
|Item 7.                    |  | Major Shareholders and Related Party Transactions                            |   |      | 56 | 
|Item 8.                    |  | Financial Information                                                        |   |      | 60 | 
|Item 9.                    |  | The Offer and Listing                                                        |   |      | 60 | 
|Item 10.                   |  | Additional Information                                                       |   |      | 61 | 
|Item 11.                   |  | Quantitative and Qualitative Disclosures About Market Risk                   |   |      | 69 | 
|Item 12.                   |  | Description of Securities Other than Equity Securities                       |   |      | 70 | 
|                           |  |                                                                             
|                           |  | PART II                                                                      |   |      |    | 
|                           |  |                                                                             
|Item 13.                   |  | Defaults, Dividend Arrearages and Delinquencies                              |   |      | 72 | 
|Item 14.                   |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |   |      | 72 | 
|Item 15.                   |  | Controls and Procedures                                                      |   |      | 72 | 
|Item 16A.                  |  | Audit Committee Financial Expert                                             |   |      | 73 | 
|Item 16B.                  |  | Code of Ethics                                                               |   |      | 73 | 
|Item 16C.                  |  | Principal Accountant Fees and Services                                       |   |      | 73 | 
|Item 16D.                  |  | Exemptions from the Listing Standards for Audit Committees                   |   |      | 73 | 
|Item 16E.                  |  | Purchases of Equity Securities by the Issuer and Affiliated
Purchasers       |   |      | 73 | 
|Item 16F.                  |  | Change in Registrants Certifying Accountant                                 |   |      | 73 | 
|Item 16G.                  |  | Corporate Governance                                                         |   |      | 73 | 
|Item 16H.                  |  | Mine Safety Disclosure                                                       |   |      | 74 | 
|                           |  |                                                                             
|                           |  | PART III                                                                     |   |      |    | 
|                           |  |                                                                             
|Item 17.                   |  | Financial Statements                                                         |   |      | 75 | 
|Item 18.                   |  | Financial Statements                                                         |   |      | 75 | 
|Item 19.                   |  | Exhibits                                                                     |   |      | 75 | 



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Forward-Looking Statements

This annual report on Form 20-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:



| |  |  | our business objectives and strategies, including those relating to the development of our terminal procurement and distribution business;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our operations and prospects;
| | - |  | -----------------------------



| |  |  | our network expansion and capital expenditure plans;
| | - |  | ----------------------------------------------------



| |  |  | the expected impact of any acquisitions or other strategic transactions;
| | - |  | ------------------------------------------------------------------------



| |  |  | our provision of services, including fourth generation, or 4G, services, wireline broadband services and services based on technological evolution, and our ability to attract customers to these services;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the planned development of future generations of mobile technologies and other technologies and related applications;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | the anticipated evolution of the industry chain of 4G and future generations of mobile technologies, including future development in, and availability of, terminals that support our provision of services based on 4G and
future generations of mobile technologies;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the expected benefit from our investment in and any arrangements with China Tower Corporation Limited;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | the expected benefit from our acquisition and planned integration of certain assets, businesses and related liabilities and employees from China Tietong Telecommunications Corporation;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the expected impact of the implementation in Mainland China of value-added tax, the policy of speed upgrade and tariff reduction on our business, financial condition and results of operations;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the expected impact of tariff changes on our business, financial condition and results of operations;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | the expected impact of new service offerings on our business, financial condition and results of operations; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | future developments in the telecommunications industry in Mainland China, including changes in the regulatory and competitive landscape.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------

The words aim, anticipate, believe, could, estimate, expect,
intend, may, plan, seek, should, 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.



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##### Table of Contents

PART I



|Item 1. | Identity of Directors, Senior Management and Advisers.
|------- | ------------------------------------------------------

Not applicable.



|Item 2. | Offer Statistics and Expected Timetable.
|------- | ----------------------------------------

Not applicable.



|Item 3. | Key Information.
|------- | ----------------

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. 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, 2014 and 2015 and the selected historical consolidated balance sheet data as of December 31, 2014 and 2015 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 Form 20-F. The selected historical consolidated statement of comprehensive income data for the years ended
December 31, 2011 and 2012 and the selected historical consolidated balance sheet data as of December 31, 2011, 2012 and 2013 set forth below are derived from our internal records and management accounts that are not included in this
annual report on Form 20-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, acquired certain telecommunications
assets, businesses and related liabilities and 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 completed in December 2015. See Item 4. Information on the CompanyBusiness OverviewAcquisition from China TieTong of certain Assets, Businesses and
Related Liabilities and Employees. The aforementioned 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 (AG 5) issued by the Hong Kong
Institute of Certified Public Accountants (HKICPA). Accordingly, the acquired Target Assets and Businesses are stated at predecessor values, and were included in the consolidated financial statements from the beginning of the earliest
period presented 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 of the 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) to our consolidated financial statements.



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The statistical information set forth in this annual report on Form 20-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.



|                                                                                   |  |                                                                |            |   |                       |  |            |                       |  |  |                      |   |  |      |            |   |      |  |            |   |  |  |            |  
|---------------------------------------------------------------------------------- |  | -------------------------------------------------------------- | ---------- | - | --------------------- |  | ---------- | --------------------- |  |  | -------------------- | - |  | ---- | ---------- | - | ---- |  | ---------- | - |  |  | ---------- | -
|                                                                                   |  | As of or for the year ended December 31,                       |           
|                                                                                   |  | 2011(As restated)(1)                                           |            |   | 2012(As restated) (1) |  |            | 2013(As restated) (1) |  |  | 2014(As restated)(1) |   |  | 2015 |            |   | 2015 | 
|                                                                                   |  | RMB                                                            |            |   | RMB                   |  |            | RMB                   |  |  | RMB                  |   |  | RMB  |            |   | US$  | 
|                                                                                   |  | (in millions, except share, per share
and per ADS information) |           
|Consolidated Statement of Comprehensive Income Data:                               |  |                                                                |            |   |                       |  |            |                       |  |  |                      |   |  |      |            |   |      |  |            |   |  |  |            |  
|Operating revenue(2)                                                               |  |                                                                | 547,286    |   |                       |  | 591,006    |                       |  |  | 640,048              |   |  |      | 651,509    |   |      |  | 668,335    |   |  |  | 103,173    |  
|Operating expenses(2)(3)                                                           |  |                                                                | 396,541    |   |                       |  | 440,317    |                       |  |  | 508,624              |   |  |      | 534,189    |   |      |  | 565,413    |   |  |  | 87,285     |  
|Profit from operations                                                             |  |                                                                | 150,745    |   |                       |  | 150,689    |                       |  |  | 131,424              |   |  |      | 117,320    |   |      |  | 102,922    |   |  |  | 15,888     |  
|Profit before taxation                                                             |  |                                                                | 162,864    |   |                       |  | 168,793    |                       |  |  | 153,649              |   |  |      | 142,522    |   |      |  | 143,734    |   |  |  | 22,189     |  
|Taxation                                                                           |  |                                                                | (40,593    | ) |                       |  | (41,887    | )                     |  |  | (36,746              | ) |  |      | (33,179    | ) |      |  | (35,079    | ) |  |  | (5,415     | )
|Profit for the year attributable to equity shareholders                            |  |                                                                | 122,162    |   |                       |  | 126,799    |                       |  |  | 116,791              |   |  |      | 109,218    |   |      |  | 108,539    |   |  |  | 16,756     |  
|Basic earnings per share(4)                                                        |  |                                                                | 6.09       |   |                       |  | 6.31       |                       |  |  | 5.81                 |   |  |      | 5.38       |   |      |  | 5.30       |   |  |  | 0.82       |  
|Diluted earnings per share(4)                                                      |  |                                                                | 6.01       |   |                       |  | 6.23       |                       |  |  | 5.74                 |   |  |      | 5.35       |   |      |  | 5.30       |   |  |  | 0.82       |  
|Basic earnings per ADS(4)                                                          |  |                                                                | 30.44      |   |                       |  | 31.56      |                       |  |  | 29.05                |   |  |      | 26.91      |   |      |  | 26.51      |   |  |  | 4.09       |  
|Diluted earnings per ADS(4)                                                        |  |                                                                | 30.07      |   |                       |  | 31.17      |                       |  |  | 28.71                |   |  |      | 26.76      |   |      |  | 26.50      |   |  |  | 4.09       |  
|Number of shares utilized in basic earnings per share calculation (in thousands)   |  |                                                                | 20,068,194 |   |                       |  | 20,090,824 |                       |  |  | 20,101,232           |   |  |      | 20,293,254 |   |      |  | 20,473,119 |   |  |  | 20,473,119 |  
|Number of shares utilized in diluted earnings per share calculation (in thousands) |  |                                                                | 20,315,252 |   |                       |  | 20,341,516 |                       |  |  | 20,343,120           |   |  |      | 20,408,441 |   |      |  | 20,479,706 |   |  |  | 20,479,706 |  



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|                                                   |  |                                                                |          |   |                      |  |           |                      |  |  |                      |   |  |      |           |   |      |  |           |   |  |  |         |  
|-------------------------------------------------- |  | -------------------------------------------------------------- | -------- | - | -------------------- |  | --------- | -------------------- |  |  | -------------------- | - |  | ---- | --------- | - | ---- |  | --------- | - |  |  | ------- | -
|                                                   |  | 2011(As restated)(1)                                           |          |   | 2012(As restated)(1) |  |           | 2013(As restated)(1) |  |  | 2014(As restated)(1) |   |  | 2015 |           |   | 2015 | 
|                                                   |  | RMB                                                            |          |   | RMB                  |  |           | RMB                  |  |  | RMB                  |   |  | RMB  |           |   | US$  | 
|                                                   |  | (in millions, except share, per share
and per ADS information) |         
|                                                   |  |                                                                |          |   |                      | 
|Consolidated Balance Sheet Data:                   |  |                                                                |          |   |                      |  |           |                      |  |  |                      |   |  |      |           |   |      |  |           |   |  |  |         |  
|Working capital(5)                                 |  |                                                                | 81,515   |   |                      |  | 99,396    |                      |  |  | 80,009               |   |  |      | 34,433    |   |      |  | (12,341   | ) |  |  | (1,905  | )
|Cash and cash equivalents                          |  |                                                                | 89,938   |   |                      |  | 75,764    |                      |  |  | 51,180               |   |  |      | 73,812    |   |      |  | 79,842    |   |  |  | 12,325  |  
|Bank deposits                                      |  |                                                                | 247,134  |   |                      |  | 332,495   |                      |  |  | 375,127              |   |  |      | 353,507   |   |      |  | 323,330   |   |  |  | 49,914  |  
|Accounts receivable                                |  |                                                                | 9,642    |   |                      |  | 11,918    |                      |  |  | 14,083               |   |  |      | 16,715    |   |      |  | 17,743    |   |  |  | 2,739   |  
|Property, plant and equipment                      |  |                                                                | 429,836  |   |                      |  | 469,627   |                      |  |  | 520,571              |   |  |      | 605,023   |   |      |  | 585,631   |   |  |  | 90,406  |  
|Total assets                                       |  |                                                                | 991,935  |   |                      |  | 1,110,478 |                      |  |  | 1,222,684            |   |  |      | 1,348,035 |   |      |  | 1,427,895 |   |  |  | 220,429 |  
|Bondscurrent portion(6)                           |  |                                                                | 800      |   |                      |  |          |                      |  |  |                     |   |  |      | 1,000     |   |      |  |          |   |  |  |        |  
|non-current portion                               |  |                                                                | 5,984    |   |                      |  | 5,986     |                      |  |  | 5,989                |   |  |      | 4,992     |   |      |  | 4,995     |   |  |  | 771     |  
|Deferred consideration payable(7)                  |  |                                                                | 23,633   |   |                      |  | 23,633    |                      |  |  |                     |   |  |      |          |   |      |  |          |   |  |  |        |  
|Total liabilities                                  |  |                                                                | 337,537  |   |                      |  | 383,658   |                      |  |  | 401,561              |   |  |      | 459,052   |   |      |  | 507,527   |   |  |  | 78,349  |  
|Share capital(8)                                   |  |                                                                | 2,140    |   |                      |  | 2,142     |                      |  |  | 2,142                |   |  |      | 400,737   |   |      |  | 402,130   |   |  |  | 62,078  |  
|Shareholders equity                               |  |                                                                | 653,041  |   |                      |  | 724,958   |                      |  |  | 819,171              |   |  |      | 886,916   |   |      |  | 917,336   |   |  |  | 141,612 |  
|Other Financial Data:                              |  |                                                                |          |   |                      |  |           |                      |  |  |                      |   |  |      |           |   |      |  |           |   |  |  |         |  
|Capital expenditures and land lease
prepayments(9) |  |                                                                | (134,353 | ) |                      |  | (144,362  | )                    |  |  | (149,121             | ) |  |      | (175,701  | ) |      |  | (173,693  | ) |  |  | (26,814 | )
|Net cash generated from operating activities       |  |                                                                | 227,863  |   |                      |  | 233,776   |                      |  |  | 226,905              |   |  |      | 216,438   |   |      |  | 235,089   |   |  |  | 36,291  |  
|Net cash used in investing activities              |  |                                                                | (179,477 | ) |                      |  | (210,447  | )                    |  |  | (180,122             | ) |  |      | (151,230  | ) |      |  | (142,743  | ) |  |  | (22,036 | )
|Net cash used in financing activities              |  |                                                                | (54,642  | ) |                      |  | (37,514   | )                    |  |  | (71,312              | ) |  |      | (42,530   | ) |      |  | (86,510   | ) |  |  | (13,355 | )
|Dividend declared                                  |  |                                                                | 54,298   |   |                      |  | 55,821    |                      |  |  | 52,675               |   |  |      | 47,170    |   |      |  | 46,145    |   |  |  | 7,124   |  
|Dividend declared per share (RMB)                  |  |                                                                | 2.730    |   |                      |  | 2.773     |                      |  |  | 2.621                |   |  |      | 2.311     |   |      |  | 2.205     |   |  |  | 0.340   |  
|Dividend declared per share (HK$)                  |  |                                                                | 3.327    |   |                      |  | 3.411     |                      |  |  | 3.311                |   |  |      | 2.920     |   |      |  | 2.721     |   |  |  | 0.340   |  



|(1) | As described in Note 2(b) to our consolidated financial statements, certain restatements to periods in 2011, 2012, 2013 and 2014 have been made to reflect our acquisition of Target Assets and Businesses which was
accounted for using merger accounting in accordance with the Accounting Guideline 5 Merger Accounting for Common Control Combinations (AG 5) issued by the HKICPA.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Prior to 2013, the sales of products were incidental to our telecommunications services. In 2013, 2014 and 2015, our sales of products have become more than incidental as a result of our business development, and
accordingly we present the revenue from sales of products and related cost of products sold separately with the comparative figures also being presented on the same basis. Such change in presentation had no impact on reported profit or net assets
for any of the years presented.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | In accordance with requirements of reducing the proportion of labor sourced by third parties that provide services to the Group (outsourcing labor) among total labor under Amendment to Labor Contract
Law of the PRC and its associated rules and regulations, we have made adjustment on the structure of employees and outsourcing labor. Such adjustment leads to the increase in number of employees and the decrease in number of outsourcing labor
in 2015. In order to reasonably reflect the composition and fluctuation of employee benefit and related expenses, we present employee benefit and related expenses by combining personnel expenses and labor service expenses, the latter of which was
presented under other operating expenses prior to 2015. The comparative figures have been presented on the same basis. Such change in presentation had no impact on reported profit or net assets for any of the years presented.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The basic earnings per share have been computed by dividing profit attributable to our equity shareholders by the weighted average number of shares outstanding in 2011, 2012, 2013, 2014 and 2015. The diluted earnings
per share have been computed after adjusting for the effects of all dilutive potential ordinary shares. Dilutive potential ordinary shares resulting from the share options granted to our directors and employees under the share option scheme would
decrease profit attributable to equity shareholders per share. The basic and diluted earnings per ADS amounts have been computed based on one ADS representing five ordinary shares.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Represents current assets minus current liabilities.
|--- | ----------------------------------------------------

|(6) | The current portion of the bonds as at December 31, 2011 was issued by China TieTong on November 8, 2007, with a principal amount of RMB800 million, at an issue price equal to the face value of the bonds. The
bond was unsecured and bore interest at rate of 5.3% per annum which is payable annually. The bond was fully repaid on November 8, 2012. The current portion of the bonds as of December 31, 2014 was issued by China TieTong on
August 18, 2005, with a principal amount of RMB1,000 million, at an issue price equal to the face value of the bonds. The bond was unsecured and bore interest at rate of 4.6% per annum which is payable annually. The bond was fully
repaid on August 18, 2015.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(7) | Represents the respective balance of the purchase consideration payable to our immediate holding company for our acquisition of the eight regional mobile telecommunications companies in 2002 and for our acquisition of
the ten regional mobile telecommunications companies and other telecommunications assets in 2004. The deferred consideration was fully repaid by December 31, 2013.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Under the new Hong Kong Companies Ordinance (Cap. 622 of the laws of Hong Kong), or the Companies Ordinance, which has been in effect since March 3, 2014, the concept of authorized share capital no longer exists
and our shares no longer have a par or nominal value. There is no impact on the number of shares in issue or the relative entitlement of any of our shareholders as a result of this transition. In addition, in accordance with the transitional
provisions set forth in Section 37 of Schedule 11 to the Companies Ordinance, any amount standing to the credit of the share premium account has become part of our share capital.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Represents payments made for capital expenditures and land lease prepayments during the year and included in net cash used in investing activities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

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



|                                  |  |                 |        |  |     |  |                 |  |  |                                   |  |  |        |  |  |  |        | 
|--------------------------------- |  | --------------- | ------ |  | --- |  | --------------- |  |  | --------------------------------- |  |  | ------ |  |  |  | ------ | 
|                                  |  | RMB per US$1.00 |        |  |     |  | HK$ per US$1.00 | 
|                                  |  | High            |        |  | Low |  |                 |  |  | High                              |  |  | Low    | 
|October 2015                      |  |                 | 6.3591 |  |     |  | 6.3180          |  |  | October 2015                      |  |  | 7.7503 |  |  |  | 7.7495 | 
|November 2015                     |  |                 | 6.3945 |  |     |  | 6.3180          |  |  | November 2015                     |  |  | 7.7526 |  |  |  | 7.7498 | 
|December 2015                     |  |                 | 6.4896 |  |     |  | 6.3883          |  |  | December 2015                     |  |  | 7.7527 |  |  |  | 7.7496 | 
|January 2016                      |  |                 | 6.5932 |  |     |  | 6.5219          |  |  | January 2016                      |  |  | 7.8270 |  |  |  | 7.7505 | 
|February 2016                     |  |                 | 6.5795 |  |     |  | 6.5154          |  |  | February 2016                     |  |  | 7.7969 |  |  |  | 7.7700 | 
|March 2016                        |  |                 | 6.5500 |  |     |  | 6.4480          |  |  | March 2016                        |  |  | 7.7745 |  |  |  | 7.7528 | 
|April 2016 (up to April 19, 2016) |  |                 | 6.4810 |  |     |  | 6.4571          |  |  | April 2016 (up to April 19, 2016) |  |  | 7.7569 |  |  |  | 7.7537 | 

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



|     |  |                 |        |  |                 |  |        | 
|---- |  | --------------- | ------ |  | --------------- |  | ------ | 
|     |  | RMB per US$1.00 |        |  | HK$ per US$1.00 | 
|     |  |                
|2011 |  |                 | 6.4475 |  |                 |  | 7.7793 | 
|2012 |  |                 | 6.2990 |  |                 |  | 7.7556 | 
|2013 |  |                 | 6.1412 |  |                 |  | 7.7565 | 
|2014 |  |                 | 6.1704 |  |                 |  | 7.7554 | 
|2015 |  |                 | 6.2869 |  |                 |  | 7.7519 | 



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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.

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 as 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 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. 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.



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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., or China Unicom, China
Telecommunications Corporation, or China Telecom, and us. In January 2016, China Unicom and China Telecom entered into a strategic cooperation agreement to promote resource-sharing in several key aspects of business operations. Such cooperation as
contemplated by our two major competitors, if materialized, may significantly change the competitive landscape of telecommunications industry in Mainland China. For further information, see Item 4. Information on the Company  Business
Overview  Competition.

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 intense 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.



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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, 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.



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The PRC government has adopted other regulatory measures that may 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 more stringent measures to enforce the PRC Anti-Monopoly Law, such as the anti-monopoly investigation in 2012 undertaken by 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 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-LTE technologies and developing our 4G services.

We are developing and
conducting our 4G business based on the TDD mode long-term evolution, or TD-LTE, technology. 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, the number of 4G customers reached 376.5 million. However, we expect that we will continue to face
intense 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-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. As 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.



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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, new services and products, and new business models, including Over The Top products such as
instant voice and messaging services, may have a material adverse effect on our business, financial condition and results of operations.

The rapid development of new technologies, new 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. These new competitors compete against us in
both voice and data businesses by offering mobile Internet access, Over The Top products such as instant voice and messaging services, and other mobile services. See  Changes in technology and business models may render our current
technologies and business model obsolete and intensify competition from telecommunications services providers that use alternative technologies, which could materially and adversely affect our business and market position.

Revenue generated from wireless data traffic grew substantially in 2015, partly due to continued increased penetration of smartphones and
improvements in our services provided on our upgraded networks with the development of our 4G technology and services. 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 revenue and revenue generated from SMS and MMS and other services. We cannot assure you that the measures we are taking in response to these challenges will
achieve the results we expect.

We face a number of risks relating to our Internet-related services.

We currently provide certain Internet-related services, including mobile Internet, digital services and certain 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.



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Moreover, the development of our Internet-related services depends on our ability to continue to
expand and innovate our Internet-related services. 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 new business opportunities 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 otherwise be able to successfully integrate any acquired business into our existing operations. Our ability to capture 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., 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.



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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 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 may 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, 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 and resulted in new competitors entering the
telecommunications market. See  Rapid development of new technologies, new services and products, and new business models, including Over The Top products such as instant voice and messaging services, may have a material adverse effect
on our business, financial condition and results of operations.

The intensified competitive landscape requires us to implement new
technologies and develop new businesses 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 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 components of our strategy, as well as the development of new businesses, such as mobile Internet, Internet of Things and cloud computing, require significant time, financial and other resources and involve substantial risks, we may not be able
to successfully implement the components of our strategy, launch or develop such new businesses within a short time period, or otherwise achieve the expected benefits.



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We cannot assure you that our continued investments in the construction of our
infrastructure network may adequately address the issues resulting from the substantial increases in data traffic or otherwise achieve the desired economic returns.

Our wireless data traffic business has experienced significant growth in recent years, which contributed to the growth of our operating revenue
and provides our business with further opportunities for development. In addition, we have launched our TD-LTE services, which are expected 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. 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. 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.

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 Form 20-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 our company and our subsidiaries 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 have re-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.



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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 will 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.

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

As of March 31, 2016, 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Overview of Our 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 on TD-SCDMA
technology and a 4G business based on TD-LTE 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.



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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 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 145 MHz of spectrum to be used for nationwide coverage, including 20 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. Under the existing agreement between CMCC and us, we have the right to use the allocated frequency spectrum in Mainland China.

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. 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 materially and adversely affect our business and prospects as well as
our financial condition and results of operations.

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 mobile 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, 2013 and December 31, 2014 with the SEC on May 30, 2014 and May 29, 2015, respectively, and our conflict minerals report for the year ended December 31, 2015 is due May 31,
2016. 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 in our cost structure. We cannot predict when or if changes in tariff policies may occur. For example, 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. In addition, since May 2015, the central government has been promoting a national policy of speed upgrade and tariff
reduction and may issue similar policies in the future. Future changes in tariff policies could significantly decrease our revenues and materially reduce our profitability. 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.



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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 telecommunications business based on the 3G license 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.

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 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. 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. 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.

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.



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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% in 2015. 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 fluctuates and is affected by, among other things, changes in PRC and international political and economic
conditions. Since 1994, the conversion of Renminbi into foreign currencies, including Hong Kong and U.S. dollars, has been 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, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a
regulated band based on market supply and demand and by reference to a basket of currencies. In April 2012, the PRC government expanded the floating band of Renminbi trading prices against the U.S. dollar in the inter-bank spot foreign currency
exchange market from 0.5% to 1.0%. In August 2015, PBOC announced that the mid-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 the
Renminbi-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. Renminbi depreciated against the U.S. dollar by 3.7% by
March 2016 following this August 2015 announcement by PBOC. 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
about 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.



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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 their non-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, result of operations and prospects.

Natural disasters and health hazards in China may severely
disrupt our business and operations and may have a material adverse effect on our financial condition and results of operations.

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 hazards may
have on our business. Any future natural disasters and health hazards 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 hazards 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 hazards in China may have a material
adverse effect on our financial condition and results of operations.

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. The PCAOB is currently unable to inspect a registered public accounting firms audit work relating to a companys operations in China where the documentation of such audit work is located in China, such as our
registered public accounting firms audit work relating to our operations in China. 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.



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If additional remedial measures are imposed on the PRC-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 the PRC-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 certain PRC-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 four PRC-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 problem with the process between the SEC and CSRC, the SEC
retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure. 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.



|Item 4. | Information on the Company.
|------- | ---------------------------

We provide a full range of mobile 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 mobile services in Mainland China and the largest provider of
mobile services in the world as measured by total number of mobile customers as of December 31, 2015. As of March 31, 2016, our total number of mobile customers reached approximately 833.9 million.

The History and Development of the Company

We were incorporated under the laws of Hong Kong on September 3, 1997 as a limited liability company under the name China Telecom
(Hong Kong) 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 known as China Mobile Group Guangdong Co., Ltd.), or Guangdong Mobile, and Zhejiang Mobile Communication Company Limited (currently known as China Mobile Group Zhejiang Co., Ltd.), 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.



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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). CMC subsequently transferred 1% of the share capital of Topssion to
CMCC, and further subscribed for additional share capital of Topssion. Topssion thereafter changed its name to China Mobile Device. As of March 31, 2016, we held a 99.97% equity interest in China Mobile Device.

In 2015, we, through our wholly-owned subsidiary, CM TieTong, acquired Target Assets and Businesses of China 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 TieTong will facilitate our transformation into a full
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.

On May 24, 2008, the MIIT, the National Development 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 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 TieTong 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, our wholly-owned subsidiary, entered into the Acquisition Agreement with China TieTong, pursuant to which CM TieTong 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, a wholly-owned subsidiary of China Unicom, and China Telecom to establish China Tower. Pursuant to the promoters agreement, we have made an investment of RMB4,000 million and indirectly owned a 40% equity
interest in China Tower. In October 2015, CMC entered into the Transaction Agreement with China United Network Communications Corporation Limited, China Telecom, China Reform Holdings Corporation Ltd. and China Tower, pursuant to which CMC, China
United Network Communications Corporation Limited and China Telecom shall transfer their telecommunications towers and related assets to China Tower, China Tower shall issue 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. CMC transferred its existing telecommunications towers and related assets to China Tower for a final consideration of RMB102.736 billion. As of
March 31, 2016, we indirectly owned 38% equity interest in China Tower. We are in the process of negotiating the definitive usage arrangements with China Tower with respect to telecommunications towers.



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Organizational Structure

As of March 31, 2016, 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, we owned, directly or through intermediate holding companies, 100% equity interests in the following companies:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       China Mobile Communication Co., Ltd.

       China Mobile Group Guangdong Co., Ltd.

       China Mobile Group Zhejiang Co., Ltd.

       China Mobile Group Jiangsu Co., Ltd.

       China Mobile Group Fujian Co., Ltd.

       China Mobile Group Henan Co., Ltd.

       China Mobile Group Hainan Co., Ltd.

       China Mobile Group Beijing Co., Ltd.

       China Mobile Group Shanghai Co., Ltd.

       China Mobile Group Tianjin Co., Ltd.

       China Mobile Group Hebei Co., Ltd.

       China Mobile Group Liaoning Co., Ltd.

       China Mobile Group Shandong Co., Ltd.

       China Mobile Group Guangxi Co., Ltd.

       China Mobile Group Anhui Co., Ltd.

       China Mobile Group Jiangxi Co., Ltd.

       China Mobile Group Chongqing Co., Ltd.

       China Mobile Group Sichuan Co., Ltd.

       China Mobile (Shenzhen) Limited

       China Mobile (Suzhou) Software Technology Co., Ltd.

       MIGU Company Limited

       China Mobile TieTong Company Limited |  |        China Mobile Group Hubei Co., Ltd.

       China Mobile Group Hunan Co., Ltd.

       China Mobile Group Shaanxi Co., Ltd.

       China Mobile Group Shanxi Co., Ltd.

       China Mobile Group Neimenggu Co., Ltd.

       China Mobile Group Jilin Co., Ltd.

       China Mobile Group Heilongjiang Co., Ltd.

       China Mobile Group Guizhou Co., Ltd.

       China Mobile Group Yunnan Co., Ltd.

       China Mobile Group Xizang Co., Ltd.

       China Mobile Group Gansu Co., Ltd.

       China Mobile Group Qinghai Co., Ltd.

       China Mobile Group Ningxia Co., Ltd.

       China Mobile Group Xinjiang Co., Ltd.

       China Mobile Group Design Institute Co., Ltd.

       China Mobile Hong Kong Company Limited

       China Mobile International Limited

       China Mobile M2M Company Limited

       China Mobile Online Services Co., Ltd.

       China Mobile (Hangzhou) Information Technology Co., Ltd.

       China Mobile Internet Co., Ltd.

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.



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





LOGO

General Information

Our principal executive offices are located at 60th 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 Form 20-F.

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, WLAN and TD-LTE
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 TieTong of Target Assets and Businesses, is expected to 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 and increase our wireline broadband network capacity, coverage and efficiency through an
integrated network. See  The History and Development of the Company  Industry Restructuring and Changes in Our Shareholding Structure. We continue to increase our reserves of basic resources, such as metropolitan area
transmission networks, public Internet and broadband access networks in Mainland China, promote the construction of North and South Bases, data centers and call centers, accelerate Internet Data Center, or IDC, development and focus on the
development of services such as dedicated lines for corporate customers.



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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 China and have fully embraced the transition from voice to data traffic operation. We have also striven to enhance our wireline broadband services and promote the transition from mobile
communication services to innovative full services.

In 2015, we had focused on the development of our 4G network. As of December 31,
2015, we cumulatively put in use 1.1 million 4G base stations which covered a population of over 1.2 billion. In 2015, the number of our 4G customers increased by 222 million, reaching over 312 million by the end of the year. As of
March 31, 2016, our 4G 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 experience of our 4G network. In 2016, we will continue
to focus the development of our 4G network to maintain our market leading position in China in terms of wide, continuous 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 to enhance 4G network quality and customer perception through acclerating the development of VoLTE and carrier aggregation, or CA. 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 continue enhancing network capacity and increasing network speed, offered discounts to our tariff plans. In 2016, we plan to continue to strike a balance between
tariff reduction and value preservation, and strive to enhance network capacity and increasing network speed for our data service customers.

With respect to corporate customers, we have focused on key services such as dedicated lines and IDC services, built a network-wide
coordinated sales system to target major corporate customers and have developed product series targeting governmental and corporate customers in key industries, such as finance, education, transportation, logistics and healthcare. We further
improved the transmission capacity of our fiber optic cable and the accessibility of our corporate customer dedicated lines. In 2016, 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 emphasize the development of high-standard, high-quality and high-value wireline broadband services. We
will also optimize our investment in wireline broadband by providing products featuring high connection speed, premium quality and brand.

In terms of long-term strategy, we will continue to focus our efforts on expanding 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. We also plan to
build upon our existing customer base to boost connectivity scale and expand connections among people to connections among people and things, and among things, which may allow us to provide connection support to an Internet of Everything market
where the number of connections may reach the level of ten-billion.

Customers and Usage

Our mobile customer base has grown substantially from approximately 806.6 million at the end of 2014 to approximately 826.2 million
at the end of 2015. As of March 31, 2016, our total number of mobile customers reached approximately 833.9 million, our 4G customers reached 376.5 million. Our total number of wireline broadband customers reached approximately
60.6 million as of March 31, 2016, compared to 55.0 million by the end of 2015. Our customer growth is primarily attributable to a number of factors, including:



| |  |  | economic growth in our markets, including in rural areas;
| | - |  | ---------------------------------------------------------



| |  |  | the PRC governments promotion of informatization and reform and development initiatives targeting the rural areas of Mainland China;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | growth potential in small and medium-sized cities, rural areas and migrant population markets;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | decreased cost of initiating services due to a decline in handset prices as well as the decrease in other tariffs for our services;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | our increased marketing and sales efforts and new business initiatives;
| | - |  | -----------------------------------------------------------------------



| |  |  | the implementation of our business strategy for the transformation to become an innovative integrated service provider;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | our competitive advantages in terms of scale of operations, networks, support systems, brands, marketing and sales channels, and services;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the further development of TD-LTE industry chain, in particular the increasing availability of TD-LTE handsets, especially smartphones, in the market which contributes to the increase in our 4G customer base;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the increasing prevalence of customers using multiple SIM cards; and
| | - |  | --------------------------------------------------------------------



| |  |  | the higher customer demand for high speed Internet access.
| | - |  | ----------------------------------------------------------

However, due to the increasing
mobile penetration rate and intensified competition among mobile operators and from competitors in other related industries, our customer base may not continue to grow as fast as it has over the past few years, if at all.

Our total voice usage was 4,220.8 billion minutes in 2015, representing a decrease of 1.7% from 2014. Our short message services, or SMS,
usage totaled 559.9 billion messages in 2015, representing a decrease of approximately 8.4% from 2014. The decrease in our voice usage and the decrease in SMS usage are partly due to the increasing competition from providers offering Over The Top
products such as instant voice and messaging services.

Our total mobile data traffic was 2,760.6 billion megabytes in 2015, representing
an increase of 143.7% from 2014. The increase in our mobile data traffic usage is due to our continued efforts to promote data traffic services operations, with a focus on the expansion of our 4G network.

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



|                                                         |  |                                         |         |  |                   |  |         |      |  |  |         | 
|-------------------------------------------------------- |  | --------------------------------------- | ------- |  | ----------------- |  | ------- | ---- |  |  | ------- | 
|                                                         |  | As of or for the year endedDecember 31, |        
|                                                         |  | 2013(As restated)                       |         |  | 2014(As restated) |  |         | 2015 | 
|                                                         |  |                                         |        
|Mobile Business                                          |  |                                         |         |  |                   |  |         |      |  |  |         | 
|Customer Base (in millions)                              |  |                                         | 767.2   |  |                   |  | 806.6   |      |  |  | 826.2   | 
|4G Customer Base (in millions)                           |  |                                         |        |  |                   |  | 90.1    |      |  |  | 312.3   | 
|Total Voice Usage (in billions of minutes)               |  |                                         | 4,316.0 |  |                   |  | 4,293.9 |      |  |  | 4,220.8 | 
|Mobile Data Traffic (in billions of megabytes)           |  |                                         | 526.8   |  |                   |  | 1,132.9 |      |  |  | 2,760.6 | 
|Average Minutes of Usage Per User Per Month
(minutes)(1) |  |                                         | 486     |  |                   |  | 453     |      |  |  | 430     | 
|Average Handset Data Traffic Per User Per Month (MB)
(2) |  |                                         | 72      |  |                   |  | 155     |      |  |  | 339     | 
|Average Revenue Per User Per Month
(RMB)(3)              |  |                                         | 65      |  |                   |  | 59      |      |  |  | 56      | 
|Average Monthly Churn Rate (%)(4)                        |  |                                         | 3.15    |  |                   |  | 3.13    |      |  |  | 2.78    | 
|Wireline Broadband Business                              |  |                                         |         |  |                   |  |         |      |  |  |         | 
|Customer base (in millions)                              |  |                                         |        |  |                   |  |        |      |  |  | 55.0    | 
|Average Revenue Per User Per Month
(RMB)(5)              |  |                                         |        |  |                   |  |        |      |  |  | 32      | 



|(1) | Calculated by (A) dividing the total minutes of usage during the relevant year by the average number of customers during the year (calculated as the average of the numbers of customers at the end of each of the 13
calendar months from the end of the previous year to the end of the current year) and (B) dividing the result by 12.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Calculated by (A) dividing the total handset data usage during the relevant year by the average number of handset data users during the year and (B) dividing the result by 12.
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|(3) | Calculated by (A) dividing the revenue from mobile services during the relevant year by the average number of mobile customers during the year (calculated as the average of the numbers of customers at the end of
each of the 13 calendar months from the end of the previous year to the end of the current year) and (B) dividing the result by 12. The revenue from mobile services in 2013, 2014 and 2015 is derived from our consolidated statements of
comprehensive income for the years ended December 31, 2013, 2014 and 2015, respectively. As described in Note 2(b) to our consolidated financial statements, certain restatements to periods in 2013 and 2014 have been made to reflect our
acquisition of Target Assets and Businesses.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Measures the monthly rate of customer disconnections from mobile telecommunications services, determined by dividing: (A) the result obtained by dividing (i) the sum of voluntary and involuntary terminations
from our network (excluding internal transfer) during the relevant year by (ii) the average number of customers during the year (calculated in the same manner as in note (1) above) by (B) 12.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Calculated by (A) dividing the revenue from wireline broadband services during the relevant year by the average number of wireline broadband customers during the year (calculated as the average of the numbers of
customers at the end of each of the 13 calendar months from the end of the previous year to the end of the current year) and (B) dividing the result by 12. The revenue from wireline broadband services in 2015 is derived from our consolidated
statements of comprehensive income for the year ended December 31, 2015.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Businesses

Our businesses primarily consist of voice business and data business.

Voice Business. Our voice business includes voice usage services and voice value-added services.

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 distance calls, international long distance calls, domestic roaming and international roaming. Our voice usage services experienced a decline due to the substitution effect of
Over The Top products and a decline in tariffs, and total voice usage decreased by 1.7% in 2015 compared to 2014.

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. Our data services revenue increased to RMB303,425 million in 2015, representing an increase of 17.4% from 2014. As a percentage of revenue from telecommunications
services, our data services revenue increased to 52.0% in 2015 from 43.7% in 2014.

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. SMS usage decreased from 611.4 billion messages in 2014 to 559.9 billion messages in 2015, and revenue generated from SMS and MMS decreased from
RMB34,780 million in 2014 to RMB31,244 million in 2015 due to the increasing competition from and substitution effect of providers offering Over The Top products such as instant voice and messaging services.

Our wireless data traffic business includes mobile data traffic service and WLAN service. Revenue generated from wireless data traffic
business reached RMB200,857 million in 2015, compared to RMB153,926 million in 2014.

Mobile Data Traffic. Our mobile 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 significant 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 mobile data traffic service reached RMB198,270 million in 2015, compared to RMB150,571 million in 2014.

WLAN.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. Revenue generated from wireline broadband
business reached RMB18,339 million in 2015.



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Our applications and information services include IDC services, network resource services and
various mobile application products such as Migu Music, Migu Reading, Migu Video, Migu Gaming and Migu Animation, Mobile Market and Internet of Things. Revenue generated from applications and information services reached RMB52,985 million in 2015,
compared to RMB53,552 million in 2014.

In 2015, we established MIGU, focusing on explorations in digital content and applications,
including music, reading, video, gaming and animation areas.

We have been making efforts 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.

In 2015, we expanded the application of Internet of Things to various areas such as urban management, smart
transportation and industrial control, and have developed standardized Internet of Things products including home security services, automobile fleet management services and remote surveillance. We also established high quality and centralized
public Internet of Things networks. The number of Internet of Things connections increased to over 60 million in 2015.

In addition,
we have endeavored to develop personal digital services. We have established various specialized companies, including, among others, MIGU, CM Internet, CM M2M, Virtue Intelligent Network, all of 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. We continue to promote our digital services and explore new operating
models for China Mobile, in order to further advance the market-orientated mechanism and to strengthen our position in the competitive digital landscape through continuous innovation.

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 and non-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 rates 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 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.



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Since May 2015, in response to the expectations of the society and customers and in order to
implement the relevant national policy, we, in addition to continue enhancing network capacities and increasing network speed, launched data tariff plans at lower rates for both peak and non-peak time. We also provided certain amount of free
non-peak time data to customers, and reduced the tariffs for out-of-plan data usage and international data roaming in certain countries and regions. 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, 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. These 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, respectively, as compared to
those in 2014. 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. The reduction in tariffs as a result
of these measures has had, and we expect that it will continue to have, adverse impact on our financial condition and results of operations. See Risk Factors  Risks Relating to Our Business  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.

Interconnection

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 of non-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 interconnect with the networks of other operators, which enables our customers to communicate with the customers of those
operators. 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.

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 (excluding TD-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 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. The interconnection settlement
policies for TD-SCDMA remain unchanged, meaning that when mobile users of China Telecom and China Unicom in Mainland China and our TD-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.



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A mobile customer using domestic roaming services is charged at our roaming usage charges or, for
outgoing international long distance calls, international long 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, in 2015, we reduced the international data
roaming charges in certain countries and regions and cancelled the long-distance and roaming charges for voice services within the Beijing-Tianjin-Hebei tariff zones, in order to implement relevant national policies. See   Tariffs.

Research and Development

Our research and development, or R&D, functions are undertaken jointly by our research institute, research centers in Suzhou and Hangzhou
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, our main R&D efforts were focused on a number of aspects:

Improving Networks and Services.
In 2015, we strengthened the development and optimization 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 promoted
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, and SDN and
reduced the connection time for corporate customers by 70%.

Setting Technical Standards and Promoting Industry
Development. We participated in the drafting 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 in
international organizations, such as the 3rd Generation Partnership Project, the International Telecommunication Union and the Next Generation Mobile Networks. In 2015, China Mobile Research Institute entered into a memorandum of understanding 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.

Building Independent R&D Capabilities in Terms of Cloud Computing and Big Data. In order to deepen the top-level design of
the information technology systems and to promote the maturity of independently-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 Innovation of Internet-related Key Products. We formulated a complete set of technical schemes and
standards for unified communication, realized the independent R&D 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-connection 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 and 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 independently research and
develop the centralized open platform.



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Sales and Customer Services

We continue to optimize our customer service system that separate front and back 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 for pre-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.

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 retaining middle-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 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 finance, education, transportation, logistics and healthcare. 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.

Customer Services. Our customer support service centers offer 24-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 is to classify 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.

In 2015, we continued to optimize our customer service processes through efforts such as improving service quality at our sales outlets, 10086
hotline and online portal. 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 filter spam SMS
and software that were sent to our customers. Our continued improvement in customer services resulted in broader customer satisfaction in 2015.

Service Quality. We strive to improve the quality of our services through improvements in the quality of our infrastructure
network. In particular, we continued to lead the industry in 2015 in terms of low voice call drop rate of our 2G, 3G and 4G networks and highly successful connection rate, which significantly improved customer perception and laid a solid foundation
for developing the 4G market. We have also improved our business support capabilities, especially in the areas of billing and data business subscription support.



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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.

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 customers pre-pay for our services, we have limited credit risk exposure to our customers. We make an
allowance for doubtful accounts based on our assessment of the recoverability of accounts receivable.

Corporate Social
Responsibility and Sustainable Development.

We are committed to fulfilling our responsibilities to stakeholders and proactively
implementing a sustainable development strategy to meet the challenges brought about by climate change. 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% in 2015 compared with the previous 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 2,744 children in poverty diagnosed with congenital heart disease, and provided trainings to 80,981 principals of rural primary and secondary schools 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
TD-LTE services have been developing rapidly, and the quality and value of TD-LTE models continue to improve. Since launching our TD-LTE services, we have focused on the development of multi-mode, multi-band terminals and low cost TD-LTE terminals,
as well as self-brand terminals. In 2015, we launched three self-branded smartphones, namely A1, N1 and N1 Max. A1 features a five-inch screen and support GSM, TD-SCDMA, WCDMA, TD-LTE and LTE-FDD networks. N1 is the first VoLTE-compatible smartphone
in the PRC which is priced below RMB1,000 per unit, within the lower price range of smartphones in the PRC. N1 Max adopts NFC and real-name authentication technologies. In 2016, we plan to develop four self-branded smartphones, all of which will be
VoLTE-compatible and support CA technology. We have devoted ourselves to promoting the long-term development of the TD-LTE 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 provides day-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.



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Trademark

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, we entered into a trademark license agreement, or the 2013 Trademark License Agreement, to replace the trademark license agreement that we
entered into in 2008, or the 2008 Trademark License Agreement. Under the 2013 Trademark License Agreement, we and our operating subsidiaries have a non-exclusive right to use the CHINA MOBILE trademark in Mainland China and Hong Kong. No
license fee is payable by us to CMCC during the term of the 2013 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 the new logo has been filed in Mainland China 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, Pakistan and Taiwan.

Mobile Networks

We offer mobile services using the Global System for Mobile Communications, or GSM, standard, which is a pan-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 the TD-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 of TD-SCDMA technology. We intend to use the TD-LTE network to primarily carry high bandwidth and high quality wireless broadband businesses. As of December 31, 2015, we cumulatively
put in use 1.1 million 4G base stations which cover a population of over 1.2 billion, realizing nationwide continuous coverage in cities and towns, effective coverage of data hotspot in villages, as well as full coverage of high speed rail,
subways and key scenic areas, in the PRC. As of March 31, 2016, the number of 4G customers reached 376.5 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 and TD-LTE bandwidths we previously obtained from the Office of the Telecommunications Authority of Hong Kong.

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 provide back-up maintenance and technical support.



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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.

Spectrum usage fees for GSM networks are currently charged at the annual
rate of RMB17 million per MHz for the 900 MHz frequency band and 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 at the annual rate of RMB15 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.

Our network expansion and optimization plans depend to a large extent upon the availability of sufficient spectrum. For our 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 145 MHz of spectrum to be used for nationwide coverage, including 20 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. 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.

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.

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, we focused on constructing 4G base stations, and put in use 1.1 million 4G base stations, which cover a population of over 1.2 billion in the
PRC. 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, we purchased our networks equipment primarily from Huawei Technologies,
ZTE Corporation, Ericsson, Nokia, FiberHome and Alcatel-Lucent Shanghai Bell.



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Investments and Acquisitions

As of March 31, 2016, Guangdong Mobile, our wholly-owned subsidiary, held a 18.98% equity interest in the issued share capital of SPD Bank
as a result of shares issued to certain other shareholders, compared to a 20% equity interest as of December 31, 2015. SPD Bank is a joint-stock commercial bank incorporated in the PRC, with its shares listed on the Shanghai Stock Exchange. We
and SPD Bank entered into a strategic cooperation agreement in November 2010, pursuant to which we and SPD Bank cooperate in the areas of internet finance and mobile payment businesses in Mainland China, as well as in the sharing of customer
services and channels resources. Through such strategic cooperation, we and SPD Bank have issued China Mobile  SPD Bank co-branded debit and credit cards, which support NFC, in 29 provinces in Mainland China. In January 2016, we renewed our
strategic cooperation with SPD Bank and developed an and-Finance system to provide SPD Bank and our customers with payment, wealth management and financing services.

In August 2012, CMC, our wholly-owned subsidiary, entered into a share subscription agreement with IFLYTEK, pursuant to which CMC would
subscribe for 15% of the shares of IFLYTEK for an aggregate subscription price of RMB1,363,314,339 (approximately US$210,459,468). The share subscription was completed on April 24, 2013. Concurrent with the share subscription, we and IFLYTEK
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. As of December 31, 2015, CMC held a 13.93% equity interest in IFLYTEK.

In June 2014, CMI Holdings, our wholly-owned subsidiary, entered into a share subscription agreement with True Corporation, a major national
telecommunications provider in Thailand, pursuant to which CMI Holdings agreed to subscribe to 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.

In May 2015, CMC, our wholly-owned subsidiary, entered into a partnership agreement with SDIC, and 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 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, CMC had contributed RMB360 million to China Mobile Fund and has a commitment to make further investment in an amount
of RMB1,140 million upon the request by China Mobile Fund.

In November 2015, CM TieTong, our wholly-owned subsidiary, acquired Target
Assets and Businesses of China 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 of Target Assets and Businesses of China TieTong 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 Guideline 5 Merger Accounting for Common Control
Combinations (AG 5) issued by the HKICPA. Accordingly, the acquired Target Assets and Businesses are stated at predecessor values, and were included in the consolidated financial statements from the beginning of the earliest period
presented 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 of the 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) to our consolidated financial statements.

We expect that our acquisition of Target Assets and Businesses will facilitate our transformation into a full 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.



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Competition

We compete with other telecommunications services providers. 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 TieTong entered into the Acquisition Agreement with China TieTong to acquire Target Assets and
Business, which we expect will facilitate our transformation into a full service operator offering both wireline broadband and mobile services. Having each operated a wireline broadband services business for a number of years, China Telecom and
China Unicom have advantage 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 expenditure 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 telecommunications industry in Mainland China.

In addition, the PRC
government has begun to allow certain operators approved by the MIIT to lease and repackage mobile services for sale to end customers on a trial basis and we may face increasing competition from these new mobile network operators. We also face
increasing competition from providers offering telecommunications services using alternative technologies. Furthermore, we expect that we will face intense 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-LTE technology. See Risk Factors  Risks Relating to Our Business  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. And 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 would in turn significantly reduce our revenues and profitability, and our financial condition and results of operations may be materially and adversely affected.

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, 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.



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

Entry into the Industry. Under the current regulations, operators of mobile networks, providers of other basic
telecommunications services such as local and long 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 WTO 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, 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. Those regulations apply to the application for, and examination and approval 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 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.

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 10th day of the first month of each quarter.
Moreover, under the applicable regulations, mobile companies are required to pay an annual usage fee of RMB12 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.



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Sharing of Telecommunications Infrastructure. In December 2014, the MIIT and the
SASAC jointly issued the 2015 Implementation Opinions on Promoting the Joint Construction and Sharing of Telecommunications Infrastructure, or the Opinions. The Opinions required joint construction and sharing of three types of facilities, including
transmission poles, pipelines, 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, namely 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; which shall be uniformly constructed by China Tower; regarding the construction of
transmission poles and pipelines for the four types of key sites and the two key areas of construction, both joint construction and joint 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; as to the Internet facilities for the broadband access in existing residential areas, joint sharing is mandatory whenever
conditions allow.

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 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 2012, we received an audio and video transmission license from the former State Administration of Radio, Film and Television of the PRC, which enables us to provide audio and video programs through mobile Internet.

VAT Reform Applicable to the Telecommunications Industry. Effective from June 1, 2014, the PRC business tax
was replaced with a VAT in the telecommunications industry. The pilot tax rate for basic telecommunications services is 11% and the pilot tax rate for value-added telecommunications services is 6%. The application of the VAT to the
telecommunications industry has had, and is expected to continue to have, an adverse effect on our operating revenue and profits in the short term. See Item 3. Key Information  Risk Factors  Risks Relating to Our Business 
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 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.

We will strive to reduce the short-term adverse effect of the application of VAT to the telecommunications industry on our revenues and
profits. Through various measures, including optimization of the development and 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 beneficial to the development of our business and further reduce the adverse impact of the implementation of VAT on our operating revenues and profitability.

For the regulations in relation to tariff setting, spectrum usage, interconnection arrangements and lease line arrangements, see 
Tariffs,  Interconnection,   Mobile Networks  Spectrum and   Mobile Networks  Leased Lines.



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Employees.As of December 31, 2013, 2014 and 2015, we had 197,030, 241,550 and
438,645 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, 2015 are classified in the following table.
Approximately 56.56% 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.



|                |  |  |         | 
|--------------- |  |  | ------- | 
|Management      |  |  | 33,435  | 
|Technical       |  |  | 92,846  | 
|Marketing       |  |  | 240,230 | 
|General affairs |  |  | 42,665  | 
|Other           |  |  | 29,469  | 
|                |  |  |         | 
|Total           |  |  | 438,645 | 
|                |  |  |         | 

We provide benefits to certain employees, including housing, retirement benefits and hospital, maternity,
disability and dependent medical care benefits. Most of our employees are members of a labor association. We have not experienced any strikes, slowdowns or labor disputes that have interfered with our operations during 2015, and we believe that our
relations with our employees are good.

The number of labor sourced by third parties reached 62,771 by the end of 2015.

Properties, Plants and Equipment

We own,
lease or have usage rights in various properties which consist of land and buildings for offices, administrative centers, staff quarters, retail outlets and technical facilities. We believe that all of our owned and leased properties are well
maintained and are suitable and adequate for our present use.

Disclosure of Iranian Activities under Section 13(r) of the Exchange Act

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Exchange Act.
Section 13(r) of the Exchange Act requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with
designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in
compliance with applicable non-U.S. law, and whether or not the activities are sanctionable under U.S. law.

As of the date of this
report, we are not aware of any activity, transaction or dealing by us or any of our affiliates in 2015 that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below.

CMCC, our parent company, is a party to international GSM roaming agreements with Telecommunication Kish Company and Mobile Company of Iran in
Iran, which may be government-controlled entities. China Mobile International, one of our wholly-owned subsidiaries, is a party to an international roaming agreement with Irancell Telecommunications Services Company in Iran, which may be a
government-controlled entity. In 2015, our gross revenue generated by roaming traffic under these agreements was less than US$500,000, and our net profit generated by roaming traffic under these agreements was insignificant.

China Mobile International intends to, and we understand that CMCC intends to, continue these activities in the future.



|Item 4A. | Unresolved Staff Comments.
|-------- | --------------------------

None.



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|Item 5. | Operating and Financial Review and Prospects.
|------- | ---------------------------------------------

You should read the following discussion
and analysis in conjunction with our consolidated financial statements, together with the related notes, included elsewhere in this annual report on Form 20-F.

Our consolidated financial statements as of and for the years ended December 31, 2011, 2012, 2013 and 2014 have been restated to reflect
our acquisition of Target Assets and Businesses of China TieTong in December 2015. See Item 4. Information on the Company  Business Overview  Acquisition from China TieTong of certain Assets, Businesses and Related Liabilities and
Employees and Note 2(b) to our consolidated financial statements.

Overview of Our Operations

The following table sets forth selected information about our operations for the periods indicated.



|                                                             |  |                         |         |  |                      |  |         |      |  |  |         | 
|------------------------------------------------------------ |  | ----------------------- | ------- |  | -------------------- |  | ------- | ---- |  |  | ------- | 
|                                                             |  | Year ended December 31, |        
|                                                             |  | 2013(As restated)(1)    |         |  | 2014(As restated)(1) |  |         | 2015 | 
|Total Voice Usage (in billions of minutes)                   |  |                         | 4,316.0 |  |                      |  | 4,293.9 |      |  |  | 4,220.8 | 
|Mobile Data Traffic (in billions of megabytes)               |  |                         | 526.8   |  |                      |  | 1,132.9 |      |  |  | 2,760.6 | 
|Operating Revenue (in RMB millions)                          |  |                         | 640,048 |  |                      |  | 651,509 |      |  |  | 668,335 | 
|Operating Expenses (in RMB millions)                         |  |                         | 508,624 |  |                      |  | 534,189 |      |  |  | 565,413 | 
|Profit Attributable to Equity Shareholders (in RMB millions) |  |                         | 116,791 |  |                      |  | 109,218 |      |  |  | 108,539 | 



|(1) | As described in Note 2(b) to our consolidated financial statements, certain restatements to periods in 2013 and 2014 have been made to reflect our acquisition of Target Assets and Businesses.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2013, 2014 and 2015, our customer base continued to experience stable growth while our wireless data traffic business continued to
experience rapid growth. Our total net increase in the number of customers was 19.6 million in 2015 and our total customer base reached 826.2 million as of December 31, 2015. Our total voice usage decreased by 0.5% in 2014 and
decreased by 1.7% in 2015. Our mobile data traffic increased by 115.1% in 2014 and by 143.7% in 2015. As a result, our operating revenue increased by 1.8% in 2014 and by 2.6% in 2015. Our data business continued to grow, and our data services
revenue accounted for 43.7% and 52.0% of our revenue from telecommunications services in 2014 and 2015, respectively. Our operating expenses increased by 5.0% in 2014 and by 5.8% in 2015. Our profit attributable to equity shareholders decreased by
6.5% in 2014 and by 0.6% in 2015.

The PRC economy continued to grow in terms of GDP by 6.9% in 2015, which provided a favorable
environment for our continued business development. However, we faced various challenges arising from increased market saturation and intensified competition among mobile operators and from providers offering telecommunications services using
alternative technologies, in particular Internet service providers. As the mobile penetration rate in Mainland China reached 95.5% as of December 31, 2015, the mobile markets in some economically developed regions of Mainland China has begun to
show signs of saturation. We intend to continue to cope with market and industry challenges that may arise from time to time by leveraging our customer base, network quality, brand name, execution capabilities and quality of our customer service.
Moreover, economic growth in the PRC and its modernization and urbanization offer an opportunity and platform for the ongoing development of the telecommunications industry, in particular the development of mobile Internet. Such development presents
potential opportunities for us to further develop our wireless data traffic business and applications and information services.

We have
been a mobile services provider in China since our inception in 1997. We acquired all of the issued and outstanding shares of Hong Kong Mobile in 2006, which enabled us to expand into the Hong Kong mobile market. See Item 4. Information on the
Company  The History and Development of the Company  Expansion Through Acquisitions.



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We operate in an extensively regulated environment and our operations and financial performance
are significantly affected by the PRC governments regulation of the telecommunications industry. These regulations and policies may affect, among other things, our tariffs, technology and equipment standards and capital investment, as
described in more detail under Item 4. Information on the Company  Business Overview  Regulation and Risk Factors  Risks Relating to Our Business  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. In addition, we believe
that the effects of the industry restructuring that took place in 2008, increasing competition from telecommunications services providers that use alternative technologies and entry of non-State-owned telecommunications services providers into the
telecommunications services market have had, and will continue to have, a significant impact on the competitive landscape of the telecommunications industry in Mainland China. We expect competition from other telecommunications services providers
may intensify. See Risk Factors  Risks Relating to Our Business  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, Risk Factors  Risks Relating to Our Business  Changes in technology and business models 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 and 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 would in turn significantly reduce our revenues and profitability, and our financial condition and results of operations may be
materially and adversely affected. Our financial performance is also subject to the economic and social conditions in Mainland China. See Risk Factors  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.

Our Operating Arrangements with CMCC Have Affected and May Continue to Affect Our Financial Results

We have entered into agreements with CMCC with respect to, among other things, inter-provincial transmission lines leasing. Pursuant to these
agreements, for the inter-provincial transmission lines we lease from other providers through CMCC, CMCC maintains its inter-provincial transmission line leasing arrangements with the relevant transmission line providers, and collects leasing fees
from us and pays fees to the relevant transmission line providers.

Prior to September 13, 2012, we had an arrangement with CMCC
under which CMCC maintained its settlement arrangements with respect to international interconnection and roaming with the relevant telecommunications services providers in foreign countries and regions, and collected the relevant usage fees and
other fees from us and paid the same to the relevant mobile services providers in foreign countries and regions. On September 13, 2012, we entered into an agreement with CMCC, pursuant to which CMCC would gradually transfer its settlement
arrangements with certain telecommunications services providers in foreign countries and regions to China Mobile International, our wholly-owned subsidiary. As a result, our arrangement with CMCC with respect to international interconnection and
roaming with certain telecommunications services providers is being gradually phased out.

We have also entered into a telecommunications
services cooperation agreement with CMCC, pursuant to which we and CMCC provide customer development services to each other by utilizing our respective sales channels and resources, and cooperate in the provision of basic telecommunications services
and value-added telecommunications services to customers of each other. Since 2013, we have paid the leasing fees to CMCC for the Village Connect assets constructed before 2013 and undertaken the investments on any new Village
Connect assets after 2013.

We have also entered into a network capacity leasing agreement with CMCC, pursuant to which we and our
operating subsidiaries lease TD-SCDMA network capacity from CMCC and pay leasing fees to CMCC. We have also entered into a network assets leasing agreement with CMCC, pursuant to which we and CMCC will lease our respective telecommunications network
operation assets to each other for a leasing fee.

Tariff Adjustments

The tariffs charged by PRC telecommunications operators are regulated by the PRC government. Moreover, we are allowed to offer our customers a
variety of tariff packages with different monthly charges, levels of basic usage and charges for usage exceeding the covered basic usage, voice value-added services, data services and other features. See Item 4. Information on the Company
 Business Overview  Tariffs.



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Our average voice services revenue per minute has generally decreased in recent years as tariffs
have generally decreased. We expect the decrease in tariffs to gradually slow down after the adjustments we implemented in recent years.

Our ARPU Has Declined in Recent Years and May Further Decline in the Future

Our average revenue per user, or ARPU, has been declining in recent years. In 2015, our ARPU for mobile users decreased to RMB56 from RMB59 in
2014, primarily due to our reduction of tariff and the availability of alternative services through the Internet. Our ARPU may further decline due to the same factors. In 2015, our ARPU for broadband users was RMB32.

Critical Accounting Policies and Estimates

The following discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with IFRS for
the years ended December 31, 2013, 2014 and 2015. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and revenues and expenses during the years reported. Estimates are also used when accounting for certain items such as revenue recognition, interest income, allowance for doubtful accounts,
depreciation, impairment of property, plant and equipment, interest in associates, goodwill and other intangible assets arising from acquisitions. Actual results may differ from those estimates under different assumptions or conditions.

We believe that the following critical accounting estimates and related assumptions and uncertainties inherent in our accounting policies have
a more significant impact on our consolidated financial statements, either because of the significance of the financial statement elements to which they relate or because they require judgment and estimation.

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. If it is probable that the economic benefits will flow to us
and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in our profit or loss as follows:

(i) revenue
derived from voice and data services is recognized when the service is rendered;

(ii) sales of products are recognized when title passes
to the buyer;

(iii) for offerings that include the provision of services and the sale of mobile handsets, we determine revenue from the
sale of the mobile terminals by deducting the fair value of the service element from the total contract consideration; and

(iv) for
transactions that offer customer points rewards when the services are provided, the consideration allocated to the customer points rewards is based on its fair value, which is recorded as deferred revenue when the rewards are granted and recognized
as revenue when the points are redeemed or expire.

Interest Income

Interest income is recognized as it accrues using the effective interest method.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts based upon evaluation of the recoverability of the accounts receivable and other receivables at
each balance sheet date. Our estimates are based on the aging of our accounts receivable and other receivable balances and our historical write-off experience, net of recoveries. If the financial condition of our customers were to deteriorate,
additional allowances may be required.

Depreciation

Depreciation is based on the estimated useful lives of items of property, plant and equipment, less their estimated residual value, if any, to
write off the cost of these items using the straight-line method over their estimated useful lives. We review the estimated useful lives and residual values of our assets annually. We determine the useful life and residual values of our assets based
on our historical experience with similar assets, expected usage of the assets and anticipated technological changes with respect to those assets. Estimates and assumptions used in setting depreciable lives require both judgment and estimation. Our
policies regarding accounting for these assets are set forth in note 2(h) to our consolidated financial statements included elsewhere in this annual report on Form 20-F.



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Impairment of Property, Plant and Equipment, Interest in Associates, Goodwill and Other
Intangible Assets

Our property, plant and equipment, consisting primarily of telecommunications transceivers, switching centers,
transmission and other network equipment, comprise a significant portion of our total assets. Changes in technology or industry conditions may cause the estimated period of use or the value of these assets to change. Property, plant and equipment,
interest in associates and other intangible assets subject to amortization are reviewed at least annually to determine whether there is any indication of impairment. The recoverable amount is estimated whenever events or changes in circumstances
have indicated that their carrying amounts may not be recoverable. In addition, for goodwill and other intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of
impairment.

The recoverable amount of an asset is the greater of its fair value less costs of disposal and its value-in-use. In assessing
value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset, which requires significant
judgment relating to level of revenue and amount of operating costs. We use all readily available information in determining an amount that is a reasonable approximation of the recoverable amount, including estimates based on reasonable and
supportable assumptions and projections of revenue and operating costs. Changes in these estimates could have a significant impact on the carrying value of the assets and could result in further impairment charge or reversal of impairment in future
periods. No impairment of property, plant and equipment, interest in associates, goodwill and other intangible assets was recorded in 2013, 2014 and 2015, except for the goodwill impairment in 2014 and certain inefficient terminal transmission
equipment and WLAN assets impairment in 2015. Details are set forth in note 14 and note 17 to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

Estimates and assumptions used in testing for recoverability require both judgment and estimation. Our policies regarding accounting for these
assets and assessing their recoverability are set forth in note 2(j) to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

Possible Impact of Amendments, New Standards, Interpretations And Disclosures Issued But Not Yet Effective For The Year Ended
December 31, 2015

Up to the date of issue of our consolidated financial statements for the year ended December 31, 2015,
the IASB has issued a number of amendments and new standards and interpretations which are not yet effective for the year ended December 31, 2015 and which have not been adopted by us.

Of these developments, the following relate to matters that may be relevant to our operations and consolidated financial statements:



|                                                                    |  |                                                       
|------------------------------------------------------------------- |  | ------------------------------------------------------
|                                                                    |  | Effective for accounting periods
beginning on or after
|                                                                    | 
|Amendment to IFRS 11, Joint Arrangements                          |  | January 1, 2016                                       
|                                                                    | 
|Amendment to IAS 16, Property, Plant and Equipment                |  | January 1, 2016                                       
|                                                                    | 
|Amendment to IAS 38, Intangible Assets                            |  | January 1, 2016                                       
|                                                                    | 
|Amendment to IFRS 10, Consolidated Financial Statements           |  | January 1, 2016                                       
|                                                                    | 
|Amendment to IAS 28, Investments in Associates and Joint Ventures |  | *                                                     
|                                                                    | 
|Amendment to IAS 27, Separate Financial Statements                |  | January 1, 2016                                       
|                                                                    | 
|Annual Improvement to IFRSs 2012-2014 cycle                         |  | January 1, 2016                                       
|                                                                    | 
|IFRS 15 Revenue from Contracts with Customers                     |  | January 1, 2018                                       
|                                                                    | 
|IFRS 9 Financial Instrument                                       |  | January 1, 2018                                       
|                                                                    | 
|IFRS 16 Leases                                                    |  | January 1, 2019                                       



|* | The amendments were originally intended to be effective for annual periods beginning on or after January 1, 2016. The effective date has now been deferred/removed. Early application of the amendments continues to
be permitted.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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We are assessing the impact of these new standards and amendments to standards, and will adopt
the relevant standards and amendments to standards in the subsequent periods as required.

In addition, the requirements of Part 9
Accounts and Audit of the Companies Ordinance came into operation from our first financial year commencing on or after March 3, 2014 in accordance with Section 358 of the Companies Ordinance. The adoption of the new Hong Kong
Companies Ordinance does not have any significant impact on our consolidated financial statements for the year ending December 31, 2015 and only the presentation and the disclosure of certain information in our consolidated financial statements
is affected.

Results of Operations

The following table sets forth selected consolidated statements of comprehensive income data for the years indicated:



|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|-------------------------------------------------------------------- |  | ----------------------- | ------- | - | -------------------- |  | ------- | ---- |  |  | ------- | -
|                                                                     |  | Year Ended December 31, |        
|                                                                     |  | 2013(As restated)(1)    |         |   | 2014(As restated)(1) |  |         | 2015 | 
|                                                                     |  | (in millions of RMB)    |        
|Operating revenue(2):                                                |  |                         |         |   |                      |  |         |      |  |  |         |  
|Revenue from telecommunications services                             |  |                         | 600,424 |   |                      |  | 591,602 |      |  |  | 584,089 |  
|Revenue from sales of products and others                            |  |                         | 39,624  |   |                      |  | 59,907  |      |  |  | 84,246  |  
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Total                                                                |  |                         | 640,048 |   |                      |  | 651,509 |      |  |  | 668,335 |  
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Operating expenses(2):                                               |  |                         |         |   |                      |  |         |      |  |  |         |  
|Leased lines and network assets                                      |  |                         | 14,816  |   |                      |  | 15,843  |      |  |  | 20,668  |  
|Interconnection                                                      |  |                         | 25,983  |   |                      |  | 23,502  |      |  |  | 21,668  |  
|Depreciation                                                         |  |                         | 111,493 |   |                      |  | 122,805 |      |  |  | 136,832 |  
|Employee benefit and related
expenses(3)                             |  |                         | 66,681  |   |                      |  | 70,385  |      |  |  | 74,805  |  
|Selling expenses                                                     |  |                         | 91,719  |   |                      |  | 75,655  |      |  |  | 59,850  |  
|Cost of products sold                                                |  |                         | 61,409  |   |                      |  | 74,495  |      |  |  | 89,297  |  
|Other operating expenses                                             |  |                         | 136,523 |   |                      |  | 151,504 |      |  |  | 162,293 |  
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Total                                                                |  |                         | 508,624 |   |                      |  | 534,189 |      |  |  | 565,413 |  
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Profit from operations                                               |  |                         | 131,424 |   |                      |  | 117,320 |      |  |  | 102,922 |  
|Gain on the transfer of Tower Assets                                 |  |                         |        |   |                      |  |        |      |  |  | 15,525  |  
|Other gains                                                          |  |                         | 989     |   |                      |  | 1,171   |      |  |  | 1,800   |  
|Interest income                                                      |  |                         | 15,368  |   |                      |  | 16,270  |      |  |  | 15,852  |  
|Finance costs                                                        |  |                         | (1,195  | ) |                      |  | (487    | )    |  |  | (455    | )
|Share of profit of investments accounted for using the equity method |  |                         | 7,063   |   |                      |  | 8,248   |      |  |  | 8,090   |  
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Profit before taxation                                               |  |                         | 153,649 |   |                      |  | 142,522 |      |  |  | 143,734 |  
|Taxation                                                             |  |                         | (36,746 | ) |                      |  | (33,179 | )    |  |  | (35,079 | )
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Profit for the year                                                  |  |                         | 116,903 |   |                      |  | 109,343 |      |  |  | 108,655 |  
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Attributable to:                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Equity shareholders                                                  |  |                         | 116,791 |   |                      |  | 109,218 |      |  |  | 108,539 |  
|Non-controlling interests                                            |  |                         | 112     |   |                      |  | 125     |      |  |  | 116     |  
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  
|Profit for the year                                                  |  |                         | 116,903 |   |                      |  | 109,343 |      |  |  | 108,655 |  
|                                                                     |  |                         |         |   |                      |  |         |      |  |  |         |  



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|(1) | As described in Note 2(b) to our consolidated financial statements, certain restatements to periods in 2013 and 2014 have been made to reflect our acquisition of Target Assets and Businesses which was accounted for
using merger accounting in accordance with the Accounting Guideline 5 Merger Accounting for Common Control Combinations (AG 5) issued by the HKICPA.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Our operating revenue components are revenue from telecommunications services and revenue from sales of products and others. Revenue from telecommunications services consists of voice services revenue, data
services revenue and other revenue from telecommunications services. Revenue from sales of products and others is mainly derived from sales of SIM cards and terminals as well as revenue from construction contracts.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On April 29, 2014, a notification (Cai Shui [2014] No.43) was jointly issued by the Ministry of Finance and the State
Administration of Taxation, and as approved by the State Council of the PRC, the telecommunications industry would be included in the scope of the pilot program for the transformation from business tax to value-added tax (VAT) (the
VAT Program) from June 1, 2014. According to the Cai Shui [2014] No.43, the VAT rates for the provision of basic telecommunications services and value-added telecommunications services are 11% and 6%, respectively. With the
implementation of the VAT Program from June 1, 2014, the Group is not required to pay the business tax of 3% on the telecommunications services.



|(3) | In accordance with requirements of reducing the proportion of labor sourced by third parties that provide services to the Group (outsourcing labor) among total labor under Amendment to Labor Contract
Law of the PRC and its associated rules and regulations, we have made adjustment on the structure of employees and outsourcing labor. Such adjustment leads to the increase in number of employees and the decrease in number of outsourcing labor
in 2015. In order to reasonably reflect the composition and fluctuation of employee benefit and related expenses, we presents employee benefit and related expenses by combining personnel expenses and labor service expenses, the latter of which was
presented under other operating expenses prior to 2015. The comparative figures have been presented on the same basis.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Operating Revenue. Our operating revenue components are revenue from telecommunications services and revenue from sales of
products and others. Revenue from telecommunications services primarily consists of voice services revenue and data services revenue. Voice services revenue mainly includes standard local usage fees for airtime and applicable domestic and
international long distance charges receivable from customers for the use of our telecommunications networks and facilities, fees in respect of roaming out calls made by our customers outside their registered service areas and fees charged for voice
value-added services. Data services revenue is mainly derived from SMS and MMS, wireless data traffic services, wireline broadband business and applications and information services. Other revenue from telecommunications services largely represents
interconnection revenue. Revenue from sales of products and others is mainly derived from sales of SIM cards and terminals, as well as revenue from construction contracts. See note 1 to the table above.

Operating revenue increased by 2.6% from RMB651,509 million in 2014 to RMB668,335 million (US$103,173 million) in 2015. This increase was
primarily due to the growth in our data services and our terminal sales business.

Revenue from telecommunications services decreased by
1.3% from RMB591,602 million in 2014 to RMB584,089 million (US$90,168 million) in 2015. Voice services revenue decreased by 16.5% from RMB313,476 million in 2014 to RMB261,896 million (US$40,430 million) in 2015. This decrease was
principally due to the substitution effect of Over The Top products, which resulted in a decrease in voice usage, and the implementation of VAT in the PRC. Our average voice services revenue per minute continued to reflect a downward trend from
RMB0.072 in 2014 to RMB0.061 in 2015. With intensified market competition and further tariff decreases, our average voice services revenue per minute may continue to decline in future periods. In response to the downward trend in voice services
revenue, we are providing reasonable tariff packages and undertaking sales and marketing activities. As a percentage of revenue from telecommunications services, voice services revenue decreased from 53.0% in 2014 to 44.8% in 2015.



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Set forth below is a table summarizing certain results of our data business for the periods
indicated.



|                                                                                  |  |                               |         |   |      |  |         |  
|--------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ---- |  | ------- | -
|                                                                                  |  | Year Ended December 31,       |        
|                                                                                  |  | 2014(As restated)(1)          |         |   | 2015 | 
|                                                                                  |  | (Revenue, in millions of RMB) |        
|SMS and MMS                                                                       |  |                               | 34,780  |   |      |  | 31,244  |  
|Wireless data traffic                                                             |  |                               | 153,926 |   |      |  | 200,857 |  
|of which: Mobile data traffic                                                     |  |                               | 150,571 |   |      |  | 198,270 |  
|Wireline broadband                                                                |  |                               | 16,204  |   |      |  | 18,339  |  
|Applications and information services                                             |  |                               | 53,552  |   |      |  | 52,985  |  
|                                                                                  |  |                               |         |   |      |  |         |  
|Data services revenue                                                             |  |                               | 258,462 |   |      |  | 303,425 |  
|                                                                                  |  |                               |         |   |      |  |         |  
|Data services revenue as a percentage of revenue from telecommunications services |  |                               | 43.7    | % |      |  | 52.0    | %



|(1) | As described in Note 2(b) to our consolidated financial statements, certain restatements to periods in 2014 have been made to reflect our acquisition of Target Assets and Businesses which was accounted for using merger
accounting in accordance with the Accounting Guideline 5 Merger Accounting for Common Control Combinations (AG 5) issued by the HKICPA.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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. This increase was mainly due to our continued efforts to promote data traffic services operations, with a focus on the expansion of our 4G network capacity to continue to attract new customers and in
response to the national policy of speed upgrade and tariff reduction, we offered discounts to our tariff plans and certain amount of free data usage to our customers during non-peak time and launched an unused data traffic carry-over
program for our mobile monthly plans that are charged based on pre-determined data traffic, which had a negative impact over our data services revenue in 2015. The increase in our data service revenue was also partially offset by the negative effect
of the implementation of VAT in the PRC telecommunications industry. Our data business includes wireless data traffic, wireline broadband, SMS and MMS, and applications and information services. Revenue generated from mobile data traffic, which has
become a strong driver of revenue growth, grew by 31.7% to RMB198,270 million in 2015, as compared to RMB150,571 million in 2014, primarily due to the rapid development of the mobile Internet business, the increasing market penetration of
smartphones by focusing on the sales of 4G terminals and the development of 4G services. The growth of our revenue from mobile data traffic in 2015 was partially offset by the same reasons reducing the growth of our data services revenue.
Revenue generated from wireline broadband business grew by 13.2% to RMB18,339 million in 2015, as compared to RMB16,204 million in 2014. Revenue generated from SMS and MMS decreased by 10.2% from RMB34,780 million in 2014 to RMB31,244 million in
2015, as competition from Internet instant messaging applications continued to intensify, and SMS service volume decreased by 8.4% compared to the previous year. Revenue generated from applications and information services decreased by 1.1% to
RMB52,985 million in 2015, as compared to RMB53,552 million in 2014. As a percentage of revenue from telecommunications services, data services revenue increased from 43.7% in 2014 to 52.0% in 2015.

Revenue from sales of products and others increased by 40.6% from RMB59,907 million in 2014 to RMB84,246 million (US$13,005 million) in 2015
due to the increase in our sales of 4G terminals. The increase was partially offset by the negative effect of the implementation of VAT in the PRC telecommunications industry.

Operating Expenses. Operating expenses include leased lines and network assets, interconnection expenses, depreciation expenses
relating to our telecommunications network and other property, plant and equipment, employee benefit and related expenses, selling expenses, cost of products sold and other operating expenses. Other operating expenses primarily consist of network
maintenance expenses, operating lease charges, impairment loss of doubtful accounts, assets written off and other miscellaneous expenses.

Operating expenses increased by 5.8% from RMB534,189 million in 2014 to RMB565,413 million (US$87,285 million) in 2015. The increase was due
to the increases in the sales of our devices, investments and the expansion of asset scale resulting in increases in depreciation expenses and maintenance fees and other operating expenses and the usage fees payable to China Tower for
telecommunications towers. The increase in our operating expenses is partially offset by the input VAT credits we were entitled to as a result of the implementation of VAT in the PRC telecommunications industry.



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Leased lines and network assets expenses increased by 30.5% from RMB15,843 million to RMB20,668
million (US$3,191 million) in 2015. The increase was mainly because we accrued usage fees to China Tower in an amount of RMB5.6 billion in respect of existing telecommunications towers for November and December 2015 and the new
telecommunications towers from the date of delivery. As a percentage of operating expenses, leased lines and network assets expenses increased from 3.0% in 2014 to 3.7% in 2015.

Interconnection expenses decreased by 7.8% from RMB23,502 million in 2014 to RMB21,668 million (US$3,345 million) in 2015, primarily due to a
decrease in voice, SMS and MMS usage, which resulted in a decrease in settlement expenses for voice, SMS and MMS services. Interconnection expenses as a percentage of operating expenses decreased from 4.4% in 2014 to 3.8% in 2015.

Depreciation expenses increased by 11.4% from RMB122,805 million in 2014 to RMB136,832 million (US$21,123 million) in 2015. The increase was
mainly due to the expansion in our network assets, which is in turn due to large-scale capital expenditure undertaken by us for the purpose of building and expanding our 4G network as part of our strategic transformation. As a percentage of
operating expenses, depreciation expenses increased from 23.0% in 2014 to 24.2% in 2015.

Employee benefit and related expenses increased
by 6.3% from RMB70,385 million in 2014 to RMB74,805 million (US$11,548 million) in 2015. This increase was primarily due to the rise in social insurance expenses, slight increase of employee compensation and the implementation of our enterprise
annuity system. As a percentage of operating expenses, employee benefit and related expenses remained stable at 13.2% from 2014 to 2015.

Selling expenses decreased by 20.9% from RMB75,655 million in 2014 to RMB59,850 million (US$9,239 million) in 2015. This decrease was
principally the result of our deepened transformation of marketing mode, optimized structure of our selling expenses, marketization of terminal sales we promoted, our accelerated transformation of social channels, our enhancing the concentration of
advertising and utilizing big data for precise marketing, thereby boosting our marketing efficiency significantly. As a percentage of operating expenses, selling expenses decreased from 14.2% in 2014 to 10.6% in 2015.

Cost of products sold increased by 19.9% from RMB74,495 million in 2014 to RMB89,297 million (US$13,785 million) in 2015. This increase
was generally in line with the increase in sales of devices, especially TD-LTE smartphones. As a percentage of operating expenses, cost of products sold increased from 13.9% in 2014 to 15.8% in 2015.

Other operating expenses increased by 7.1% from RMB151,504 million in 2014 to RMB162,293 million (US$25,054 million) in 2015. As a percentage
of operating expenses, other operating expenses increased from 28.3% in 2014 to 28.7% in 2015. This increase was primarily due to the increase in maintenance expenses and the provision for impairment of certain inefficient terminal transmission
equipment and WLAN assets, which was partially offset by the decrease in our administrative expenses such as conference and travelling expenses. For more information on our other operating expenses, see note 6 to our consolidated financial
statements included elsewhere in this annual report on Form 20-F.

Profit from Operations. As a result of the foregoing,
profit from operations decreased by 12.3% from RMB117,320 million in 2014 to RMB102,922 million (US$15,888 million) in 2015, and operating margin (profit from operations as a percentage of operating revenue) decreased from 18.0% in 2014 to 15.4% in
2015.

Gain on the Transfer of Tower Assets.In 2015, we realized a gain of RMB15,525 million (US$2,397 million) on the
transfer of telecommunication towers and related assets to China Tower.

Other Gains. Other gains increased by 53.7% from
RMB1,171 million in 2014 to RMB1,800 million (US$278 million) in 2015, principally due to an increase in others from RMB656 million in 2014 to RMB1,131million in 2015 as a result of the VAT refund of high and new technologies businesses received by
certain of our subsidiaries.

Interest Income. Interest income decreased by 2.6% from RMB16,270 million in 2014 to RMB15,852
million (US$2,447 million) in 2015, mainly because the benchmark deposit rates were reduced by PBOC and the average bank and cash balance during the year decreased compared to the previous year.

Finance Costs. Finance costs decreased by 6.6% from RMB487 million in 2014 to RMB455 million (US$70 million) in 2015. This
decrease was mainly due to a decrease in interest on bonds as the bonds issued by China TieTong with a principal amount of RMB1,000 million was repaid in 2015 and a decrease in interest on entrusted loans as we repaid certain amount of entrusted
loans from CMCC.



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Share of Profit of Investments Accounted for Using the Equity Method.We had a
share of profit of investments accounted for using the equity method of RMB8,090 million (US$1,249 million) in 2015, which was primarily attributable to our shareholding in SPD Bank, compared to RMB8,248 million in 2014. For more information on our
share of profit of investments accounted for using equity method, see note 19 to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

Profit before Taxation. As a result of the foregoing, profit before tax increased by 0.9% from RMB142,522 million in 2014 to
RMB143,734 million (US$22,189 million) in 2015.

Taxation. Our income tax expense increased by 5.7% from RMB33,179 million
in 2014 to RMB35,079 million (US$5,415 million) in 2015. This increase was due to an increase in taxable income. Our effective tax rate was 23.3% in 2014 and 24.4% in 2015, respectively.

Profit Attributable to Equity Shareholders. As a result of the foregoing and after taking into account non-controlling
interests, profit attributable to equity shareholders decreased by 0.6% from RMB109,218 million in 2014 to RMB108,539 million (US$16,756 million) in 2015. Net profit margin (profit attributable to equity shareholders as a percentage of operating
revenue) decreased from 16.8% in 2014 to 16.2% in 2015.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Operating Revenue. Operating revenue increased by 1.8% from RMB640,048 million in 2013 to RMB651,509 million in
2014. This increase was primarily due to the growth in our data services and our terminal sales business.

Revenue from
telecommunications services decreased by 1.5% from RMB600,424 million in 2013 to RMB591,602 million in 2014. Voice services revenue decreased by 13.0% from RMB360,425 in 2013 to RMB313,476 million in 2014. This decrease was principally due
to the substitution effect of Over The Top products, which resulted in a decrease in voice usage for the first time, and the implementation of VAT in the PRC. Our average voice services revenue per minute continued to reflect a downward trend
from RMB0.082 in 2013 to RMB0.072 in 2014. With intensified market competition and further tariff decreases, our average voice services revenue per minute may continue to decline in future periods. In response to the downward trend in voice services
revenue, we are providing reasonable tariff packages and undertaking sales and marketing activities. As a percentage of revenue from telecommunications services, voice services revenue decreased from 60.0% in 2013 to 53.0% in 2014.

Set forth below is a table summarizing certain results of our data business for the periods indicated.



|                                                                                  |  |                               |         |   |                      |  |         |  
|--------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | -------------------- |  | ------- | -
|                                                                                  |  | Year Ended December 31,       |        
|                                                                                  |  | 2013(As restated)(1)          |         |   | 2014(As restated)(1) | 
|                                                                                  |  | (Revenue, in millions of RMB) |        
|SMS and MMS                                                                       |  |                               | 41,321  |   |                      |  | 34,780  |  
|Wireless data traffic                                                             |  |                               | 108,239 |   |                      |  | 153,926 |  
|of which: Mobile data traffic                                                     |  |                               | 105,373 |   |                      |  | 150,571 |  
|Wireline broadband                                                                |  |                               | 12,089  |   |                      |  | 16,204  |  
|Applications and information services                                             |  |                               | 50,324  |   |                      |  | 53,552  |  
|                                                                                  |  |                               |         |   |                      |  |         |  
|Data services revenue                                                             |  |                               | 211,973 |   |                      |  | 258,462 |  
|                                                                                  |  |                               |         |   |                      |  |         |  
|Data services revenue as a percentage of revenue from telecommunications services |  |                               | 35.3    | % |                      |  | 43.7    | %



|(1) | As described in Note 2(b) to our consolidated financial statements, certain restatements to periods in 2013 and 2014 have been made to reflect our acquisition of Target Assets and Businesses which was accounted for
using merger accounting in accordance with the Accounting Guideline 5 Merger Accounting for Common Control Combinations (AG 5) issued by the HKICPA.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Data services revenue increased by 21.9% from RMB211,973 million in 2013 to RMB258,462 million in
2014. This increase was mainly due to our continued efforts to promote data traffic services operations, with a focus on the expansion of our 4G network capacity. Our data business includes wireless data traffic, wireline broadband services, SMS and
MMS, and applications and information services. Revenue generated from mobile data traffic, which has become a strong driver of revenue growth, grew by 42.9% to RMB150,571 million in 2014, as compared to RMB105,373 million in 2013, primarily due to
the rapid development of the mobile Internet business, the increasing market penetration of smartphones by focusing on the sales of 4G terminals and the development of 4G services. Revenue generated from SMS and MMS decreased by 15.8% from RMB41,321
million in 2013 to RMB34,780 million in 2014, as competition from Internet instant messaging applications continued to intensify, and SMS service volume decreased by 16.7% compared to the previous year. Growth of applications and information
services, in particular and-Reading, and-Video, and-Game, and and-Animation, was favorable. Revenue generated from applications and information services increased by 6.4% to RMB53,552 million in 2014,
as compared to RMB50,324 million in 2013. As a percentage of revenue from telecommunications services, data services revenue increased from 35.3% in 2013 to 43.7% in 2014. We expect our data services revenue, in particular revenue generated
from wireless data traffic business, to continue to grow in 2015.

Revenue from sales of products and others increased by 51.2% from
RMB39,624 million in 2013 to RMB59,907 million in 2014. This increase was primarily due to our efforts to increase the sales of terminals, since the long-term development of the TD terminal supply chain has considerable potential to drive data
traffic growth.

Operating Expenses. Operating expenses include leased lines and network assets expenses, interconnection
expenses, depreciation expenses relating to our telecommunications network and other property, plant and equipment, employee benefit and related expenses, selling expenses, cost of products sold and other operating expenses. Other operating expenses
primarily consist of network maintenance expenses, operating lease charges, impairment loss of doubtful accounts, assets written off and other miscellaneous expenses.

Operating expenses increased by 5.0% from RMB508,624 million in 2013 to RMB534,189 million in 2014. The increase was due to the growth in the
sales of our terminals and an increase in investments and the expansion of asset scale resulting in increases in depreciation expenses and maintenance fees.

Leased lines and network assets expenses increased by 6.9% from RMB14,816 million to RMB15,843 million in 2014. The increase was a result
of (i) an increase in TD-SCDMA network capacity leasing fees, due to an increase in TD-SCDMA network utilization rate and expansion in the asset scale relating to the TD-SCDMA network and (ii) our payment of the leasing fees to CMCC for the
Village Connect assets constructed before 2013. As a percentage of operating expenses, leased lines and network assets expenses increased from 2.9% in 2013 to 3.0% in 2014.

Interconnection expenses decreased by 9.5% from RMB25,983 million in 2013 to RMB23,502 million in 2014, primarily due to a decrease in SMS and
MMS settlement expenses to other operators as a result of adjustments in the interconnection settlement standards. Interconnection expenses as a percentage of operating expenses decreased from 5.1% in 2013 to 4.4% in 2014.

Depreciation expenses increased by 10.1% from RMB111,493 million in 2013 to RMB122,805 million in 2014. The increase was mainly due to the
expansion in our network assets, which is in turn due to large-scale capital expenditure undertaken by us for the purpose of building and expanding our 4G network as part of our strategic transformation. As a percentage of operating expenses,
depreciation expenses increased from 21.9% in 2013 to 23.0% in 2014.

Employee benefit and related expenses increased by 5.6% from
RMB66,681 million in 2013 to RMB70,385 million in 2014. This increase was primarily due to an increase in headcount and social insurance costs. The total number of our personnel increased due to the need to support 4G network construction and
the transformation of our development, as well as adjustment of employment structure in accordance with the requirements of relevant laws, rules and regulations. As a percentage of operating expenses, employee benefit and related expenses was 13.1%
and 13.2% in 2013 and 2014, respectively.

Selling expenses decreased by 17.5% from RMB91,719 million in 2013 to RMB75,655 million in
2014. This decrease was principally the result of our decision to optimize our marketing and sales model. As a percentage of operating expenses, selling expenses decreased from 18.0% in 2013 to 14.2% in 2014.



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Cost of products sold increased by 21.3% from RMB61,409 million in 2013 to RMB74,495 million in
2014. This increase was mainly due to our efforts to increase the sales of devices, especially TD-LTE smartphones, resulting in a corresponding increase in the costs of goods sold. As a percentage of operating expenses, cost of products
sold increased from 12.1% in 2013 to 13.9% in 2014.

Other operating expenses increased by 11.0% from RMB136,523 million in 2013 to
RMB151,504 million in 2014. As a percentage of operating expenses, other operating expenses increased from 26.9% in 2013 to 28.3% in 2014. This increase was primarily due to an increase in network maintenance and other related expenses attributable
to the expansion in our network assets. The increase in other operating expenses was partially offset by a decrease in conference and travelling expenses due to the implementation of controls over administrative expenses. For more information on our
other operating expenses, see note 6 to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

Profit from Operations. As a result of the foregoing, profit from operations decreased by 10.7% from RMB131,424 million in 2013
to RMB117,320 million in 2014, and operating margin (profit from operations as a percentage of operating revenue) decreased from 20.5% in 2013 to 18.0% in 2014.

Other Gains. Other gains increased by 18.4% from RMB989 million in 2013 to RMB1,171 million in 2014, principally due to an
increase in penalty income from RMB411 million in 2013 to RMB515 million in 2014.

Interest Income. Interest income
increased by 5.9% from RMB15,368 million in 2013 to RMB16,270 million in 2014, mainly because the average bank and cash balance during the year increased compared to the previous year and the average yield of our bank deposits increased due to the
optimization of the composition of our bank deposits.

Finance Costs. Finance costs decreased by 59.2% from RMB1,195 million
in 2013 to RMB487 million in 2014. This decrease was because in 2014 there was no longer an outstanding balance for the deferred consideration payable in connection with the acquisition of our subsidiaries in 2002 and 2004 and certain repayment of
entrusted loans granted by CMCC to China TieTong.

Share of Profit of Investments accounted for Using the Equity Method.We
had a share of profit of investments accounted for using the equity method of RMB8,248 million in 2014, which was primarily attributable to our shareholding in SPD Bank, compared to RMB7,063 million in 2013. For more information on our share of
profit of investments accounted for using the equity method, see note 19 to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

Profit before Taxation. As a result of the foregoing, profit before tax decreased by 7.2% from RMB153,649 million in 2013 to
RMB142,522 million in 2014.

Taxation. Our income tax expense decreased by 9.7% from RMB36,746 million in 2013 to RMB33,179
million in 2014. This decrease was due to a decrease in taxable income. Our effective tax rate was 23.9% in 2013 and 23.3% in 2014, respectively.

Profit Attributable to Equity Shareholders. As a result of the foregoing and after taking into account non-controlling
interests, profit attributable to equity shareholders decreased by 6.5% from RMB116,791 million in 2013 to RMB109,218 million in 2014. Net profit margin (profit attributable to equity shareholders as a percentage of operating revenue) decreased from
18.2% in 2013 to 16.8% in 2014.

Liquidity and Capital Resources

Liquidity

Our
principal source of liquidity is cash generated from our operations. As of December 31, 2015, we had negative working capital (current assets minus current liabilities) of RMB12,341 million (US$1,905 million), compared to working capital
of RMB34,433 million as of December 31, 2014 and working capital of RMB80,009 million as of December 31, 2013. We had negative working capital as of December 31, 2015 primarily due to the decrease in bank deposits and the increases in accrued
expenses and other payables and accounts payable, which were partially offset by the increases in available-for-sale financial assets and other receivables.The current portion of our finance lease obligations as of December 31,
2013, 2014 and 2015 were RMB68 million, RMB68 million and nil, respectively.



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Bank deposits represent term deposits with banks with original maturity exceeding three
months. As of December 31, 2015, we had bank deposits of RMB323,330 million (US$49,914 million), compared to bank deposits of RMB353,507 million as of December 31, 2014 and bank deposits of RMB375,127 million as of December 31, 2013. The
decrease of bank deposits in 2014 was mainly due to substantial capital expenditures resulting from the development of our 4G services, while the decrease of bank deposits in 2015 was mainly because of the consideration we paid for acquiring Target
Assets and Businesses.

The following table summarizes certain cash flow information for the periods indicated.



|                                                       |  |                         |          |   |                      |  |          |      |  |  |          |  
|------------------------------------------------------ |  | ----------------------- | -------- | - | -------------------- |  | -------- | ---- |  |  | -------- | -
|                                                       |  | Year ended December 31, |         
|                                                       |  | 2013(As restated)(1)    |          |   | 2014(As restated)(1) |  |          | 2015 | 
|                                                       |  | (in millions of RMB)    |         
|Net cash generated from operating activities           |  |                         | 226,905  |   |                      |  | 216,438  |      |  |  | 235,089  |  
|Net cash used in investing activities                  |  |                         | (180,122 | ) |                      |  | (151,230 | )    |  |  | (142,743 | )
|Net cash used in financing activities                  |  |                         | (71,312  | ) |                      |  | (42,530  | )    |  |  | (86,510  | )
|                                                       |  |                         |          |   |                      |  |          |      |  |  |          |  
|Net increase / (decrease) in cash and cash equivalents |  |                         | (24,529  | ) |                      |  | 22,678   |      |  |  | 5,836    |  
|                                                       |  |                         |          |   |                      |  |          |      |  |  |          |  



|(1) | As described in Note 2(b) to our consolidated financial statements, certain restatements to periods in 2013 and 2014 have been made to reflect our acquisition of Target Assets and Businesses which was accounted for
using merger accounting in accordance with the Accounting Guideline 5 Merger Accounting for Common Control Combinations (AG 5) issued by the HKICPA.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net cash generated from operating activities increased by 8.6% from RMB216,438 million in 2014 to RMB235,089 million (US$36,291 million) in
2015, which is in line with the increases in our profit before taxation excluding depreciation and amortization, a larger increase in our deferred revenue and a larger increase in accrued expenses and other payables and a decrease in prepayments and
other current assets, compared to an increase in 2014, which was partially offset by a decrease in account payable compared to an increase in account payable in 2014.

Net cash generated from operating activities decreased by 4.6% from RMB226,905 million in 2013 to RMB216,438 million in 2014, which is in line
with the decrease in our profit from operations excluding depreciation and amortization, a decrease in the increase in accrued expenses and other payables, and an increase in the increase in prepayments and other current assets.

Net cash used in investing activities decreased by 5.6% from RMB151,230 million in 2014 to RMB142,743 million (US$22,036 million) in 2015,
primarily due to a decrease in payment for investment accounted for using the equity method, a larger decrease in bank deposits, an increase in maturity of available-for-sale financial assets and a decrease in restricted bank deposits compared to an
increase in restricted bank deposits in 2014, which was partially offset by an increase in our purchase of available-for-sale financial assets.

Net cash used in investing activities decreased by 16.0% from RMB180,122 million in 2013 to RMB151,230 million in 2014, primarily because
there was a decrease in bank deposits in 2014 compared to an increase in bank deposits in 2013, which was partially offset by an increase in capital expenditure resulting from the development of our 4G services.

Net cash used in financing activities increased by 103.4% from RMB42,530 million in 2014 to RMB86,510 million (US$13,355 million) in 2015. The
larger amount of cash used in financing activities in 2015 compared to 2014 was mainly attributable to our payment of consideration for the acquisition of Target Assets and Businesses of China TieTong and the increase of repayment of entrusted
loans.

Net cash used in financing activities decreased by 40.4% from RMB71,312 million in 2013 to RMB42,530 million in 2014. The
larger amount of cash used in financing activities in 2013 compared to 2014 was mainly attributable to our repayment of deferred considerations in full in 2013.

Capital Expenditures

Capital expenditures incurred in 2013, 2014 and 2015 were RMB190,596 million, RMB215,097 millionand RMB195,577 million
(US$30,192 million), respectively. We incurred capital expenditures principally for the construction of mobile communication networks, transmission facilities, buildings, infrastructure and power systems, business networks, support systems and
others. The level of our capital expenditures decreased in 2015 principally because we appropriately controlled the investment schedules and optimized the investment directions to ensure the effectiveness of our investments.



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We estimate that we will incur capital expenditures of approximately RMB186.2 billion (US$28.7
billion) in 2016. We expect that approximately 43% of our capital expenditures in 2016 will be used in the construction of mobile communications networks, approximately 30% will be used in the construction of transmission facilities, approximately
12% will be used for the construction of buildings, infrastructure and power systems, approximately 7% will be used for the construction of business networks, approximately 5% will be used for the construction of support systems, and approximately
3% will be used for other construction.

We have generally funded our capital requirements primarily with cash generated from operations.
We believe our available cash and cash generated from future operations will be sufficient to fund the capital expenditures and working capital necessary for the planned network expansion and continued growth of our mobile operations through the end
of 2016.

We may seek to obtain additional sources of financing to fund our network expansion and possible future acquisitions, to the
extent necessary.

Contractual Obligations and Commitments

Indebtedness

As of
December 31, 2014 and 2015, our indebtedness mainly included the current portion of our finance lease obligations of RMB68 million and nil and corporate bonds of RMB5,992 million and RMB4,995 million as described below, respectively.

On October 28, 2002, our wholly-owned subsidiary, Guangdong Mobile, issued RMB5,000 million guaranteed bonds due 2017, with the entire
net proceeds used to settle part of the deferred consideration for our acquisition of eight regional mobile companies in China from CMCC. These bonds commenced trading on the Shanghai Stock Exchange on January 22, 2003. The guaranteed bonds
bear fixed interest of 4.5%, payable annually. We have issued a joint and irrevocable guarantee for the performance of these bonds, and CMCC has issued a further guarantee in relation to the performance by us of our guarantee obligation. These bonds
received a consolidated credit rating of AAA by China Chengxin International Credit Rating Company Limited and a consolidated credit rating of AAA by Dagong Global Credit Rating Co. Ltd, a PRC credit rating agency.

On August 18, 2005, China TieTong issued the bonds with a principal amount of RMB1,000 million, at an issue price equal to the face value of
the bonds. The bonds are unsecured and bear interest at rate of 4.6% per annum which is payable annually. The bonds were fully repaid on August 18, 2015.

We currently have a corporate credit rating of Aa3/Outlook Negative from Moodys and AA-/Outlook Negative from Standard &
Poors, which remain at levels equivalent to Chinas sovereign credit rating, respectively. Any downgrade in our credit rating will not trigger any events of default on our outstanding bonds or loans or our existing credit facilities.

For a discussion of our interest rate risk, please see Item 11. Quantitative and Qualitative Disclosures About Market Risk.

Other Contractual Obligations and Commitments

As of December 31, 2015, we had various contractual obligations and commitments which are more fully disclosed in the notes to our
consolidated financial statements. The principal components of these obligations and commitments include:



| |  |  | our short-term and long-term debts (in addition to the bonds described under  Indebtedness above), which includes finance leases;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | operating leases; and
| | - |  | ---------------------



| |  |  | capital commitments.
| | - |  | --------------------



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In the ordinary course of our business, we routinely enter into commercial commitments for
various aspects of our operations, such as repair and maintenance. However, we believe that those commitments will not have a material effect on our financial condition, results of operations or cash flows.

For further disclosure regarding leases and other commitments, please see note 38 to our consolidated financial statements included elsewhere
in this annual report on Form 20-F.

The following table sets forth certain information regarding our contractual obligations to make
future payments (including relevant estimated interest payment) as of December 31, 2015:



|                                       |  |                        |         |  |                 |  |         |            |  |  |            |  |  |                  |   |  |  |  |   | 
|-------------------------------------- |  | ---------------------- | ------- |  | --------------- |  | ------- | ---------- |  |  | ---------- |  |  | ---------------- | - |  |  |  | - | 
|                                       |  | Payments Due by Period |        
|Contractual Obligations                |  | Total                  |         |  | Less than1 year |  |         | 1  3years |  |  | 3  5years |  |  | More than5 years |  
|                                       |  | (in millions of RMB)   |        
|Accounts Payable                       |  |                        | 243,579 |  |                 |  | 243,579 |            |  |  |           |  |  |                  |  |  |  |  |  | 
|Bills Payable                          |  |                        | 645     |  |                 |  | 645     |            |  |  |           |  |  |                  |  |  |  |  |  | 
|Accrued Expenses and Other Payables    |  |                        | 163,404 |  |                 |  | 163,404 |            |  |  |           |  |  |                  |  |  |  |  |  | 
|Amount Due to Ultimate Holding Company |  |                        | 7,339   |  |                 |  | 7,339   |            |  |  |           |  |  |                  |  |  |  |  |  | 
|Bonds                                  |  |                        | 5,410   |  |                 |  | 225     |            |  |  | 5,185      |  |  |                  |  |  |  |  |  | 
|Finance Lease Obligations              |  |                        |        |  |                 |  |        |            |  |  |           |  |  |                  |  |  |  |  |  | 
|                                       |  |                        |         |  |                 |  |         |            |  |  |            |  |  |                  |   |  |  |  |   | 
|Total Contractual Obligations          |  |                        | 420,377 |  |                 |  | 415,192 |            |  |  | 5,185      |  |  |                  |  |  |  |  |  | 
|                                       |  |                        |         |  |                 |  |         |            |  |  |            |  |  |                  |   |  |  |  |   | 

The following table sets forth certain information regarding our other commercial commitments as of
December 31, 2015:



|                             |  |                                           |        |  |                 |  |        |            |  |  |            |  |  |                  |        |  |  |  |       | 
|---------------------------- |  | ----------------------------------------- | ------ |  | --------------- |  | ------ | ---------- |  |  | ---------- |  |  | ---------------- | ------ |  |  |  | ----- | 
|                             |  | Amount of CommitmentExpiration Per Period |       
|Other Commercial Commitments |  | TotalAmountCommitted                      |        |  | Less than1 year |  |        | 1  3years |  |  | 3  5years |  |  | More than5 years |       
|                             |  | (in millions of RMB)                      |       
|Operating Lease Commitments  |  |                                           | 60,740 |  |                 |  | 25,758 |            |  |  | 16,535     |  |  |                  | 10,333 |  |  |  | 8,114 | 
|Capital Commitments          |  |                                           | 34,666 |  |                 |  | 29,159 |            |  |  | 5,507      |  |  |                  |       |  |  |  |      | 
|                             |  |                                           |        |  |                 |  |        |            |  |  |            |  |  |                  |        |  |  |  |       | 
|Total Commercial Commitments |  |                                           | 95,406 |  |                 |  | 54,917 |            |  |  | 22,042     |  |  |                  | 10,333 |  |  |  | 8,114 | 
|                             |  |                                           |        |  |                 |  |        |            |  |  |            |  |  |                  |        |  |  |  |       | 

Apart from the commitments listed above, as of December 31, 2015, the company has a commitment to invest
RMB1,140 million to China Mobile Fund upon its request.

Off-Balance Sheet Arrangements

As of December 31, 2015, we did not have any off-balance sheet arrangements or any written options on non-financial assets.

Foreign Exchange

We maintain our
accounts in Renminbi and substantially all of our revenue and expenses are denominated in Renminbi. Most of our current operating subsidiaries are incorporated in Mainland China. Under the current foreign exchange system in Mainland China, our
subsidiaries in Mainland China may not be able to hedge effectively against currency risk, including any possible future Renminbi devaluation. See Item 10. Additional Information  Exchange Controls.

Each of our operating subsidiaries in Mainland China is able to purchase foreign exchange for settlement of current account transactions, as
defined in applicable regulations, in order to satisfy its foreign exchange requirements.



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|Item 6. | Directors, Senior Management and Employees.
|------- | -------------------------------------------

Directors and Senior Management

The following table sets forth certain information concerning our directors and senior management as of April 26, 2016.



|                     |  |     |  |                                                               
|-------------------- |  | --- |  | --------------------------------------------------------------
|Name                 |  | Age |  | Position                                                      
|Mr. SHANG Bing       |  | 60  |  | Executive Director and Chairman                               
|Mr. LI Yue           |  | 56  |  | Executive Director and Chief Executive Officer                
|Mr. XUE Taohai       |  | 59  |  | Executive Director, Vice President and Chief Financial Officer
|Mr. SHA Yuejia       |  | 58  |  | Executive Director and Vice President                         
|Mr. LIU Aili         |  | 52  |  | Executive Director and Vice President                         
|Dr. LO Ka Shui       |  | 69  |  | Independent Non-Executive Director                            
|Mr. Frank K.S. WONG  |  | 68  |  | Independent Non-Executive Director                            
|Dr. Moses M.C. CHENG |  | 66  |  | Independent Non-Executive Director                            
|Mr. Paul M.Y. CHOW   |  | 69  |  | Independent Non-Executive Director                            

Mr. SHANG Bing has served as our Executive Director and Chairman since September 2015. He is in charge of our
overall management. Mr. Shang is also the Chairman of CMCC and CMC. Mr. Shang previously served as a Director of Industrial Technology Development Centre in Liaoning Province, a General Manager of Economic and Technological Development Company in
Liaoning Province, a General Manager of China United Telecommunications Corporation Liaoning Branch, a Director, Vice President and President of China United Telecommunications Corporation, an Executive Director and President of China United
Telecommunications Corporation Limited and China Unicom Limited, a Vice President of China Telecom, an Executive Director, President and Chief Operating Officer of China Telecom Corporation Limited and the Vice Minister of the MIIT. Mr. Shang
graduated from Shenyang Chemical Industry Institution with a Bachelors degree in 1982. He received a Masters degree in business administration from the State University of New York in 2002 and a Doctors degree in business
administration from the Hong Kong Polytechnic University in 2005. Mr. Shang is a senior economist and has long-term experience in the operations and management in basic telecommunications enterprises, with extensive experience in enterprise
management and telecommunications industry.

Mr. LI Yue has served as our Executive Director since March 2003 and our Chief Executive
Officer since August 2010. He is in charge of our operations and management. Mr. Li is also the President and director of CMCC and CMC. Mr. Li previously served as Deputy Director General and Chief Engineer of Tianjin Long-Distance
Telecommunications Bureau, Deputy Director General of Tianjin Posts and Telecommunications Administration, President of Tianjin Mobile Communications Company, Deputy Head of the Preparatory Team of CMCC, Vice President of CMCC, Chairman of Aspire
Holdings Limited, a non-executive director of Phoenix Satellite Television Holdings Ltd and Chairman of Union Mobile Pay Limited. Mr. Li graduated from the Correspondence College of Beijing University of Posts and Telecommunications with a
Bachelors Degree in telephone exchange, holds a Masters Degree in business administration from Tianjin University and a doctoral degree in business administration from Hong Kong Polytechnic University. He is a professor-level senior
engineer and has won multiple national, provincial and ministerial level Science and Technology Advancement Awards. Mr. Li has many years of experience in the telecommunications industry, including experience in telecommunications network operations
and maintenance, planning and construction, operational management and development strategies.

Mr. XUE Taohai has served as our
Executive Director, Vice President and Chief Financial Officer since July 2002. Mr. Xue is principally in charge of our corporate affairs, finance and internal audit. Mr. Xue is also a Vice President of CMCC, a director of CMC and a
director and Chairman of China Mobile Finance. Mr. Xue previously served as the Deputy Director General of the Finance Department of the former Ministry of Posts and Telecommunications, Deputy Director General of the Department of Financial
Adjustment and Clearance of the Ministry of Information Industry (predecessor of the MIIT) and Deputy Director General of the former Directorate General of Telecommunications. He graduated from Henan University and received an EMBA degree from
Peking University. He is a senior accountant with many years of experience in the telecommunications industry and financial management.



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Mr. SHA Yuejia has served as our Executive Director and Vice President since March 2006.
Mr. Sha is principally in charge of marketing, data business, corporate customers and international businesses. He is also a Vice President of CMCC, a director of CMC and a non-executive director of PhoenixTV and SPD Bank. He previously served
as Director of the Engineering Construction Department IV Division of Beijing Telecommunications Administration, President of Beijing Telecommunications Planning Design Institute, Deputy Director General of Beijing Telecommunications Administration,
Vice President of Beijing Mobile Communications Company, Chairman and President of Beijing Mobile. Mr. Sha graduated from Beijing University of Posts and Telecommunications, and received a Masters Degree from the Academy of Posts and
Telecommunications of the former Ministry of Posts and Telecommunications and a doctoral degree in business administration from Hong Kong Polytechnic University. He is a professor-level senior engineer with many years of experience in the
telecommunications industry.

Mr. LIU Aili has served as our Executive Director and Vice President since March 2006. Mr. Liu is
principally in charge of planning and construction, network operations and business support. He is also a Vice President of CMCC and a director of CMC and a Vice President of China Internet Infrastructure Resources Association. Mr. Liu was appointed
as the Chairman of China Tower with effect from July 11, 2014. He previously served as Deputy Director General of Shandong Mobile Telecommunications Administration, Director General of Shandong Mobile Telecommunications Administration and General
Manager of Shandong Mobile Communications Enterprises, Vice President of Shandong Mobile Communications Company, Director-General of Network Department of CMCC, Chairman and President of China Mobile Group Shandong Co., Ltd. and Zhejiang Mobile,
Chairman of CMPak Limited and a non-executive director of China Communications Services Corporation Limited. Mr. Liu graduated from Heilongjiang Posts and Telecommunications School with an associate degree. Mr. Liu also received a Master
of Management degree from Norwegian School of Management BI and a doctoral degree in business administration from Hong Kong Polytechnic University. He is a professor-level senior engineer with many years of experience in the telecommunications
industry.

Dr. LO Ka Shui has served as our independent Non-Executive Director since April 2001. Dr. Lo is the Chairman and
Managing Director of Great Eagle Holdings Limited, and the chairman and non-executive director of the Manager of the publicly listed Champion Real Estate Investment Trust and Langham Hospitality Investments. He is also an independent non-executive
director of Shanghai Industrial Holdings Limited, Phoenix Satellite Television Holdings Limited and City e-Solutions Limited. He is a Vice President of the Real Estate Developers Association of Hong Kong, a Trustee of the Hong Kong Centre for
Economic Research, the Vice Chairman of The Chamber of Hong Kong Listed Companies and a member of the Exchange Fund Advisory Committee of the Hong Kong Monetary Authority. Dr. Lo graduated from McGill University with a Bachelor of Science
Degree and from Cornell University with a Doctor of Medicine (M.D.) Degree. He was certified in internal medicine and cardiology. He has over three decades of experience in property and hotel development and investment both in Hong Kong and
overseas.

Mr. Frank K.S. WONG has served as our independent Non-Executive Director since August 2002. Mr. Wong currently
serves as the Chairman and independent non-executive director of Mapletree Greater China Commercial Trust Management Ltd., a non-executive director of PSA International Pte Ltd, and PSA Corporation Limited in Singapore. Mr. Wong previously
served as Vice Chairman of DBS Bank, a member of the boards of DBS Bank and DBS Group Holdings and Chairman of DBS Bank (Hong Kong) and DBS Bank (China). He held a series of progressively senior positions at Citibank, JP Morgan and NatWest. More
recently, he was an independent non-executive director of Industrial and Commercial Bank of China Limited in China, Mapletree Investment Pte Ltd and National Healthcare Group Pte Ltd in Singapore. Mr. Wong has also served in various positions
with Hong Kongs government bodies including the Chairman of the Hong Kong Futures Exchange between 1993 and 1998 and a member of the Financial Services Development Council of the Hong Kong SAR Government between 2013 and 2015. Mr. Wong
has many years of finance and commercial management experience.

Dr. Moses M.C. CHENG has served as our independent Non-Executive
Director since March 2003. Dr. Cheng is a practising solicitor and a consultant of Messrs. P.C. Woo & Co after serving as its senior partner from 1994 to 2015. Dr. Cheng was a member of the Legislative Council of Hong Kong. He is
the founder chairman of the Hong Kong Institute of Directors of which he is now the Honorary President and Chairman Emeritus. Dr. Cheng currently holds directorships in Liu Chong Hing Investment Limited, China Resources Beer (Holdings) Company,
Limited, Towngas China Company Limited, Kader Holdings Company Limited, K. Wah International Holdings Limited, Guangdong Investment Limited and Tian An China Investments Company Limited, all of which are publicly-listed companies in Hong Kong. He is
also an independent non-executive director of ARA Asset Management Limited, a company with shares listed on the Singapore Exchange Limited. His other directorships in publicly-listed companies in the last three years include Hong Kong Television
Network Limited (formerly known as City Telecom (H.K.) Limited).



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Mr. Paul M.Y. CHOW has served as our independent Non-Executive Director since May 2013. Mr. Chow
currently serves as the Chairman of Hong Kong Cyberport Management Company Limited, a member of the Advisory Committee on Innovation and Technology of the Government of the Hong Kong Special Administrative Region, a member of the Asian Advisory
Council of AustralianSuper, an independent non-executive director of Bank of China Limited, an independent non-executive director of Julius Baer Group Ltd. and Bank Julius Baer & Co Ltd. and an independent non-executive director of CITIC
Limited. Mr. Chow previously served as an executive director and Chief Executive of Hong Kong Exchanges and Clearing Limited from April 2003 to January 2010, and as the Chief Executive of the Asia Pacific Region (ex-Japan) of HSBC Asset Management
(Hong Kong) Limited from 1997 to 2003.

Compensation

The amount of compensation that we paid to our executive directors for their services in 2015 was approximately RMB2.88 million (US$0.44
million). The amount of compensation that we paid to our independent non-executive directors for their services in 2015, was approximately HK$1.57 million (US$0.20 million).

We adopted a share option scheme on October 8, 1997, or the 1997 Scheme, pursuant to which our directors may, at their discretion, invite
our employees, including executive directors, or employees of our subsidiaries, to take up options to subscribe for ordinary shares up to a maximum aggregate number of ordinary shares equal to 10% of our total issued share capital.

Pursuant to a resolution passed at the annual general meeting held on June 24, 2002, a share option scheme, or the 2002 Scheme, was
implemented for a term of ten years commencing on June 24, 2002. Under the 2002 Scheme, the board of directors may, at their discretion, invite the executive directors, non-executive directors and employees of our company, any of its holding
companies and their respective subsidiaries, and any entity in which our company or any of its subsidiaries holds any equity interest to take up options to subscribe for shares in our company. The 2002 Scheme ceased to be effective from June
24, 2012 and no further options were granted under the 2002 Scheme thereafter. The 2002 Scheme will remain in effect to the extent necessary to give effect to the exercise of any options granted prior to June 24, 2012 and which at that time or
thereafter become capable of being exercised under the 2002 Scheme or otherwise to the extent as may be required in accordance with the 2002 Scheme. As of December 31, 2015, there were no ordinary shares which may be issued on the exercise
of the outstanding options granted under the 2002 Scheme.

The maximum aggregate number of ordinary shares which can be subscribed
pursuant to options that are or may be granted under the above schemes equals to 10% of the total issued share capital of our company as of the date of adoption of the 2002 Scheme. Options lapsed or cancelled will not be counted for the purpose of
calculating this 10% limit.

The consideration payable for the grant of option under the 2002 Scheme is HK$1.00.

The exercise price of the options granted under the 2002 Scheme is determined by our board of directors at its discretion provided that such
price may not be set below a minimum price which is the highest of:



| | (i) | the nominal value of an ordinary share;
| | --- | ---------------------------------------



| | (ii) | the closing price of the ordinary shares on the Hong Kong Stock Exchange on the date on which the option was granted; and
| | ---- | -------------------------------------------------------------------------------------------------------------------------



| | (iii) | the average closing price of the ordinary shares on the Hong Kong Stock Exchange for the five trading days immediately preceding the date on which the option was granted.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under the 2002 Scheme, the term of the option is determined by the board of directors at its discretion, provided that all options shall be
exercised within ten years after the date on which the option is granted.

As of December 31, 2015, there were no outstanding options
exercisable to subscribe for shares of our company granted to our directors and members of our senior management under our share option scheme. In 2015, 37,056,383 of these options had been exercised. See  Share Ownership below for
details on options granted to our directors.



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Board Practices

To enhance our corporate governance, we have three principal board committees, the audit committee, the remuneration committee and the
nomination committee. The audit committee, the remuneration committee and the nomination committee are all comprised solely of independent non-executive directors.

Audit Committee

The members of our audit committee are Mr. Frank K.S. Wong, as chairman of the committee, Dr. Moses M.C. Cheng and Mr. Paul M.Y.
Chow. The audit committees major responsibilities include:



| |  |  | to review the financial reports, the related report of the independent registered public accounting firm and managements responses to the reports;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to discuss the audit procedures with the independent registered public accounting firm as well as any issues arising out of such procedures;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to review the appointment of the independent registered public accounting firm, the audit and non-audit fees and any matters relating to the termination or resignation of the independent registered public accounting
firm; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to examine the effectiveness of our internal controls, to review our internal audit plan and to submit relevant reports and recommendations to our Board on a regular basis.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The audit committee usually meets five times each year.

Remuneration Committee

The members of our remuneration committee are Dr. Lo Ka Shui, as chairman of the committee, Mr. Frank K.S. Wong and Dr. Moses
M.C. Cheng. The remuneration committees major responsibilities include:



| |  |  | to advise the Board in relation to the remuneration structure and payments of our executive directors and executives; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | to represent the Board in confirming the individual remuneration packages and employment terms of executive directors and approving their related employment contracts.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Meetings of the remuneration committee are held at least once a year.

Nomination Committee

The members of our nomination committee are Dr. Lo Ka Shui, as chairman of the committee, Mr. Frank K.S. Wong and Dr. Moses M.C.
Cheng. The primary responsibilities of the nomination committee include:



| |  |  | to review, advise and make recommendations to the board on the matters in relation to the appointment and re-appointment of board members; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to ensure the proper and transparent procedures for the appointment and re-appointment of directors.
| | - |  | ----------------------------------------------------------------------------------------------------

Meetings of the nomination committee are held at least once a year.

Employees

See Item 4. Information
on the Company  Business Overview  Employees.

Share Ownership

As of December 31, 2015, our directors who own shares in our company are listed as follows:



|                 |  |                      |         |   |                              |  |        |  
|---------------- |  | -------------------- | ------- | - | ---------------------------- |  | ------ | -
|Director         |  | Number ofshares held |         |   | Percentage ofordinary shares | 
|Lo Ka Shui       |  |                      | 700,000 | * |                              |  | 0.0034 | %
|Frank K.S. Wong  |  |                      | 150,000 |   |                              |  | 0.0007 | %
|Moses M.C. Cheng |  |                      | 400,000 |   |                              |  | 0.0020 | %



|* | Including interest of controlled corporation.
|- | ---------------------------------------------



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Under our Articles of Association, our directors and senior management do not have different
voting rights when compared to other holders of shares in the same class.

As of December 31, 2015, there were no outstanding options
exercisable to subscribe for shares in our Company granted to our directors and members of our senior management under our share option scheme.



|Item 7. | Major Shareholders and Related Party Transactions.
|------- | --------------------------------------------------

Major Shareholders

As of March 31, 2016, approximately 72.72% of our outstanding shares were held by China Mobile Hong Kong (BVI) Limited, a wholly-owned
subsidiary of China Mobile (Hong Kong) Group Limited. CMCC, a state-owned company, holds all of the voting shares and economic interest in China Mobile (Hong Kong) Group Limited. No other persons own 5% or more of our ordinary shares. Between our
initial public offering and March 31, 2016, our majority shareholders held, directly or indirectly, between approximately 72.72% and 76.5% of equity interest in us, except for brief periods following our equity offerings in 1999 and 2000 but before
the issuance of consideration shares to our direct shareholder, China Mobile Hong Kong (BVI) Limited, for the related acquisitions, during which periods the shareholding was temporarily lower. See Item 4. Information on the Company  The
History and Development of the Company  Industry Restructuring and Changes in Our Shareholding Structure for changes during the past three years with respect to our majority shareholders. Under our Articles of Association, our major
shareholders do not have different voting rights when compared to other holders of shares in the same class.

We are not aware of any
arrangement which may at a subsequent date result in a change of control over us.

Related Party Transactions

As of March 31, 2016, CMCC indirectly owned an aggregate of approximately 72.72% of our issued and outstanding share capital.

We and each of our subsidiaries have entered into various related party transactions. The principal terms of the agreements for these related
party transactions are described below.

Certain charges for the services under these agreements are based on tariffs set by the PRC
regulatory authorities. Those transactions where the charges are not set by PRC regulatory authorities are based on commercial negotiation between the parties, in each case on an arms-length basis.

International Roaming Arrangements

Pursuant to an agreement between us and CMCC (the International Roaming Settlement Agreement), CMCC maintains the existing
settlement arrangements with respect to international interconnection and roaming with the relevant telecommunications services providers in foreign countries and regions, and collects the relevant usage fees and other fees from us and pays the same
to the relevant mobile services providers in foreign countries and regions. On September 13, 2012, we entered into an agreement with CMCC, pursuant to which CMCC would gradually transfer its settlement arrangements with certain telecommunications
services providers in foreign countries and regions to China Mobile International, our wholly-owned subsidiary. As a result, our arrangement with CMCC with respect to international interconnection and roaming with those telecommunications services
providers has been gradually phasing out.

Licensing of Trademark

CMCC is the owner of the CHINA MOBILE name and logo, a registered trademark in Mainland China, Australia, Brunei, Cambodia, Canada,
Hong Kong, India, Indonesia, Macau, New Zealand, Pakistan, South Africa, South Korea, Taiwan, Thailand, the United States and Yemen. In addition, it has filed applications to register the CHINA MOBILE name and logo as a trademark in
Malaysia for certain goods and services. CMCC has also registered the CHINA MOBILE name and logo as a trademark under the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks.



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On January 1, 2013, we entered into the 2013 Trademark License Agreement with CMCC, which
has a term of five years. Under the 2013 Trademark License Agreement, we and our operating subsidiaries are granted the right to use the CHINA MOBILE name and logo. No license fee is payable by us to CMCC during the term of the 2013
Trademark License Agreement.

Spectrum Fees and Numbering Resources

The MIIT and the MOF jointly determine the standardized spectrum fees payable to the MIIT by all mobile operators in Mainland China,
including us. In accordance with a joint circular from the NDRC and the MOF, CMCC 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.

Pursuant to an agreement between us and CMCC (the Spectrum and Numbering Resources Agreement), CMCC will
collect usage fees from us relating to spectrum frequency and numbering resources and make payment to the MIIT (and prior to April 2008, to the Ministry of Information Industry, predecessor of the MIIT). In addition to transferring to us all
existing frequency spectrum and numbering resources allocated to it by the MIIT, CMCC has also agreed to apply for new frequency spectrum and numbering resources upon our request or notice from time to time and transfer the relevant new frequency
spectrum and numbering resources to us.

Sharing of Inter-Provincial Transmission Line Leasing Fees

Pursuant to an agreement between us and CMCC (the Inter-Provincial Transmission Line Leasing Settlement Agreement), CMCC maintains
the existing settlement arrangements with respect to inter-provincial transmission line leasing with the relevant transmission line providers in Mainland China, and collects inter-provincial transmission line leasing fees from us and pays the same
to the transmission line providers in respect of the inter-provincial transmission lines we lease from such providers.

Platform
Development

Aspire is 66.41% owned by us, and is our joint venture with Vodafone and Hewlett-Packard Company. Aspire has a
platform development master agreement (the Platform Development Agreement) with CMCC, pursuant to which Aspire (or its subsidiaries) will provide technology platform development and maintenance services to CMCC and its subsidiaries.
These services include system and gateway integration services, hardware, software and system development (including development of applications), technical support and major overhaul services for a standardized, nation-wide platform for wireless
data.

Under the Platform Development Agreement, CMCC will pay Aspire equipment charges, systems integration fees, software licensing
fees, technical support fees and/or major overhaul charges, which will be determined according to standards laid down by the relevant governmental departments and/or by reference to market rates.

Leasing of TD-SCDMA Network Capacity

Pursuant to a network capacity leasing agreement between us and CMCC (the Network Capacity Leasing Agreement), we and our operating
subsidiaries lease TD-SCDMA network capacity from CMCC and pay leasing fees to CMCC. The initial term of the Network Capacity Leasing Agreement expired on December 31, 2009 and the agreement has been renewed for successive one-year periods since
that time.

The leasing fees are determined on a basis that reflects our actual usage of CMCCs TD-SCDMA network capacity and
compensates CMCC for the costs of such network capacity. The amount of leasing fees payable by us to CMCC under the Network Capacity Leasing Agreement did not exceed RMB10,000 million in 2015, and it is expected that the amount of leasing fees
payable by us to CMCC under the Network Capacity Leasing Agreement (as renewed) will not exceed RMB10,000 million in 2016. The transactions contemplated under the Network Capacity Leasing Agreement constitute our continuing connected transactions
under Rule 14A.31 of the Hong Kong Listing Rules and are subject to the reporting, annual review and announcement requirements, but are exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules.



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Interconnection Settlement Arrangements

China TieTong is a wholly-owned subsidiary of CMCC, our connected person for purposes of the Hong Kong Listing Rules. Pursuant to an agreement
among us, CMCC and China TieTong (the Tripartite Agreement), we and China TieTong make settlement payments to each other in respect of calls made or received by their respective customers. The initial term of the Tripartite Agreement
expired on December 31, 2009. The Tripartite Agreement provides that unless the parties agree otherwise, upon expiry of its term, the Tripartite Agreement shall automatically be renewed for further terms of one year. We, CMCC and China TieTong
agreed to renew the Tripartite Agreement on August 21, 2015 for a term of one year commencing on January 1, 2016.

The settlement charges
receivable by us from China Tietong under the Tripartite Agreement in 2015 did not exceed the de minimis threshold under Chapter 14A of the Hong Kong Listing Rules. The settlement charges payable by us under the Tripartite Agreement did not
exceed RMB800 million in 2015. The annual cap for the settlement charges payable by us to CMCC under the Tripartite Agreement (as renewed) for 2016 is RMB800 million. Before the completion of the acquisition of Target Assets and Businesses on
December 31, 2015, the transactions contemplated under the Tripartite Agreement constituted our continuing connected transactions under Rule 14A.31 of the Hong Kong Listing Rules and were subject to the reporting, annual review and announcement
requirements, but were exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules. Since the completion of such acquisition, the business contracts and relevant transactions between us, CMCC and China
TieTong as contemplated under the Tripartite Agreement have been conducted by us and our subsidiaries. As a result, the existing interconnection settlement arrangements pursuant to the Tripartite Agreement ceased to be our continuing connected
transactions pursuant to Chapter 14A of the Listing Rules.

Telecommunications Services Cooperation Agreement

In order to meet the customers demand for one-stop shop telecommunications services, we and CMCC have entered into a telecommunications
services cooperation agreement (the Telecommunications Services Cooperation Agreement) pursuant to which we and CMCC will provide customer development services to each other by utilizing our respective existing sales channels and
resources, such as sales outlets, Internet sales network, sales personnel and local sales units, and cooperate in the provision of basic telecommunications services and value-added telecommunications services to customers of the other party. The
initial term of the Telecommunications Services Cooperation Agreement expired on December 31, 2010 and the agreement has been renewed for successive one-year periods since that time.

The amount of charges receivable by us in 2015 under the Telecommunications Services Cooperation Agreement did not exceed RMB1,700 million,
while the amount of charges payable by us in 2015 under the Telecommunications Services Cooperation Agreement did not exceed RMB7,000 million. Following the completion of the acquisition of Target Assets and Businesses in December 2015, we estimate
that the aggregate amount of charges payable by us to CMCC and the aggregate amount of charges receivable by us from CMCC under the Telecommunications Services Cooperation Agreement (as renewed) in 2016 will no longer be subject to the reporting,
annual review, announcement or individual shareholders approval requirements under the Hong Kong Listing Rules.

Network
Assets Leasing Agreement

In order to better position ourselves in the changing landscape of the telecommunications industry in
China and to enable us to meet the customers demand for one-stop shop telecommunications services, we entered into the Network Assets Leasing Agreement with CMCC on August 18, 2011 (the Network Assets Leasing Agreement), pursuant
to which we and CMCC will lease our respective telecommunications network operation assets to each other in return for a leasing fee. The initial term of the Network Assets Leasing Agreement expired on December 31, 2011 and the agreement has been
renewed for successive one-year periods since that time.

The leasing fees will be determined with reference to the prevailing market
rates, but in any event shall not be more than the leasing fees charged to any independent third party for the same kinds of network assets. The amount of leasing fees receivable by us from CMCC in 2015 under the Network Assets Leasing Agreement did
not exceed the de minimis threshold under Chapter 14A of the Hong Kong Listing Rules, and the amount of leasing fees payable by us to CMCC in 2015 under the Network Assets Leasing Agreement did not exceed RMB15,000 million. It is expected, in 2016,
that the amount of leasing fees payable by us to CMCC under the Network Assets Leasing Agreement (as renewed) will not exceed RMB5,500 million, while the aggregate amount of the leasing fees receivable by us from CMCC will not exceed the de minimis
threshold under Rule 14A.76 of the Hong Kong Listing Rules. The transactions contemplated under the Network Assets Leasing Agreement constitute our continuing connected transactions under Rule 14A.31 of the Hong Kong Listing Rules and are subject to
the reporting, annual review and announcement requirements, but are exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules.



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Transfer of Telecommunications Towers and Related Assets to China Tower

In October 2015, CMC entered into 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, China Tower shall issue 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. The transfer of
telecommunication towers and related assets was consummated in October 2015. CMC transferred its existing telecommunications towers and related assets to China Tower for a final consideration of RMB102.736 billion. In January 2016, seven
subsidiaries of CMC and China Tower entered into share subscription agreements to settle the number of shares subscribed by such subsidiaries and the amount of the consideration. As of March 31, 2016, we indirectly owned 38% equity interest in China
Tower through CMC, our wholly owned subsidiary.

Telecommunications Towers and Related Assets Arrangements

We are in the process of negotiating the usage arrangements with China Tower for our usage of telecommunications towers and related assets from
China Tower. Upon the completion of the transfer of telecommunications towers and related assets to China Tower, based on the proposed usage pricing calculation mechanism of assets to China Tower and the actual usage, we accrued the expense of
approximately RMB5.6 billion in 2015.

Miscellaneous

Following the completion of our acquisition of the telecommunications assets from CMCC in July 2004, the transactions previously entered into
between our subsidiaries and prior subsidiaries of CMCC which have been acquired by us no longer constitute connected transactions under the Hong Kong Listing Rules beginning on July 1, 2004 since such prior subsidiaries of CMCC became part of us on
July 1, 2004. Only those transactions between CMCC and us or its subsidiaries (which have not been acquired by us) remain as connected transactions under the Hong Kong Listing Rules. As of the date of this annual report on Form 20-F, in order
to streamline the management of the connected transactions between CMCC and us, we consolidated the agreements between CMCC and us:



| | (i) | the Property Leasing and Management Services Agreement, pursuant to which we rent from CMCC various properties for use as business premises and offices, retail outlets and machining rooms and CMCC and its subsidiaries
provide to us property management services. Under this agreement, for properties owned by CMCC or its subsidiaries, the charges are determined with reference to market rates. For properties leased by CMCC or its subsidiaries from third parties and
sublet to us, the charges are determined according to the actual rent payable by CMCC or its subsidiaries together with any tax payable; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | the Telecommunications Services Agreement, pursuant to which our subsidiaries obtain telecommunications project planning, design and construction services, telecommunications line and pipeline construction services and
telecommunications line maintenance services from CMCC and its subsidiaries. Pursuant to the Telecommunications Services Agreement, subsidiaries of CMCC sell transmission towers and spare parts and provide related installation and maintenance
services to our subsidiaries. Under this agreement, the charges and prices payable are generally determined with reference to and cannot exceed relevant standards set by and revised from time to time by relevant governmental authorities in Mainland
China. Where there are no such standards, the charges and prices are determined with reference to market rates.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The rental
and property management service charges paid by us to CMCC and its subsidiaries under the Property Leasing Agreement did not exceed RMB1,500 million, RMB2,000 million and RMB2,200 million in 2013, 2014 and 2015, respectively. The charges paid
by us to CMCC and its subsidiaries under the Telecommunications Services Agreement did not exceed RMB3,500 million, RMB7,000 million and RMB8,000 million in 2013, 2014 and 2015, respectively, while the aggregate annual amount paid by CMCC and its
subsidiaries to us in 2013, 2014 and 2015 did not exceed RMB2,400 million, RMB2,300 million and RMB2,200 million, respectively.



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Following the completion of the acquisition of Target Assets and Businesses in December 2015, we
estimate that the aggregate annual amount payable by us to CMCC and its subsidiaries under the Telecommunications Services Agreement in 2016 will no longer be subject to the reporting, annual review, announcement or individual shareholders
approval requirements under the Hong Kong Listing Rules. The other transactions contemplated under the Property Leasing Agreement constitute our continuing connected transactions under Rule 14A.31 of the Hong Kong Listing Rules and are subject to
the reporting, annual review and announcement requirements, but exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules.

The rental and property management service charges payable by us to CMCC and its subsidiaries under the Property Leasing Agreement in 2016 are
not expected to exceed RMB2,800 million. The aggregate annual amounts payable by CMCC and its subsidiaries to us under the Telecommunications Services Agreement in 2016 are not expected to exceed RMB1,800 million, respectively.

In 2015, no consideration was paid from us to CMCC or from CMCC to us under the 2013 Trademark License Agreement, the Spectrum and Numbering
Resources Agreement, the Inter-Provincial Transmission Line Leasing Settlement Agreement and the Platform Development Agreement.



|Item 8. | Financial Information.
|------- | ----------------------

Consolidated Financial Statements

Our audited consolidated financial statements are set forth beginning on page F-1. Other than as disclosed elsewhere in this annual report on
Form 20-F, no significant change has occurred since the date of the annual financial statements.

Legal Proceedings

We are not involved in any material litigation, arbitration or administrative proceedings, and, so far as we are aware, we do not have any
pending or threatened litigation, arbitration or administrative proceeding that is expected to have a material effect on our financial condition and results of operations.

Policy on Dividend Distributions

We hold
in the highest regard the interests of our shareholders and the returns achieved for them, especially our minority shareholders. In consideration of our operating results in 2015 and having taken into account our long-term future development, our
board of directors recommended payment of a final dividend of HK$1.196 per share for the financial year ended December 31, 2015. This is in accordance with our dividend payout ratio of 43% planned for the full financial year of 2015. This,
together with the interim dividend of HK$1.525 per share that was paid, amounted to an aggregate dividend payment of HK$2.721 per share for the full financial year of 2015.

In 2016, having taken into consideration various relevant factors, such as our overall financial condition, cash flow generating capabilities
and future sustainable development needs, we plan that our dividend payout ratio for the full year of 2016 will be 43%.

Our board of
directors believes that our favorable profitability and healthy cash flow generating capability will be able to provide sufficient support to our future development, while providing our shareholders with a favorable return.



|Item 9. | The Offer and Listing.
|------- | ----------------------

In connection with our initial public offering, our ADSs each
representing twenty ordinary shares, were listed and commenced trading on the New York Stock Exchange on October 22, 1997 under the symbol CHL. Effective from July 5, 2000, our ADS-to-share ratio has been changed to
one-to-five. Our shares were listed and commenced trading on the Hong Kong Stock Exchange on October 23, 1997. Prior to these listings, there was no public market for our equity securities. The New York Stock Exchange and the Hong Kong Stock
Exchange are the principal trading markets for our ADSs and ordinary shares, which are not listed on any other exchanges in or outside the United States.

As of December 31, 2015 and March 31, 2016, there were 20,475,482,897 and 20,475,482,897, respectively, of our ordinary shares issued and
outstanding. As of December 31, 2015 and March 31, 2016, there were, respectively, 483 and 478 registered holders of American depositary receipts evidencing 98,998,862 and 99,191,320 of our ADSs. Since certain of the ADSs are held by nominees,
the above number may not be representative of the actual number of U.S. beneficial holders of ADSs or the number of ADSs beneficially held by U.S. persons. The depositary for the ADSs is The Bank of New York Mellon.



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The high and low closing sale prices of the shares on the Hong Kong Stock Exchange and of the
ADSs on the New York Stock Exchange for the periods indicated are as follows.



|                         |  |                       |        |  |                     |  |       |      |  |  |       |  |  |  |       | 
|------------------------ |  | --------------------- | ------ |  | ------------------- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                         |  | Price per Share (HK$) |        |  | Price per ADS (US$) | 
|                         |  | High                  |        |  | Low                 |  |       | High |  |  | Low   | 
|                         |  |                       |        | 
|2011                     |  |                       | 80.90  |  |                     |  | 68.15 |      |  |  | 51.70 |  |  |  | 43.77 | 
|2012                     |  |                       | 92.55  |  |                     |  | 75.05 |      |  |  | 59.30 |  |  |  | 48.62 | 
|2013                     |  |                       | 91.45  |  |                     |  | 75.05 |      |  |  | 59.53 |  |  |  | 47.74 | 
|                         |  |                       |        | 
|2014                     |  |                       |        |  |                     |  |       |      |  |  |       |  |  |  |       | 
|First Quarter            |  |                       | 80.40  |  |                     |  | 64.50 |      |  |  | 51.33 |  |  |  | 41.55 | 
|Second Quarter           |  |                       | 78.15  |  |                     |  | 69.05 |      |  |  | 50.68 |  |  |  | 44.77 | 
|Third Quarter            |  |                       | 101.70 |  |                     |  | 75.80 |      |  |  | 64.91 |  |  |  | 48.67 | 
|Fourth Quarter           |  |                       | 97.00  |  |                     |  | 87.75 |      |  |  | 63.17 |  |  |  | 56.82 | 
|                        
|2015                     | 
|First Quarter            |  |                       | 108.30 |  |                     |  | 88.75 |      |  |  | 69.47 |  |  |  | 56.70 | 
|Second Quarter           |  |                       | 116.10 |  |                     |  | 97.80 |      |  |  | 75.00 |  |  |  | 63.58 | 
|Third Quarter            |  |                       | 102.80 |  |                     |  | 89.30 |      |  |  | 66.03 |  |  |  | 56.91 | 
|Fourth Quarter           |  |                       | 95.95  |  |                     |  | 87.35 |      |  |  | 61.95 |  |  |  | 56.29 | 
|October                  |  |                       | 95.95  |  |                     |  | 91.20 |      |  |  | 61.95 |  |  |  | 58.97 | 
|November                 |  |                       | 95.25  |  |                     |  | 88.10 |      |  |  | 61.41 |  |  |  | 57.47 | 
|December                 |  |                       | 90.60  |  |                     |  | 87.35 |      |  |  | 58.81 |  |  |  | 56.29 | 
|                         |  |                       |        | 
|2016                     |  |                       |        |  |                     |  |       |      |  |  |       |  |  |  |       | 
|January                  |  |                       | 87.50  |  |                     |  | 79.65 |      |  |  | 55.08 |  |  |  | 50.66 | 
|February                 |  |                       | 85.75  |  |                     |  | 82.00 |      |  |  | 55.50 |  |  |  | 52.36 | 
|March                    |  |                       | 86.50  |  |                     |  | 83.30 |      |  |  | 56.32 |  |  |  | 53.78 | 
|First Quarter            |  |                       | 87.50  |  |                     |  | 79.65 |      |  |  | 56.32 |  |  |  | 50.66 | 
|April (through April 25) |  |                       | 91.85  |  |                     |  | 84.75 |      |  |  | 58.55 |  |  |  | 54.38 | 



|Item 10. | Additional Information.
|-------- | -----------------------

Articles of Association

According to the Companies Ordinance, we have the capacity and the rights, powers and privileges of a natural person of full age and, in
addition and without limit, we may do anything that we are permitted or required to do by any enactment or rule of law.

Directors

Material Interests. A director (or an entity connected with a director) who is in any way, whether directly or
indirectly, interested in a transaction, arrangement or contract or proposed transaction, arrangement or contract with us shall declare the nature and extent of his interest in accordance with the provisions of the Companies Ordinance and our
Articles of Association. A director shall not vote (nor shall be counted in the quorum), on any resolution of the board in respect of any contract or transaction or arrangement or proposal in which he or any of his Associates (as such term is
defined in the Listing Rules of the Hong Kong Stock Exchange), is to his knowledge, materially interested, and if he shall do so, his vote shall not be counted (nor shall be counted in the quorum for that resolution). The above prohibition shall not
apply to any contract, arrangement or proposal:



| |  |  | for the giving by us of any security or indemnity to the director or his Associates in respect of money lent or obligations incurred or undertaken by him or any of them at the request of, or for, our or any of our
subsidiaries benefit;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | for the giving by us of any security to a third party in respect of our or any of our subsidiaries debt or obligation for which the director or his Associates has himself or themselves assumed responsibility or
guaranteed or secured in whole or in part whether alone or jointly;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | concerning an offer of the shares or debentures or other securities of or by us or any other company which we may promote or be interested in for subscription or purchase where the director or his Associates are, or are
to be, interested as a participant in the underwriting or sub-underwriting of the offer;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in which the director or his Associates are interested in the same manner as other holders of our shares or debentures or other securities by virtue only of his or their interest in our shares or debentures or other
securities;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | concerning any other company in which the director or his Associates are interested, whether directly or indirectly, as an officer or a shareholder or in which the director or his Associates are beneficially interested
in shares of that company other than a company in which the director and any of his Associates, are beneficially interested in 5% or more of the issued shares of any class of the equity share capital of such company (or of any third company through
which his interest or that of his Associates is derived) or of the voting rights (excluding for the purpose of calculating such 5% interest any indirect interest of such director or his Associates by virtue of our interest in such company);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | for the benefit of our or any of our subsidiaries employees, including the adoption, modification or operation of a pension fund or retirement, death or disability benefit scheme which relates both to our, or any
of our subsidiaries, directors, his Associates and employees and does not give the director or his Associates any privilege not generally accorded to the class of persons to whom such scheme or fund relates; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | concerning the adoption, modification or operation of any employees share scheme involving the issue or grant of options over shares or other securities by us to, or for the benefit of, our or any of our
subsidiaries employees under which the director or his Associates may benefit.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Remuneration and
Pension. The directors shall be entitled to receive by way of remuneration for their services such sum as we may determine from time to time in general meeting. The directors shall also be entitled to be repaid their reasonable traveling,
hotel and other expenses incurred by them in or about the performance of their duties as directors. The directors may award special remuneration out of our funds (by way of salary, commission or otherwise as the directors may determine) to any
director who performs services which, in the opinion of the directors, are outside the scope of the ordinary duties of a director.

The
board may establish and maintain or procure the establishment and maintenance of any contributory or non-contributory pension or superannuation funds for the benefit of, or give or procure the giving of donations, gratuities, pensions, allowances or
emoluments to any persons (1) who are or were at any time in employment or service of our company, or any of our subsidiaries, or is allied or associated with us or with any of our subsidiaries, or (2) who are or were at any time our or
any of our subsidiaries directors or officers, and holding or who have held any salaried employment or office in our company or any of our subsidiaries, and the wives, widows, families and dependents of any such persons. Any director holding
any such employment or office shall be entitled to participate in, and retain for his own benefit, any such donation, gratuity, pension, allowance or emolument.

Borrowing Powers. The directors may exercise all the powers of our company to borrow money and to mortgage or charge all or any
part of the undertaking, property and assets (present and future) and uncalled capital and to issue debentures, debenture stocks, bonds and other securities, whether outright or as collateral security for any debt, liability or obligation of our
company or any third party.

Qualification; Retirement. A director need not hold any of our shares to qualify as a director.
There is no age limit requirement for a directors retirement or non-retirement.

Each director is subject to retirement by rotation
and at each general meeting, one-third of the directors for the time being, or, if their number is not three or a multiple of three, then the number nearest to one-third, shall retire from office by rotation. The directors to retire in every year
shall be those who have been longest in office since their last election, but as between persons who became directors on the same day shall be determined by lot unless they otherwise agree between themselves. The retiring directors shall be eligible
for re-election.



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Rights Attaching to Ordinary Shares

Voting Rights. Under the Companies Ordinance, any action to be taken by the shareholders in a general meeting requires the
affirmative vote of either an ordinary or a special resolution passed at the meeting. An ordinary resolution is one passed by the majority of such shareholders as are entitled to, and do, vote in person or by proxy at a general meeting. A special
resolution is one passed by not less than three-quarters of such shareholders as are entitled to, and do, vote in person or by proxy at a general meeting. Generally, resolutions of shareholders are passed by ordinary resolution. However, the
Companies Ordinance stipulates that certain matters may only be passed by special resolutions.

At any general meeting a resolution put to
the vote of the meeting shall be decided on a poll demanded by:



| |  |  | the chairman of the meeting;
| | - |  | ----------------------------



| |  |  | at least three members present in person (or in the case of a member being a corporation, by its duly authorized representative) or by proxy and entitled to vote at the meeting;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any member or members present in person (or in the case of a member being a corporation, by its duly authorized representative) or by proxy and representing in the aggregate not less than five per cent. of the total
voting rights of all members having the right to attend and vote at the meeting; or
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any member or members present in person (or in the case of a member being a corporation, by its duly authorized representative) or by proxy and holding shares conferring a right to attend and vote at the meeting on
which there have been paid up sums in the aggregate equal to not less than five per cent. of the total sum paid up on all shares conferring that right;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

provided that a resolution put to the vote of the meeting may be decided on a show of hands to the extent permitted by Hong Kong Listing
Rules.

Subject to any special rights, privileges or restrictions as to voting for the time being attached to any class or classes of
shares, every member who (being an individual) is present in person or (being a corporation) is present by a representative duly authorized under Section 606 of the Companies Ordinance at any general meeting shall be entitled, on a show of hands, to
one vote only and, on a poll, to one vote for every fully paid-up share of which he is the holder.

On a poll, votes may be given either
personally or by proxy and a member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

Modification of Rights. All or any of the special rights attached to any class of shares (unless otherwise provided for by the
terms of issue of the shares of that class) for the time being in issue may subject to the provisions of the Companies Ordinance, at any time, as well before as during liquidation, be altered or abrogated either with the consent in writing of the
holders of not less than three-fourths of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of shares of that class.

Issue of Shares.A general meeting resolving upon the creation of any new shares may direct that the same or any of them
shall be offered in the first instance, to all the holders for the time being of any class of shares in the capital of our company, in proportion to the number of shares of such class held by them respectively, or make any other provisions as to the
issue and allotment of the new shares, and in default of any such direction, or so far as the same shall not extend, the new shares shall be at the disposal of the directors, and Article 9 of the Articles of the Association shall apply thereto.

Dividends. We may by ordinary resolution declare dividends, but no such dividend shall be declared in excess of the amount
recommended by the directors.

The directors may, if they think fit, from time to time, resolve to pay to the members such interim
dividends as appear to the directors to be justified.

Winding Up. If we shall be wound up, the liquidator (whether
voluntary or official) may, with the sanction of a special resolution, divide among the shareholders in specie or kind the whole or any part of our assets or vest any part of our assets in trustees upon such trusts for the benefit of the members or
any of them as the resolution shall provide.



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Miscellaneous. The shareholders are not entitled to any redemption rights,
conversion rights or preemptive rights on the transfer of our securities.

Annual General Meetings and Extraordinary General
Meetings

We must hold, in each year, a general meeting as our annual general meeting in addition to any other meetings in that
year. The annual general meeting must be held within six months after the end of each financial year and at such place(s) as may be determined by the directors. All other general meetings are extraordinary general meetings. The directors may proceed
to convene an extraordinary general meeting whenever they think fit, in accordance with the Companies Ordinance.

In general, an annual
general meeting and a meeting called for the passing of a resolution requiring special notice as stipulated under Section 578 of the Companies Ordinance shall be called by not less than 21 days notice in writing, and any other general meeting
shall be called by not less than 14 days notice in writing. The notice must specify the place, date and time of the meeting and, in the case of special business, the general nature of that business.

Miscellaneous

We
keep our share register with our share registrar, which is Hong Kong Registrars Ltd., Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queens Road East, Wanchai, Hong Kong. In addition, we
also file certain documents with the Registrar of Companies, Hong Kong, China, in accordance with the requirements of the Companies Ordinance. Our company number is 622909.

Material Contracts

See Item 7.
Major Shareholders and Related Party Transactions  Related Party Transactions for certain arrangements we have entered into with CMCC and China Tower.

Exchange Controls

The Renminbi currently
is not a freely convertible currency. Under the capital account, which includes, among others, foreign direct investment, the prior approval of the State Administration of Foreign Exchange should be obtained prior to conversion of
Renminbi into foreign currency. However, under the current account, which includes dividends, trade and service-related foreign currency transactions, the Renminbi is currently freely convertible.

The value of the Renminbi is subject to changes in PRC government policies and to international economic and political developments. Since
1994, the conversion of the Renminbi into foreign currencies, including U.S. dollars, has been based on rates set by 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. From 1994 to July 20, 2005, the official exchange rate for the conversion of the Renminbi to foreign currencies was generally stable. On July 21, 2005, the PRC government introduced a managed floating
exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. The PRC government has since made and in the future may make further
adjustments to the exchange rate system.

There are no limitations on the right of non-resident or foreign owners to remit dividends or to
hold or vote the ordinary shares or the ADSs imposed by Hong Kong law or by our Articles of Association or other constituent documents.

Taxation
 PRC

This section describes certain PRC tax consequences relating to the ownership and disposition of our ordinary shares and
ADSs. This section does not address all possible PRC tax considerations that may be relevant to an investment in our ordinary shares or ADSs in light of an investors specific circumstances, and is based on PRC tax laws and relevant
interpretations as in effect as of the date of this annual report on Form 20-F, which are subject to change, including the possibility of having retroactive effect. Accordingly, you should consult your own tax advisor regarding the PRC and other tax
consequences of an investment in our ordinary shares or ADSs under your particular circumstances.



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Under the PRC Enterprise Income Tax Law and its implementing rules, which took effect on January
1, 2008, or the PRC income tax law, a non-resident enterprise is generally subject to PRC enterprise income tax with respect to PRC-sourced income. Moreover, the PRC tax authorities have been issuing further interpretations and notices to enhance
the application of the PRC income tax law.

Taxation of Dividends

On April 22, 2009, the PRC State Administration of Taxation, or the SAT, issued the Notice Regarding the Determination of Tax Residence Status
of Chinese-Controlled Offshore-Incorporated Enterprises on the Basis of De Facto Management Bodies, or the 2009 Notice, which had retroactive effect as of January 1, 2008. We are considered a PRC resident enterprise for purposes of the 2009 Notice.
In accordance with the 2009 Notice and the PRC income tax law, we are required to withhold enterprise income tax equal to 10% of any dividend when it is distributed to non-resident enterprise shareholders whose names appeared on our register of
members, as of the record date for such dividend, and who were not individuals.

Taxation of Capital Gains

Under the PRC income tax law, a non-resident enterprise is generally subject to PRC enterprise income tax with respect to PRC-sourced income,
but uncertainties remain as to their implementation by the relevant PRC tax authorities. We intend to comply with any interpretation or notice in relation to the taxation of capital gains issued by the PRC tax authorities in the future.

Other PRC Tax Considerations

Stamp duty.Under the Provisional Regulations of the PRC Concerning Stamp Duty and its implementing rules, both of which became
effective on October 1, 1988, PRC stamp duty should not apply to acquisitions or dispositions of our ordinary shares or ADSs outside of the PRC, as the PRC stamp duty is imposed only on documents executed or received within the PRC that are
legally binding in the PRC and protected under the PRC law.

Estate tax. The PRC does not currently levy estate tax.

Taxation  Hong Kong

The taxation
of income and capital gains of holders of ordinary shares or ADSs is subject to the laws and practices of Hong Kong and of jurisdictions in which holders of ordinary shares or ADSs are resident or otherwise subject to tax. The following summary of
certain relevant taxation provisions under Hong Kong law is based on current law and practice, is subject to changes therein and does not constitute legal or tax advice. The discussion does not deal with all possible tax consequences relating to an
investment in the ordinary shares or ADSs. Accordingly, each prospective investor (particularly those subject to special tax rules, such as banks, dealers, insurance companies, tax-exempt entities and holders of 10% or more of our voting capital
stock) should consult its own tax advisor regarding the tax consequences of an investment in the ordinary shares and ADSs. The discussion is based upon laws and relevant interpretations thereof in effect as of the date of this annual report on Form
20-F, all of which are subject to change. There is no reciprocal tax treaty in effect between Hong Kong and the United States.

Tax
on Dividends

Under the current practices of the Hong Kong Inland Revenue Department, no tax is payable in Hong Kong in respect of
dividends paid by us.

Profits Tax

No tax is imposed in Hong Kong in respect of capital gains from the sale of property (such as the ordinary shares and ADSs). Trading gains from
the sale of property by persons carrying on a trade, profession or business in Hong Kong where such gains are derived from or arise in Hong Kong from such trade, profession or business will be chargeable to Hong Kong profits tax, which is currently
imposed at the rate of 16.5% and 15% on corporations and unincorporated businesses, respectively, and at a maximum rate of 15% on individuals. Gains from sales of the ordinary shares effected on the Hong Kong Stock Exchange may be considered to be
derived from or arise in Hong Kong. Liability for Hong Kong profits tax may thus arise in respect of trading gains from sales of ordinary shares or ADSs realized by persons carrying on a business or trading or dealing in securities in Hong Kong.



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Stamp Duty

Hong Kong stamp duty, currently charged at the rate of HK$1 per HK$1,000 or part thereof on the higher of the consideration for or the value of
the ordinary shares, will be payable by the purchaser on every purchase and by the seller on every sale of ordinary shares (i.e., a total of HK$2 per HK$1,000 or part thereof is currently payable on a typical sale and purchase transaction involving
ordinary shares). In addition, a fixed duty of HK$5 is currently payable on any instrument of transfer of ordinary shares. If one of the parties to the sale is a non-Hong Kong resident and does not pay the required stamp duty, the duty not paid will
be assessed on the instrument of transfer (if any) and the transferee will be liable for payment of such duty. The withdrawal of ordinary shares upon the surrender of ADSs, and the issuance of ADSs upon the deposit of ordinary shares, will also
attract stamp duty at the rate described above for sale and purchase transactions unless the withdrawal or deposit does not result in a change in the beneficial ownership of the ordinary shares under Hong Kong law, in which case only a fixed duty of
HK$5 is payable on the transfer. The issuance of the ADSs upon the deposit of ordinary shares issued directly to the depositary or for the account of the depositary does not attract stamp duty. No Hong Kong stamp duty is payable upon the transfer of
ADSs outside Hong Kong.

Estate Duty

The Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong. No Hong Kong estate duty is
payable and no estate duty clearance papers are needed for an application for a grant of representation in respect of holders of ordinary shares whose death occurs on or after February 11, 2006.

Taxation  United States Federal Income Taxation

This section describes the material United States federal income tax consequences of the ownership and disposition of our ordinary shares or
ADSs. This section applies to you only if you are a U.S. holder, as defined below, and you hold your ordinary shares or ADSs as capital assets for United States federal income tax purposes. This section does not apply to you if you are a member of a
special class of holders subject to special rules, including:



| |  |  | a dealer in securities or currencies;
| | - |  | -------------------------------------



| |  |  | a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | a tax-exempt organization;
| | - |  | --------------------------



| |  |  | a life insurance company;
| | - |  | -------------------------



| |  |  | a person liable for alternative minimum tax;
| | - |  | --------------------------------------------



| |  |  | a person that actually or constructively owns 10% or more of our voting stock;
| | - |  | ------------------------------------------------------------------------------



| |  |  | a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | a person that purchases or sells ordinary shares or ADSs as part of a wash sale for tax purposes; or
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | a person whose functional currency is not the U.S. dollar.
| | - |  | ----------------------------------------------------------

This section is based on the
Internal Revenue Code of 1986, as amended, or the Code, its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect, as well as on the agreement between the United States and the
Peoples Republic of China for the avoidance of double taxation (the U.S.-PRC Treaty). These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of the
Depositary, and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

If a partnership holds the ordinary shares or ADSs, the United States federal income tax treatment of a partner will generally depend on the
status of the partner and the tax treatment of the partnership. A partner in a partnership holding the ordinary shares or ADSs should consult its tax advisor with regard to the United States federal income tax treatment of its investment in the
ordinary shares or ADSs.



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You are a U.S. holder if you are a beneficial owner of ordinary shares or ADSs and you are:



| |  |  | a citizen or resident of the United States;
| | - |  | -------------------------------------------



| |  |  | a domestic corporation;
| | - |  | -----------------------



| |  |  | an estate whose income is subject to United States federal income tax regardless of its source; or
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | a trust if a United States court can exercise primary supervision over the trusts administration and one or more United States persons are authorized to control all substantial decisions of the trust.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

You should consult your own tax advisor regarding the United States federal, state and local tax consequences of owning
and disposing of ordinary shares and ADSs in your particular circumstances.

In general, and taking into account the earlier
assumptions, for United States federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the ordinary shares represented by those ADRs. Exchanges of ordinary shares for ADRs, and ADRs for ordinary shares,
generally will not be subject to the United States federal income tax.

Taxation of Dividends

Under the United States federal income tax laws, and subject to the passive foreign investment company rules discussed below, if you are a U.S.
holder, the gross amount of any dividend we pay out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes) is subject to United States federal income taxation. If you are a non-corporate U.S.
holder, dividends that constitute qualified dividend income will be taxable to you at the preferential rates applicable to long-term capital gains provided that you hold the ordinary shares or ADSs for more than 60 days during the 121-day period
beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends that are paid with respect to ADSs that are readily tradable on an established securities market in the United States are qualified dividend income.
Under this rule, we expect that the dividends we pay with respect to the ADSs will be qualified dividend income. In addition, dividends paid by a non-U.S. corporation that is eligible for the benefits of a comprehensive income tax treaty with the
United States will be qualified dividend income. As our ordinary shares are not readily tradable on an established securities market in the United States and because we are uncertain as to whether we are eligible for the benefits of the U.S-PRC
Treaty, it is unclear whether dividends paid with respect to our ordinary shares will also be qualified dividend income.

The dividend is
taxable to you when you, in the case of ordinary shares, or the Depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to United
States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the Hong Kong dollar payments
made, determined at the spot Hong Kong dollar/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is, in fact, converted into U.S. dollars. Generally, any gain or loss resulting from
currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax
rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and
profits, as determined for United States federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the ordinary shares or ADSs and thereafter as capital gain. However, we do not expect to
calculate earnings and profits in accordance with United States federal income tax principles. Accordingly, you should expect to generally treat distributions we make as dividends.

Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates.

Dividends will generally be income from sources outside the United States and, depending on your circumstances, will be either
passive or general income for purposes of computing the foreign tax credit allowable to you. If you are subject to PRC withholding tax (as discussed in Taxation  PRC  Taxation of Dividends, above), you
must include any such tax withheld from the dividend payment in your gross income, even though you do not in fact receive it. Subject to certain limitations, the PRC tax withheld and paid over to the PRC tax authorities will be creditable against
your United States federal income tax liability. To the extent a refund of the tax withheld is available under PRC law, or to the extent that you could have avoided the withholding tax by complying with any certification, identification requirement
or by completing any forms, the amount of tax withheld that is refundable or that could have been avoided will not be eligible for credit against your United States federal income tax liability.



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Taxation of Capital Gains

Subject to the passive foreign investment company rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of your
ordinary shares or ADSs, you will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in
your ordinary shares or ADSs. Capital gain of a non-corporate U.S. holder is generally taxed at preferential rates where the property is held for more than one year. Subject to the paragraph immediately below regarding gain subject to PRC tax, the
gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. Your ability to deduct capital losses is subject to limitations. Any Hong Kong stamp duty that you pay will not be a
creditable tax for United States federal income tax purposes, but you may be able to deduct such stamp duty subject to limitations under the Code.

It is not clear if PRC tax will be imposed on any gain from the disposition of your ordinary shares or ADSs (as discussed above in
Taxation  PRC  Taxation of Capital Gains). Under the U.S.-PRC Treaty, if PRC tax were to be imposed on any gain from the disposition of your ordinary shares or ADSs, then such gain will be treated as PRC source income if you
are eligible for the benefits of the U.S.-PRC Treaty. U.S. holders should consult their tax advisors regarding the possibility of PRC tax being imposed on gain from the disposition of their ordinary shares or ADSs, the tax consequences if PRC tax
were to be imposed on such dispositions, and the availability of the foreign tax credit under their particular circumstances.

PFIC
Rules

We believe that we should not be treated as a passive foreign investment company, or PFIC, for United States federal income
tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change. In general, if you are a U.S. holder, we will be a PFIC with respect to you if for any taxable year in which you held our ADSs or
ordinary shares:



| |  |  | at least 75% of our gross income for the taxable year is passive income; or
| | - |  | ---------------------------------------------------------------------------



| |  |  | at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable to assets that produce or are held for the production of passive income.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct
of a trade or business), annuities and gains from assets that produce passive income. If a foreign corporation owns, directly or indirectly, at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes
of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporations income.

If we are treated as a PFIC, and you are a U.S. holder that does not make a mark-to-market election, as described below, you will be subject
to special rules with respect to:



| |  |  | any gain you realize on the sale or other disposition of your ordinary shares or ADSs; and
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | any excess distribution that we make to you (generally, any distributions to you during a single taxable year that are greater than 125% of the average annual distributions received by you in respect of the ordinary
shares or ADSs during the three preceding taxable years or, if shorter, your holding period for the ordinary shares or ADSs).
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under these rules:



| |  |  | the gain or excess distribution will be allocated ratably over your holding period for the ordinary shares or ADSs;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to the taxable year in which you realized the gain or excess distribution will be taxed as ordinary income;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



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| |  |  | the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.

If we are a PFIC and you own ADSs, then you can make a mark-to-market election with respect to the ADSs. If we are a PFIC and you own ordinary
shares, then you can make a mark-to-market election if the ordinary shares are treated as marketable stock under the applicable regulations. If you make this election, you will not be subject to the PFIC rules described above. Instead, in general,
you will include as ordinary income each year the excess, if any, of the fair market value of your ordinary shares or ADSs at the end of the taxable year over your adjusted basis in your ordinary shares or ADSs. You will also be allowed to take an
ordinary loss in respect of the excess, if any, of the adjusted basis of your ordinary shares or ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of
the mark-to-market election). Your basis in the ordinary shares or ADSs will be adjusted to reflect any such income or loss amounts. Your gain, if any, recognized upon the sale of your ordinary shares or ADSs will be taxed as ordinary income.

In addition, notwithstanding any election you make with regard to the ordinary shares or ADSs, dividends that you receive from us will not
constitute qualified dividend income to you if we are a PFIC, either in the taxable year of the distribution or the preceding taxable year. Moreover, subject to the following sentence, your ordinary shares or ADSs will be treated as stock in a PFIC
if we were a PFIC at any time during your holding period in your ordinary shares or ADSs, even if we are not currently a PFIC. The rule in the preceding sentence will not apply, however, if you had a mark-to-market election in effect with respect to
your ordinary shares or ADSs in the final year in which we are a PFIC or if you made a special purging election with respect to your ordinary shares or ADSs. Dividends that you receive that do not constitute qualified dividend income are
not eligible for taxation at the preferential rates applicable to qualified dividend income. Instead, you must include the gross amount of any such dividend paid by us out of our accumulated earnings and profits (as determined for United States
federal income tax purposes) in your gross income, and it will be subject to tax at rates applicable to ordinary income.

If you own
ordinary shares or ADSs during any year that we are a PFIC with respect to you, you may be required to file Internal Revenue Service Form 8621.

Documents on Display

You may read and
copy documents referred to in this annual report on Form 20-F that have been filed with the SEC at the SECs public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room and its copy charges. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC.

The SEC allows us to incorporate by reference the information we file with the SEC. This means that we can disclose important
information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this annual report on Form 20-F.



|Item 11. | Quantitative and Qualitative Disclosures About Market Risk.
|-------- | -----------------------------------------------------------

We are subject to market
rate risks due to fluctuations in interest rates. The majority of our debt is in the form of long-term loans with original maturities ranging up to fifteen years. Accordingly, fluctuations in interest rates can lead to significant fluctuations in
the fair value of these debt instruments. From time to time, we may enter into interest rate swap agreements designed to mitigate our exposure to interest rate risks, although we did not consider it necessary to do so in 2015.

We are also exposed to foreign currency risk relating to cash and cash equivalents denominated in foreign currencies. We may enter into
foreign exchange forward contracts designed to mitigate our exposure to foreign currency risks. As of December 31, 2015, we had no foreign exchange forward contracts outstanding. We expect our foreign currency hedging activity to be generally
limited to the hedging of specific future commitments in foreign currencies.



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The following table provides information regarding our interest rate-sensitive financial
instruments, which consist of fixed and variable rate short-term and long-term debt obligations, as of the dates indicated.



|                                 |  |                                                     |   |  |                        |  |       |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |   |           |  |       |  |  |  |       |   |  |  |       | 
|-------------------------------- |  | --------------------------------------------------- | - |  | ---------------------- |  | ----- | ---------------------- |  |  | ---- |  |  | ---- | - |  | ---------- |  | - | ------------------- |  |  | --------- |  |  | ------------------- | ----- | - | --------- |  | ----- |  |  |  | ----- | - |  |  | ----- | 
|                                 |  | Expected Maturity Date                              |   |  | As of December 31,2015 |  |       | As of December 31,2014 | 
|                                 |  | 2016                                                |   |  | 2017                   |  |       | 2018                   |  |  | 2019 |  |  | 2020 |   |  | Thereafter |  |   | TotalRecordedAmount |  |  | FairValue |  |  | TotalRecordedAmount |       |   | FairValue | 
|                                 |  | (RMB equivalent in millions, except interest rates) |  
|Debt:                            |  |                                                     |   |  |                        |  |       |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |   |           |  |       |  |  |  |       |   |  |  |       | 
|Obligations under finance leases |  |                                                     |  |  |                        |  |      |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     |      |   |           |  |      |  |  |  | 68    |   |  |  | 68    | 
|Average interest rate            |  |                                                     |  |  |                        |  |      |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     |      |   |           |  |      |  |  |  | 4.96  | % |  |  |      | 
|Bonds issued by Guangdong Mobile |  |                                                     |  |  |                        |  | 4,995 |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 4,995 |   |           |  | 5,150 |  |  |  | 4,992 |   |  |  | 4,951 | 
|Average interest rate            |  |                                                     |  |  |                        |  | 4.50  | %                      |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 4.50  | % |           |  |      |  |  |  | 4.50  | % |  |  |      | 

The following table provides information regarding our foreign currency-sensitive financial instruments and
transactions, which consist of restricted bank deposits, bank deposits and cash and cash equivalents as of the dates indicated.



|                                       |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|-------------------------------------- |  | ---------------------------- | ----- |  | ---------------------- |  | - | ---------------------- |  |  | ---- |  |  | ---- | - |  | ---------- |  | - | ------------------- |  |  | --------- |  |  | ------------------- | ----- |  | --------- |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                       |  | Expected Maturity Date       |       |  | As of December 31,2015 |  |   | As of December 31,2014 | 
|                                       |  | 2016                         |       |  | 2017                   |  |   | 2018                   |  |  | 2019 |  |  | 2020 |   |  | Thereafter |  |   | TotalRecordedAmount |  |  | FairValue |  |  | TotalRecordedAmount |       |  | FairValue | 
|                                       |  | (RMB equivalent in millions) |      
|On-balance sheet financial instruments |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|Restricted bank deposits:              |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|in U.S. dollars                        |  |                              |      |  |                        |  |  |                        |  |  |     |  |  |      | 1 |  |            |  |  |                     |  |  |          |  |  |                     | 1     |  |           |  | 1     |  |  |  | 1     |  |  |  | 1     | 
|in Hong Kong dollars                   |  |                              |      |  |                        |  |  |                        |  |  | 42   |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 42    |  |           |  | 42    |  |  |  | 734   |  |  |  | 734   | 
|Bank deposits:                         |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|in U.S. dollars                        |  |                              | 843   |  |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 843   |  |           |  | 843   |  |  |  | 279   |  |  |  | 279   | 
|in Hong Kong dollars                   |  |                              | 2,763 |  |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 2,763 |  |           |  | 2,763 |  |  |  | 758   |  |  |  | 758   | 
|Cash and cash equivalents:             |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|in U.S. dollars                        |  |                              | 1,097 |  |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 1,097 |  |           |  | 1,097 |  |  |  | 518   |  |  |  | 518   | 
|in Hong Kong dollars                   |  |                              | 777   |  |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 777   |  |           |  | 777   |  |  |  | 3,564 |  |  |  | 3,564 | 



|Item 12. | Description of Securities Other than Equity Securities.
|-------- | -------------------------------------------------------

The Bank of New York Mellon,
located at 101 Barclay Street, New York, New York 10286, USA as the depositary of our ADSs, collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal. The
depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may refuse to provide delivery of ADSs or deposited
shares or to provide any distributions until its fees for those services are paid.



|                      |  |                                                  |  |   |  |                                                                                                                                                                                                                                   
|--------------------- |  | ------------------------------------------------ |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ADR holders must pay: |  | For:                                            
|                      |  |                                                  | 
|                     |  | US$5 (or less) per 100 ADSs (or portion thereof) |  |  |  | Each issuance of an ADS, including as a result of a distribution of shares or rights or other property                                                                                                                            
|                      |  |                                                  | 
|                      |  |                                                  |  |  |  | Each cancellation of an ADS, including if the deposit agreement terminates                                                                                                                                                        
|                      |  |                                                  | 
|                      |  |                                                  |  |  |  | Each distribution of securities, other than shares or ADSs, treating the securities as if they were shares for the purpose of calculating fees                                                                                    
|                      |  |                                                  | 
|                     |  | US$0.02 (or less) per ADS                        |  |  |  | Any cash distribution (not including cash dividend distribution)                                                                                                                                                                  
|                      |  |                                                  | 
|                     |  | Registration or transfer fees                    |  |  |  | Transfer and registration of shares on the share register of our transfer agent and the registrar in Hong Kong from an ADR holders name to the name of the depositary or its agent when the ADR holder deposit or withdraw
shares



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|                      |  |                                                                                                                                                                                           |  |   |  |                                                 
|--------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - |  | ------------------------------------------------
|ADR holders must pay: |  | For:                                                                                                                                                                                     
|                      |  |                                                                                                                                                                                           | 
|                     |  | Expenses of the depositary                                                                                                                                                                |  |  |  | Conversion of Hong Kong dollars to U.S. dollars 
|                      |  |                                                                                                                                                                                           | 
|                      |  |                                                                                                                                                                                           |  |  |  | Cable, telex and facsimile transmission expenses
|                      |  |                                                                                                                                                                                           | 
|                     |  | Taxes and other governmental charges the depositary or the custodian has to pay on any ADS or share underlying an ADS; for example, stock transfer taxes, stamp duty or withholding taxes |  |  |  | As necessary                                    

The Bank of New York Mellon, as the depositary, has agreed to pay for certain expenses incurred in connection
with our shareholders meetings. The amount of such expenses paid by the Bank of New York Mellon in 2015 was US$177,908.79, net of withholding tax. The Bank of New York Mellon has also agreed to waive certain fees for standard costs associated
with the administration of the ADR program, and the amount of such fees waived in 2015 was US$132,637.09.



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PART II



|Item 13. | Defaults, Dividend Arrearages and Delinquencies.
|-------- | ------------------------------------------------

None.



|Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds.
|-------- | -----------------------------------------------------------------------------

None.



|Item 15. | Controls and Procedures.
|-------- | ------------------------

Disclosure Controls and Procedures.Our
disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms, including, without limitation, that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely
decisions regarding required disclosure.

As of December 31, 2015, an evaluation was carried out by our management, with the
participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that, as of December 31, 2015, our disclosure controls and procedures were effective at a reasonable assurance level.

Managements Annual Report on Internal Control Over Financial Reporting.Managements Report on Internal Control Over
Financial Reporting is set forth below.

Managements Report on Internal Control Over Financial Reporting

Management of China Mobile Limited (together with its consolidated subsidiaries, the Company) is responsible for establishing and
maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). The Companys internal control over financial reporting is a process designed under the
supervision of the Companys Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Companys financial statements for external
reporting purposes in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board.

As of December 31, 2015, the Companys management, with the participation of the Companys Chief Executive Officer and Chief
Financial Officer, conducted an assessment of the effectiveness of the Companys internal control over financial reporting using criteria set forth in Internal Control  Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on this assessment, the Companys management has concluded that the Companys internal control over financial reporting was effective as of December 31, 2015.

The effectiveness of the Companys internal control over financial reporting as of December 31, 2015 has been audited by
PricewaterhouseCoopers Zhong Tian LLP, an independent registered public accounting firm, as stated in their report dated April 26, 2016 appearing on page F-2 of this annual report on Form 20-F.



|           |  |                                                |  |                |  |        |  |                                                               
|---------- |  | ---------------------------------------------- |  | -------------- |  | ------ |  | --------------------------------------------------------------
|/s/ LI Yue |  |                                                |  | /s/ XUE Taohai
|Name:      |  | LI Yue                                         |  |                |  | Name:  |  | XUE Taohai                                                    
|Title:     |  | Executive Director and Chief Executive Officer |  |                |  | Title: |  | Executive Director, Vice President and Chief Financial Officer



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##### Table of Contents

Changes in Internal Control Over Financial Reporting. During 2015, no change
to our internal control over financial reporting occurred that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



|Item 16A. | Audit Committee Financial Expert.
|--------- | ---------------------------------

All members of our audit committee have extensive
management experience. In particular, one of the members has many years of finance and commercial management experience and expertise. However, members of our audit committee do not possess direct experience or expertise in respect of the evaluation
of reports filed with the SEC by SEC-reporting issuers. Our board of directors has determined that we do not currently have an audit committee financial expert, as defined in Item 16A(b) of Form 20-F, serving on our audit committee. Our audit
committee may consider appointing, from time to time, an external financial expert as a consultant.



|Item 16B. | Code of Ethics.
|--------- | ---------------

We have adopted a code of ethics that applies to our Chief Executive
Officer, Chief Financial Officer, Deputy Chief Financial Officer, Assistant Chief Financial Officer and our other designated senior officers. A copy of our Code of Ethics for Covered Officers was filed as Exhibit 11.1 to our annual report on Form
20-F for the fiscal year ended December 31, 2003, and may also be downloaded from our website at http://www.chinamobileltd.com/en/about/cg/ethics.pdf. Information contained on that website is not a part of this annual report on Form 20-F.
Copies of our Code of Ethics for Covered Officers may also be obtained at no charge by writing to our investor relations department at 60/F, The Center, 99 Queens Road Central, Hong Kong.



|Item 16C. | Principal Accountant Fees and Services.
|--------- | ---------------------------------------

The following table sets forth the aggregate
audit fees, audit-related fees, tax fees of our principal accountants and all other fees billed for products and services provided by our principal accountants other than the audit fees, audit-related fees and tax fees in 2014 and 2015:



|     |  |               |            |  |                    |  |   |          |  |  |                   |  |  |  |           | 
|---- |  | ------------- | ---------- |  | ------------------ |  | - | -------- |  |  | ----------------- |  |  |  | --------- | 
|     |  | Audit Fees(1) |            |  | Audit-Related Fees |  |   | Tax Fees |  |  | All Other Fees(2) | 
|     |  | RMB           |            |  | RMB                |  |   | RMB      |  |  | RMB               | 
|2014 |  |               | 91,350,000 |  |                    |  |  |          |  |  | 485,000           |  |  |  | 5,623,000 | 
|2015 |  |               | 96,780,000 |  |                    |  |  |          |  |  | 1,057,000         |  |  |  | 4,421,000 | 



|(1) | Includes the fees for services rendered in connection with the audit of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes the fees for risk assessment and performance improvement advisory services.
|--- | ------------------------------------------------------------------------------------

Before
our principal accountants were engaged by us or our subsidiaries to render audit or non-audit services, the engagement was approved by our audit committee as required by applicable rules and regulations of the SEC.



|Item 16D. | Exemptions from the Listing Standards for Audit Committees.
|--------- | -----------------------------------------------------------

Not applicable.



|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
|--------- | -----------------------------------------------------------------------

None.



|Item 16F. | Change in Registrants Certifying Accountant.
|--------- | ---------------------------------------------

Not applicable.



|Item 16G. | Corporate Governance.
|--------- | ---------------------

As a foreign private issuer (as defined in Rule 3b-4 under the
Exchange Act), we are permitted to follow home country practices in lieu of some of the corporate governance practices required to be followed by U.S. companies listed on the New York Stock Exchange. As a result, our corporate governance practices
differ in some respects from those required to be followed by U.S. companies listed on the New York Stock Exchange.



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The significant differences between our corporate governance practices and those required to be
followed by U.S. companies under the New York Stock Exchanges listing standards include:

Section 303A.01 of the New York Stock
Exchange Listed Company Manual provides that listed companies must have a majority of independent directors. As a listed company in Hong Kong, we are subject to the requirement under the Hong Kong Listing Rules that at least one-third of our board
of directors be independent non-executive directors as determined under the Hong Kong Listing Rules. We currently have four independent directors out of a total of nine directors. The Hong Kong Listing Rules set forth standards for establishing
independence, which differ from those set forth in the New York Stock Exchange Listed Company Manual.

Section 303A.03 of the New York
Stock Exchange Listed Company Manual provides that listed companies must schedule regular executive sessions in which non-management directors meet without management participation. As a listed company in Hong Kong, we are subject to the
requirement under the Hong Kong Listing Rules that our Chairman should hold meetings at least annually with the non-executive directors (including independent non-executive directors) without the presence of the executive directors.

Section 303A.04 of the New York Stock Exchange Listed Company Manual provides that the nominating/corporate governance committee of a listed
company must have a written charter that addresses the committees purpose and responsibilities, which include, among others, the development and recommendation of corporate governance guidelines to the listed companys board of directors.
Our board of directors is responsible for performing the corporate governance duties, including developing and reviewing our policies and practices on corporate governance guidelines.

Section 303A.07 of the New York Stock Exchange Listed Company Manual provides that if an audit committee member simultaneously serves on the
audit committee of more than three public companies, and the listed company does not limit the number of audit committees on which its audit committee members serve to three or less, then in each case, the board of directors must determine that such
simultaneous service would not impair the ability of such member to effectively serve on the listed companys audit committee and disclose such determination. We are not required, under the applicable Hong Kong law, to make such determination.

Section 303A.10 of the New York Stock Exchange Listed Company Manual provides that listed companies must adopt and disclose a code of
business conduct and ethics for directors, officers and employees. While we are not required, under the Hong Kong Listing Rules, to adopt such a similar code, as required under the Sarbanes-Oxley Act of 2002, we have adopted a code of ethics
that is applicable to our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions.

Section 303A.12(a) of the New York Stock Exchange Listed Company Manual provides that each listed companys chief executive officer must
certify to the New York Stock Exchange each year that he or she is not aware of any violation by the company of New York Stock Exchange corporate governance listing standards. Our Chief Executive Officer is not required, under the applicable Hong
Kong law, to make similar certifications.



|Item 16H. | Mine Safety Disclosure.
|--------- | -----------------------

Not applicable.



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##### Table of Contents

PART III



|Item 17. | Financial Statements.
|-------- | ---------------------

Not applicable.



|Item 18. | Financial Statements.
|-------- | ---------------------

The following financial statements are filed as part of this
annual report on Form 20-F.

China Mobile Limited:



|                                                        |  |  |      | 
|------------------------------------------------------- |  |  | ---- | 
|Index to Consolidated Financial Statements              |  |  | F-1  | 
|Report of Independent Registered Public Accounting Firm |  |  | F-2  | 
|Consolidated statements of comprehensive income         |  |  | F-4  | 
|Consolidated balance sheets                             |  |  | F-6  | 
|Consolidated statements of changes in equity            |  |  | F-9  | 
|Consolidated statements of cash flows                   |  |  | F-12 | 
|Notes to the consolidated financial statements          |  |  | F-16 | 



|Item 19. | Exhibits.
|-------- | ---------



| | (a) | See Item 18 for a list of the financial statements filed as part of this annual report on Form 20-F.
| | --- | ----------------------------------------------------------------------------------------------------



| | (b) | Exhibits to this annual report on Form 20-F:
| | --- | --------------------------------------------



|              |  |                                                                                                                                                                                                                                                                                                         
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                                                                  
|              | 
|1.1           |  | Articles of Association (as amended).(10)                                                                                                                                                                                                                                                               
|              | 
|2.1           |  | We agree to provide the SEC, upon request, copies of instruments defining the rights of holders of our long-term debt.                                                                                                                                                                                  
|              | 
|2.2           |  | Letter of Guarantee from China Mobile Communications Corporation for the RMB3,000 million guaranteed bonds due 2007 and RMB5,000 million guaranteed bonds due 2017, both issued by Guangdong Mobile in 2002 (with English translation).(1)                                                              
|              | 
|4.1           |  | Agreement on Sharing of Administrative Services and Administrative Costs, dated April 27, 2004, between China Mobile Communication Co., Ltd. and China Mobile Communications Corporation (with English translation).(2)                                                                                 
|              | 
|4.2           |  | Agreement regarding Settlement of Interconnection and Roaming, Transmission Line Leasing, Usage of Spectrum Frequency and Numbering Resources, dated July 1, 2004, between China Mobile (Hong Kong) Limited and China Mobile
Communications Corporation (with English translation).(3)                  
|              | 
|4.3           |  | Tripartite Agreement on the Transfer of Rights and Obligations Relating to the Interconnection and Settlement Arrangements, dated November 13, 2008, among China Mobile Communications Corporation, China TieTong Telecommunications
Corporation and China Mobile Limited (with English translation).(4)
|              | 
|4.4           |  | TD-SCDMA Network Capacity Leasing Agreement, dated December 29, 2008, between China Mobile Communications Corporation and China Mobile Limited (with English
translation).(4)                                                                                                                           
|              | 
|4.5           |  | Telecommunications Services Cooperation Agreement, dated November 6, 2009, between China Mobile Communications Corporation and China Mobile Limited (with English translation).(5)                                                                                                                      
|              | 
|4.6           |  | Share Subscription Agreement, dated March 10, 2010, between China Mobile Group Guangdong Co., Ltd. and Shanghai Pudong Development Bank Co., Ltd. (with English
summary).(5)                                                                                                                            
|              | 
|4.7           |  | Property Leasing and Management Services Agreement for the Years from 2011 to 2013, dated December 21, 2010, between China Mobile Limited and China Mobile Communications Corporation (with English translation).(6)                                                                                    
|              | 
|4.8           |  | Telecommunications Services Agreement for the Years from 2011 to 2013, dated December 21, 2010, between China Mobile Limited and China Mobile Communications Corporation (with English translation).(6)                                                                                                 



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|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|4.9  |  | Network Assets Leasing Agreement, dated August 18, 2011, between China Mobile Communications Corporation and China Mobile Limited (with English translation).(7)                                                                                                                                                                                                                                                  
|     | 
|4.10 |  | Amendment and Transfer Agreement in connection with the Agreement regarding Settlement of Interconnection and Roaming, Transmission Line Leasing, Usage of Spectrum Frequency and Numbering Resources, dated September 13, 2012, between
China Mobile Limited, China Mobile International Limited, China Mobile Communications Corporation and China Mobile Communication Co., Ltd. (with English translation).(8)
|     | 
|4.11 |  | Trademark License Agreement, dated January 1, 2013, between China Mobile Communications Corporation, China Mobile Limited and China Mobile Communications Limited (with English translation).(9)                                                                                                                                                                                                                  
|     | 
|4.12 |  | Property Leasing and Management Services Agreement for the Years from 2014 to 2016, dated August 15, 2013, between China Mobile Limited and China Mobile Communications Corporation (with English translation).(9)                                                                                                                                                                                                
|     | 
|4.13 |  | Telecommunications Services Agreement for the Years from 2014 to 2016, dated August 15, 2013, between China Mobile Limited and China Mobile Communications Corporation (with English translation).(9)                                                                                                                                                                                                             
|     | 
|4.14 |  | Promoters Agreement, dated July 11, 2014, among China Mobile Communication Co., Ltd., China United Network Communications Corporation Limited, and China Telecom Corporation Limited (with English translation).(10)                                                                                                                                                                                             
|     | 
|4.15 |  | Agreement on Purchase of Existing Telecommunications Towers and Related Assets by Issuing Shares and Paying Cash Consideration, dated October 14, 2015, among China Mobile Communication Co., Ltd., China United Network Communications
Corporation Limited, China Telecom Corporation Limited, China Reform Holdings Corporation Ltd., and China Tower Corporation Limited (with English translation).           
|     | 
|4.16 |  | Agreement on the Transfer of Business and Assets of China TieTong Telecommunications Corporation, dated November 27, 2015, between China Mobile TieTong Company Limited and China TieTong Telecommunications Corporation (with
English translation).                                                                                                                                                              
|     | 
|4.17 |  | Share Subscription Agreement, dated January 30, 2016, between China Mobile Group Anhui Co., Ltd. and China Tower Corporation Limited (with English translation).                                                                                                                                                                                                                                                  
|     | 
|4.18 |  | Share Subscription Agreement, dated January 30, 2016, between China Mobile Group Henan Co., Ltd. and China Tower Corporation Limited (with English translation).                                                                                                                                                                                                                                                  
|     | 
|4.19 |  | Share Subscription Agreement, dated January 30, 2016, between China Mobile Group Hebei Co., Ltd. and China Tower Corporation Limited (with English translation).                                                                                                                                                                                                                                                  
|     | 
|4.20 |  | Share Subscription Agreement, dated January 30, 2016, between China Mobile Group Guangdong Co., Ltd. and China Tower Corporation Limited (with English translation).                                                                                                                                                                                                                                              
|     | 
|4.21 |  | Share Subscription Agreement, dated January 30, 2016, between China Mobile Group Jiangsu Co., Ltd. and China Tower Corporation Limited (with English translation).                                                                                                                                                                                                                                                
|     | 
|4.22 |  | Share Subscription Agreement, dated January 30, 2016, between China Mobile Group Shandong Co., Ltd. and China Tower Corporation Limited (with English translation).                                                                                                                                                                                                                                               
|     | 
|4.23 |  | Share Subscription Agreement, dated January 30, 2016, between China Mobile Group Zhejiang Co., Ltd. and China Tower Corporation Limited (with English translation).                                                                                                                                                                                                                                               
|     | 
|8.1  |  | List of Major Subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                       
|     | 
|11.1 |  | Code of Ethics.(2)                                                                                                                                                                                                                                                                                                                                                                                                
|     | 
|12.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                                                                                                                                                                              



-76-



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##### Table of Contents

|     |  |                                                                     
|---- |  | --------------------------------------------------------------------
|     | 
|12.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a).
|     | 
|13.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(b).
|     | 
|13.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(b).



|(1) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2002 (File No. 1-14696), filed with the SEC on June 17, 2003.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2003 (File No. 1-14696), filed with the SEC on June 17, 2004.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2004 (File No. 1-14696), filed with the SEC on June 13, 2005.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2008 (File No. 1-14696), filed with the SEC on June 23, 2009.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2009 (File No. 1-14696), filed with the SEC on June 7, 2010.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2010 (File No. 1-14696), filed with the SEC on April 27, 2011.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2011 (File No. 1-14696), filed with the SEC on April 25, 2012.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2012 (File No. 1-14696), filed with the SEC on April 25, 2013.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2013 (File No. 1-14696), filed with the SEC on April 25, 2014.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2014 (File No. 1-14696), filed with the SEC on April 24, 2015.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on Form 20-F on its behalf.



CHINA MOBILE LIMITEDBy:

/s/ LI YueName:

LI YueTitle:

Executive Director and Chief Executive
Officer


Date: April 26, 2016



---

##### Table of Contents

Index to Consolidated Financial Statements



|                                                        |  |          |      | 
|------------------------------------------------------- |  | -------- | ---- | 
|                                                        |  | Page No. |     
|                                                        | 
|Report of Independent Registered Public Accounting Firm |  |          | F-2  | 
|Consolidated statements of comprehensive income         |  |          | F-4  | 
|Consolidated balance sheets                             |  |          | F-6  | 
|Consolidated statements of changes in equity            |  |          | F-9  | 
|Consolidated statements of cash flows                   |  |          | F-12 | 
|Notes to the consolidated financial statements          |  |          | F-16 | 



F-1



---

##### Table of Contents

Report of Independent Registered Public Accounting
Firm

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF

CHINA MOBILE LIMITED

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows present fairly, in all material respects, the financial position of China Mobile Limited and its
subsidiaries (collectively, the Company) at December 31, 2015 and December 31, 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity
with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2015, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is
responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Managements Report on
Internal Control Over Financial Reporting included in Item 15 of this Annual Report on Form 20-F. Our responsibility is to express opinions on these financial statements and on the Companys internal
control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements
included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.



F-2



---

##### Table of Contents

A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material
effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ PricewaterhouseCoopersZhong Tian LLP

Beijing, the Peoples Republic of China

April 26, 2016



F-3



---

##### Table of Contents

Consolidated Statements of Comprehensive Income

for the year ended December 31

(Expressed in Renminbi (RMB))



|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|------------------------------------------------------------------------------------------------------- |  | ----- |  | ------- | ------- | ----------- | ------- |  | ----------- | ------- |  |  | ------- | -
|                                                                                                        |  | Note  |  | 2015    |         |             | 2014    |  |             | 2013    | 
|                                                                                                        |  |       |  |         |         | As restated |         |  | As restated |        
|                                                                                                        |  |       |  |         |         | (Note 2(b)) |         |  | (Note 2(b)) |        
|                                                                                                        |  |       |  | Million |         |             | Million |  |             | Million | 
|                                                                                                        |  |       |  |        
|Operating revenue                                                                                       |  | 4     |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |        
|Revenue from telecommunications services                                                                |  |       |  |         | 584,089 |             |         |  | 591,602     |         |  |  | 600,424 |  
|Revenue from sales of products and others                                                               |  |       |  |         | 84,246  |             |         |  | 59,907      |         |  |  | 39,624  |  
|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |         | 668,335 |             |         |  | 651,509     |         |  |  | 640,048 |  
|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |        
|Operating expenses                                                                                      |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |        
|Leased lines and network assets                                                                         |  |       |  |         | 20,668  |             |         |  | 15,843      |         |  |  | 14,816  |  
|Interconnection                                                                                         |  |       |  |         | 21,668  |             |         |  | 23,502      |         |  |  | 25,983  |  
|Depreciation                                                                                            |  |       |  |         | 136,832 |             |         |  | 122,805     |         |  |  | 111,493 |  
|Employee benefit and related expenses                                                                   |  | 5     |  |         | 74,805  |             |         |  | 70,385      |         |  |  | 66,681  |  
|Selling expenses                                                                                        |  |       |  |         | 59,850  |             |         |  | 75,655      |         |  |  | 91,719  |  
|Cost of products sold                                                                                   |  |       |  |         | 89,297  |             |         |  | 74,495      |         |  |  | 61,409  |  
|Other operating expenses                                                                                |  | 6     |  |         | 162,293 |             |         |  | 151,504     |         |  |  | 136,523 |  
|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |         | 565,413 |             |         |  | 534,189     |         |  |  | 508,624 |  
|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |        
|Profit from operations                                                                                  |  |       |  |         | 102,922 |             |         |  | 117,320     |         |  |  | 131,424 |  
|                                                                                                        |  |       |  |        
|Gain on the transfer of Tower Assets                                                                    |  | 7     |  |         | 15,525  |             |         |  |            |         |  |  |        |  
|                                                                                                        |  |       |  |        
|Other gains                                                                                             |  | 8     |  |         | 1,800   |             |         |  | 1,171       |         |  |  | 989     |  
|                                                                                                        |  |       |  |        
|Interest income                                                                                         |  |       |  |         | 15,852  |             |         |  | 16,270      |         |  |  | 15,368  |  
|                                                                                                        |  |       |  |        
|Finance costs                                                                                           |  | 9     |  |         | (455    | )           |         |  | (487        | )       |  |  | (1,195  | )
|                                                                                                        |  |       |  |        
|Share of profit of investments accounted for using the equity method                                    |  | 19    |  |         | 8,090   |             |         |  | 8,248       |         |  |  | 7,063   |  
|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |        
|Profit before taxation                                                                                  |  |       |  |         | 143,734 |             |         |  | 142,522     |         |  |  | 153,649 |  
|                                                                                                        |  |       |  |        
|Taxation                                                                                                |  | 12(a) |  |         | (35,079 | )           |         |  | (33,179     | )       |  |  | (36,746 | )
|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |        
|PROFIT FOR THE YEAR                                                                                     |  |       |  |         | 108,655 |             |         |  | 109,343     |         |  |  | 116,903 |  
|                                                                                                        |  |       |  |        
|Other comprehensive income/(loss) for the year that may be subsequently reclassified to profit or loss: |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |        
|Exchange differences on translation of financial statements of overseas entities                        |  |       |  |         | 603     |             |         |  | (169        | )       |  |  | (176    | )
|Share of other comprehensive income/(loss) of associates                                                |  |       |  |         | 901     |             |         |  | 1,224       |         |  |  | (767    | )
|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                                        |  |       |  |        
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR                                                                 |  |       |  |         | 110,159 |             |         |  | 110,398     |         |  |  | 115,960 |  
|                                                                                                        |  |       |  |         |         |             |         |  |             |         |  |  |         |  



F-4



---

##### Table of Contents

Consolidated Statements of Comprehensive Income (Continued)

for the year ended December 31

(Expressed in
RMB)



|                                            |  |       |  |         |         |             |         |     |             |         |  |     |         | 
|------------------------------------------- |  | ----- |  | ------- | ------- | ----------- | ------- | --- | ----------- | ------- |  | --- | ------- | 
|                                            |  | Note  |  | 2015    |         |             | 2014    |     |             | 2013    | 
|                                            |  |       |  |         |         | As restated |         |     | As restated |        
|                                            |  |       |  |         |         | (Note 2(b)) |         |     | (Note 2(b)) |        
|                                            |  |       |  | Million |         |             | Million |     |             | Million | 
|                                            |  |       |  |        
|Profit attributable to:                     |  |       |  |         |         |             |         |     |             |         |  |     |         | 
|                                            |  |       |  |        
|Equity shareholders of the Company          |  |       |  |         | 108,539 |             |         |     | 109,218     |         |  |     | 116,791 | 
|Non-controlling interests                   |  |       |  |         | 116     |             |         |     | 125         |         |  |     | 112     | 
|                                            |  |       |  |         |         |             |         |     |             |         |  |     |         | 
|                                            |  |       |  |        
|PROFIT FOR THE YEAR                         |  |       |  |         | 108,655 |             |         |     | 109,343     |         |  |     | 116,903 | 
|                                            |  |       |  |         |         |             |         |     |             |         |  |     |         | 
|                                            |  |       |  |        
|Total comprehensive income attributable to: |  |       |  |         |         |             |         |     |             |         |  |     |         | 
|                                            |  |       |  |        
|Equity shareholders of the Company          |  |       |  |         | 110,043 |             |         |     | 110,273     |         |  |     | 115,849 | 
|Non-controlling interests                   |  |       |  |         | 116     |             |         |     | 125         |         |  |     | 111     | 
|                                            |  |       |  |         |         |             |         |     |             |         |  |     |         | 
|                                            |  |       |  |        
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR     |  |       |  |         | 110,159 |             |         |     | 110,398     |         |  |     | 115,960 | 
|                                            |  |       |  |         |         |             |         |     |             |         |  |     |         | 
|                                            |  |       |  |        
|Earnings per share  Basic                  |  | 13(a) |  | RMB     | 5.30    |             |         | RMB | 5.38        |         |  | RMB | 5.81    | 
|                                            |  |       |  |         |         |             |         |     |             |         |  |     |         | 
|                                            |  |       |  |        
|Earnings per share  Diluted                |  | 13(b) |  | RMB     | 5.30    |             |         | RMB | 5.35        |         |  | RMB | 5.74    | 
|                                            |  |       |  |         |         |             |         |     |             |         |  |     |         | 

The notes on pages F-16 to F-97 are an integral part of these consolidated financial statements.



F-5



---

##### Table of Contents

Consolidated Balance Sheets

as of December 31

(Expressed in RMB)



|                                                     |  |      |  |                       |           |             |                       |  |           | 
|---------------------------------------------------- |  | ---- |  | --------------------- | --------- | ----------- | --------------------- |  | --------- | 
|                                                     |  | Note |  | As ofDecember 31,2015 |           |             | As ofDecember 31,2014 | 
|                                                     |  |      |  |                       |           | As restated |                      
|                                                     |  |      |  |                       |           | (Note 2(b)) |                      
|                                                     |  |      |  | Million               |           |             | Million               | 
|                                                     |  |      | 
|Assets                                               |  |      |  |                       |           |             |                       |  |           | 
|                                                     |  |      | 
|Non-current assets                                   |  |      |  |                       |           |             |                       |  |           | 
|                                                     |  |      | 
|Property, plant and equipment                        |  | 14   |  |                       | 585,631   |             |                       |  | 605,023   | 
|Construction in progress                             |  | 15   |  |                       | 88,012    |             |                       |  | 95,110    | 
|Land lease prepayments and others                    |  | 16   |  |                       | 26,773    |             |                       |  | 24,883    | 
|Goodwill                                             |  | 17   |  |                       | 35,343    |             |                       |  | 35,343    | 
|Other intangible assets                              |  |      |  |                       | 768       |             |                       |  | 787       | 
|Investments accounted for using the equity method    |  | 19   |  |                       | 115,933   |             |                       |  | 70,451    | 
|Deferred tax assets                                  |  | 20   |  |                       | 25,423    |             |                       |  | 20,654    | 
|Proceeds receivable for the transfer of Tower Assets |  | 7    |  |                       | 56,737    |             |                       |  |          | 
|Restricted bank deposits                             |  | 21   |  |                       | 4,575     |             |                       |  | 8,731     | 
|Other financial assets                               |  | 22   |  |                       | 3         |             |                       |  | 128       | 
|                                                     |  |      |  |                       |           |             |                       |  |           | 
|                                                     |  |      |  |                       | 939,198   |             |                       |  | 861,110   | 
|                                                     |  |      |  |                       |           |             |                       |  |           | 
|                                                     |  |      | 
|Current assets                                       |  |      |  |                       |           |             |                       |  |           | 
|                                                     |  |      | 
|Inventories                                          |  | 23   |  |                       | 9,994     |             |                       |  | 9,292     | 
|Accounts receivable                                  |  | 24   |  |                       | 17,743    |             |                       |  | 16,715    | 
|Other receivables                                    |  | 25   |  |                       | 26,186    |             |                       |  | 14,567    | 
|Prepayments and other current assets                 |  | 25   |  |                       | 11,427    |             |                       |  | 15,482    | 
|Amount due from ultimate holding company             |  | 26   |  |                       | 247       |             |                       |  | 112       | 
|Tax recoverable                                      |  |      |  |                       | 746       |             |                       |  | 702       | 
|Available-for-sale financial assets                  |  | 27   |  |                       | 19,167    |             |                       |  | 2,000     | 
|Restricted bank deposits                             |  | 21   |  |                       | 15        |             |                       |  | 736       | 
|Bank deposits                                        |  | 28   |  |                       | 323,330   |             |                       |  | 353,507   | 
|Cash and cash equivalents                            |  | 29   |  |                       | 79,842    |             |                       |  | 73,812    | 
|                                                     |  |      |  |                       |           |             |                       |  |           | 
|                                                     |  |      | 
|                                                     |  |      |  |                       | 488,697   |             |                       |  | 486,925   | 
|                                                     |  |      |  |                       |           |             |                       |  |           | 
|                                                     |  |      | 
|Total assets                                         |  |      |  |                       | 1,427,895 |             |                       |  | 1,348,035 | 
|                                                     |  |      |  |                       |           |             |                       |  |           | 



F-6



---

##### Table of Contents

Consolidated Balance Sheets (Continued)

as of December 31

(Expressed in RMB)



|                                          |  |      |  |                       |         |             |                       |  |         | 
|----------------------------------------- |  | ---- |  | --------------------- | ------- | ----------- | --------------------- |  | ------- | 
|                                          |  | Note |  | As ofDecember 31,2015 |         |             | As ofDecember 31,2014 | 
|                                          |  |      |  |                       |         | As restated |                      
|                                          |  |      |  |                       |         | (Note 2(b)) |                      
|                                          |  |      |  | Million               |         |             | Million               | 
|                                          |  |      | 
|Equity and liabilities                    |  |      |  |                       |         |             |                       |  |         | 
|                                          |  |      | 
|Liabilities                               |  |      |  |                       |         |             |                       |  |         | 
|                                          |  |      | 
|Current liabilities                       |  |      |  |                       |         |             |                       |  |         | 
|                                          |  |      | 
|Interest-bearing borrowings               |  | 33   |  |                       |        |             |                       |  | 1,000   | 
|Accounts payable                          |  | 30   |  |                       | 243,579 |             |                       |  | 227,577 | 
|Bills payable                             |  |      |  |                       | 645     |             |                       |  | 674     | 
|Deferred revenue                          |  | 31   |  |                       | 78,100  |             |                       |  | 63,916  | 
|Accrued expenses and other payables       |  | 32   |  |                       | 163,404 |             |                       |  | 138,706 | 
|Amount due to ultimate holding company    |  | 26   |  |                       | 7,276   |             |                       |  | 14,519  | 
|Obligations under finance leases          |  |      |  |                       |        |             |                       |  | 68      | 
|Current taxation                          |  |      |  |                       | 8,034   |             |                       |  | 6,032   | 
|                                          |  |      |  |                       |         |             |                       |  |         | 
|                                          |  |      | 
|                                          |  |      |  |                       | 501,038 |             |                       |  | 452,492 | 
|                                          |  |      |  |                       |         |             |                       |  |         | 
|                                          |  |      | 
|Non-current liabilities                   |  |      |  |                       |         |             |                       |  |         | 
|                                          |  |      | 
|Interest-bearing borrowings  non-current |  | 33   |  |                       | 4,995   |             |                       |  | 4,992   | 
|Deferred revenue  non-current            |  | 31   |  |                       | 1,291   |             |                       |  | 1,470   | 
|Deferred tax liabilities                  |  | 20   |  |                       | 203     |             |                       |  | 98      | 
|                                          |  |      |  |                       |         |             |                       |  |         | 
|                                          |  |      | 
|                                          |  |      |  |                       | 6,489   |             |                       |  | 6,560   | 
|                                          |  |      |  |                       |         |             |                       |  |         | 
|                                          |  |      | 
|Total liabilities                         |  |      |  |                       | 507,527 |             |                       |  | 459,052 | 
|                                          |  |      |  |                       |         |             |                       |  |         | 



F-7



---

##### Table of Contents

Consolidated Balance Sheets (Continued)

as of December 31

(Expressed in RMB)



|                                                                |  |       |  |                       |           |             |                       |  |           | 
|--------------------------------------------------------------- |  | ----- |  | --------------------- | --------- | ----------- | --------------------- |  | --------- | 
|                                                                |  | Note  |  | As ofDecember 31,2015 |           |             | As ofDecember 31,2014 | 
|                                                                |  |       |  |                       |           | As restated |                      
|                                                                |  |       |  |                       |           | (Note 2(b)) |                      
|                                                                |  |       |  | Million               |           |             | Million               | 
|                                                                |  |       | 
|Equity                                                          |  |       |  |                       |           |             |                       |  |           | 
|                                                                |  |       | 
|Share capital                                                   |  | 35(b) |  |                       | 402,130   |             |                       |  | 400,737   | 
|Reserves                                                        |  |       |  |                       | 515,206   |             |                       |  | 486,179   | 
|                                                                |  |       |  |                       |           |             |                       |  |           | 
|                                                                |  |       | 
|Total equity attributable to equity shareholders of the Company |  |       |  |                       | 917,336   |             |                       |  | 886,916   | 
|                                                                |  |       | 
|Non-controlling interests                                       |  |       |  |                       | 3,032     |             |                       |  | 2,067     | 
|                                                                |  |       |  |                       |           |             |                       |  |           | 
|                                                                |  |       | 
|Total equity                                                    |  |       |  |                       | 920,368   |             |                       |  | 888,983   | 
|                                                                |  |       |  |                       |           |             |                       |  |           | 
|                                                                |  |       | 
|Total equity and liabilities                                    |  |       |  |                       | 1,427,895 |             |                       |  | 1,348,035 | 
|                                                                |  |       |  |                       |           |             |                       |  |           | 

The notes on pages F-16 to F-97 are an integral part of these consolidated financial statements.



F-8



---

##### Table of Contents

Consolidated Statements of Changes in Equity

for the year ended December 31

(Expressed in RMB)



|                                                                                               |  |                                                    |       |  |               |  |         |                 |  |  |                 |   |  |                  |    |  |                        |  |        |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|---------------------------------------------------------------------------------------------- |  | -------------------------------------------------- | ----- |  | ------------- |  | ------- | --------------- |  |  | --------------- | - |  | ---------------- | -- |  | ---------------------- |  | ------ | ---------------- |  |  | ------- |  |  | -------------------------- | ------- | - | ------------ |  | ------- | - |  |  | ----- | - |  |  | ------- | -
|                                                                                               |  | Attributable to equity shareholders of the Company |       |  |               |  |         |                 | 
|                                                                                               |  | Share capital                                      |       |  | Share premium |  |         | Capital reserve |  |  | General reserve |   |  | Exchange reserve |    |  | PRC statutory reserves |  |        | Retained profits |  |  | Total   |  |  | Non- controlling interests |         |   | Total equity | 
|                                                                                               |  | Million                                            |       |  | Million       |  |         | Million         |  |  | Million         |   |  | Million          |    |  | Million                |  |        | Million          |  |  | Million |  |  | Million                    |         |   | Million      | 
|                                                                                               |  |                                                    |       |  |               |  |         |                 |  | 
|As of January 1, 2013 (As previously reported)                                                 |  |                                                    | 2,142 |  |               |  | 387,183 |                 |  |  | (292,268        | ) |  |                  | 72 |  |                        |  | (1,489 | )                |  |  | 211,610 |  |  |                            | 416,197 |   |              |  | 723,447 |   |  |  | 1,862 |   |  |  | 725,309 |  
|Adjusted for business combination under common control(note 2(b))                              |  |                                                    |      |  |               |  |        |                 |  |  | 29,250          |   |  |                  |   |  |                        |  | (3     | )                |  |  | 17      |  |  |                            | (27,753 | ) |              |  | 1,511   |   |  |  |      |   |  |  | 1,511   |  
|                                                                                               |  |                                                    |       |  |               |  |         |                 |  |  |                 |   |  |                  |    |  |                        |  |        |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|As of January 1, 2013 (As restated)                                                            |  |                                                    | 2,142 |  |               |  | 387,183 |                 |  |  | (263,018        | ) |  |                  | 72 |  |                        |  | (1,492 | )                |  |  | 211,627 |  |  |                            | 388,444 |   |              |  | 724,958 |   |  |  | 1,862 |   |  |  | 726,820 |  
|                                                                                               |  |                                                    |       |  |               |  |         |                 |  | 
|Changes in equity for 2013:                                                                    |  |                                                    |       |  |               |  |         |                 |  |  |                 |   |  |                  |    |  |                        |  |        |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|Profit for the year                                                                            |  |                                                    |      |  |               |  |        |                 |  |  |                |   |  |                  |   |  |                        |  |       |                  |  |  |        |  |  |                            | 116,791 |   |              |  | 116,791 |   |  |  | 112   |   |  |  | 116,903 |  
|Other comprehensive loss                                                                       |  |                                                    |      |  |               |  |        |                 |  |  | (767            | ) |  |                  |   |  |                        |  | (175   | )                |  |  |        |  |  |                            |        |   |              |  | (942    | ) |  |  | (1    | ) |  |  | (943    | )
|                                                                                               |  |                                                    |       |  |               |  |         |                 |  |  |                 |   |  |                  |    |  |                        |  |        |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|Total comprehensive (loss)/income for the year                                                 |  |                                                    |      |  |               |  |        |                 |  |  | (767            | ) |  |                  |   |  |                        |  | (175   | )                |  |  |        |  |  |                            | 116,791 |   |              |  | 115,849 |   |  |  | 111   |   |  |  | 115,960 |  
|                                                                                               |  |                                                    |       |  |               |  |         |                 |  | 
|Dividends approved in respect of previous year (note 35(a)(ii))                                |  |                                                    |      |  |               |  |        |                 |  |  |                |   |  |                  |   |  |                        |  |       |                  |  |  |        |  |  |                            | (28,460 | ) |              |  | (28,460 | ) |  |  | (21   | ) |  |  | (28,481 | )
|Dividends declared in respect of current year (note 35(a)(i))                                  |  |                                                    |      |  |               |  |        |                 |  |  |                |   |  |                  |   |  |                        |  |       |                  |  |  |        |  |  |                            | (27,031 | ) |              |  | (27,031 | ) |  |  |      |   |  |  | (27,031 | )
|Shares issued under share option scheme(note 35(b))                                            |  |                                                    |      |  |               |  | 60      |                 |  |  | (17             | ) |  |                  |   |  |                        |  |       |                  |  |  |        |  |  |                            |        |   |              |  | 43      |   |  |  |      |   |  |  | 43      |  
|Transfer to PRC statutory reserves(note 35(c)(ii))                                             |  |                                                    |      |  |               |  |        |                 |  |  |                |   |  |                  |   |  |                        |  |       |                  |  |  | 24,143  |  |  |                            | (24,119 | ) |              |  | 24      |   |  |  |      |   |  |  | 24      |  
|Capital injection from ultimate holding company to Target Assets and Businesses(note 35(c)(i)) |  |                                                    |      |  |               |  |        |                 |  |  | 33,788          |   |  |                  |   |  |                        |  |       |                  |  |  |        |  |  |                            |        |   |              |  | 33,788  |   |  |  |      |   |  |  | 33,788  |  
|Others                                                                                         |  |                                                    |      |  |               |  |        |                 |  |  |                |   |  |                  |   |  |                        |  | 1,060  |                  |  |  |        |  |  |                            | (1,060  | ) |              |  |        |   |  |  |      |   |  |  |        |  
|                                                                                               |  |                                                    |       |  |               |  |         |                 |  |  |                 |   |  |                  |    |  |                        |  |        |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|                                                                                               |  |                                                    |       |  |               |  |         |                 |  | 
|As of December 31, 2013 (As restated)                                                          |  |                                                    | 2,142 |  |               |  | 387,243 |                 |  |  | (230,014        | ) |  |                  | 72 |  |                        |  | (607   | )                |  |  | 235,770 |  |  |                            | 424,565 |   |              |  | 819,171 |   |  |  | 1,952 |   |  |  | 821,123 |  
|                                                                                               |  |                                                    |       |  |               |  |         |                 |  |  |                 |   |  |                  |    |  |                        |  |        |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  

The notes on pages F-16 to F-97 are an integral part of these consolidated financial statements.



F-9



---

##### Table of Contents

Consolidated Statements of Changes in Equity (Continued)

for the year ended December 31

(Expressed in
RMB)



|                                                                  |  |                                                    |         |  |               |  |          |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|----------------------------------------------------------------- |  | -------------------------------------------------- | ------- |  | ------------- |  | -------- | --------------- |  |  | --------------- | - |  | ---------------- | -- |  | ---------------------- |  | ---- | ---------------- |  |  | ------- |  |  | -------------------------- | ------- | - | ------------ |  | ------- | - |  |  | ----- | - |  |  | ------- | -
|                                                                  |  | Attributable to equity shareholders of the Company |         |  |               |  |          |                 | 
|                                                                  |  | Share capital                                      |         |  | Share premium |  |          | Capital reserve |  |  | General reserve |   |  | Exchange reserve |    |  | PRC statutory reserves |  |      | Retained profits |  |  | Total   |  |  | Non- controlling interests |         |   | Total equity | 
|                                                                  |  | Million                                            |         |  | Million       |  |          | Million         |  |  | Million         |   |  | Million          |    |  | Million                |  |      | Million          |  |  | Million |  |  | Million                    |         |   | Million      | 
|                                                                  |  |                                                    |         |  |               |  |          |                 |  | 
|As of January 1, 2014 (As previously reported)                    |  |                                                    | 2,142   |  |               |  | 387,243  |                 |  |  | (293,052        | ) |  |                  | 72 |  |                        |  | (600 | )                |  |  | 235,749 |  |  |                            | 457,219 |   |              |  | 788,773 |   |  |  | 1,951 |   |  |  | 790,724 |  
|Adjusted for business combination under common control(note 2(b)) |  |                                                    |        |  |               |  |         |                 |  |  | 63,038          |   |  |                  |   |  |                        |  | (7   | )                |  |  | 21      |  |  |                            | (32,654 | ) |              |  | 30,398  |   |  |  | 1     |   |  |  | 30,399  |  
|                                                                  |  |                                                    |         |  |               |  |          |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|As of January 1, 2014 (As restated)                               |  |                                                    | 2,142   |  |               |  | 387,243  |                 |  |  | (230,014        | ) |  |                  | 72 |  |                        |  | (607 | )                |  |  | 235,770 |  |  |                            | 424,565 |   |              |  | 819,171 |   |  |  | 1,952 |   |  |  | 821,123 |  
|                                                                  |  |                                                    |         |  |               |  |          |                 |  | 
|Changes in equity for 2014:                                       |  |                                                    |         |  |               |  |          |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|Profit for the year                                               |  |                                                    |        |  |               |  |         |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            | 109,218 |   |              |  | 109,218 |   |  |  | 125   |   |  |  | 109,343 |  
|Other comprehensive income/(loss)                                 |  |                                                    |        |  |               |  |         |                 |  |  | 1,224           |   |  |                  |   |  |                        |  | (169 | )                |  |  |        |  |  |                            |        |   |              |  | 1,055   |   |  |  |      |   |  |  | 1,055   |  
|                                                                  |  |                                                    |         |  |               |  |          |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|Total comprehensive income/(loss) for the year                    |  |                                                    |        |  |               |  |         |                 |  |  | 1,224           |   |  |                  |   |  |                        |  | (169 | )                |  |  |        |  |  |                            | 109,218 |   |              |  | 110,273 |   |  |  | 125   |   |  |  | 110,398 |  
|                                                                  |  |                                                    |         |  |               |  |          |                 |  | 
|Dividends approved in respect of previous year(note 35(a)(ii))    |  |                                                    |        |  |               |  |         |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            | (26,044 | ) |              |  | (26,044 | ) |  |  | (10   | ) |  |  | (26,054 | )
|Dividends declared in respect of current year(note 35(a)(i))      |  |                                                    |        |  |               |  |         |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            | (24,880 | ) |              |  | (24,880 | ) |  |  |      |   |  |  | (24,880 | )
|Shares issued under share option scheme(note 35(b))               |  |                                                    | 9,279   |  |               |  | 2,073    |                 |  |  | (3,137          | ) |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            |        |   |              |  | 8,215   |   |  |  |      |   |  |  | 8,215   |  
|Transfer to PRC statutory reserves(note 35(c)(ii))                |  |                                                    |        |  |               |  |         |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  | 23,172  |  |  |                            | (22,991 | ) |              |  | 181     |   |  |  |      |   |  |  | 181     |  
|Transfer between reserves upon expiry of options (note 34(b))     |  |                                                    |        |  |               |  |         |                 |  |  | (27             | ) |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            | 27      |   |              |  |        |   |  |  |      |   |  |  |        |  
|Transition to no-par value regime(note 35(b))                     |  |                                                    | 389,316 |  |               |  | (389,316 | )               |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            |        |   |              |  |        |   |  |  |      |   |  |  |        |  
|Others                                                            |  |                                                    |        |  |               |  |         |                 |  |  |                |   |  |                  |   |  |                        |  | 8    |                  |  |  |        |  |  |                            | (8      | ) |              |  |        |   |  |  |      |   |  |  |        |  
|                                                                  |  |                                                    |         |  |               |  |          |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|                                                                  |  |                                                    |         |  |               |  |          |                 |  | 
|As of December 31, 2014 (As restated)                             |  |                                                    | 400,737 |  |               |  |         |                 |  |  | (231,954        | ) |  |                  | 72 |  |                        |  | (768 | )                |  |  | 258,942 |  |  |                            | 459,887 |   |              |  | 886,916 |   |  |  | 2,067 |   |  |  | 888,983 |  
|                                                                  |  |                                                    |         |  |               |  |          |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  

The notes on pages F-16 to F-97 are an integral part of these consolidated financial statements.



F-10



---

##### Table of Contents

Consolidated Statements of Changes in Equity (Continued)

for the year ended December 31

(Expressed in
RMB)





|                                                                                                |  |                                                    |         |  |               |  |   |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|----------------------------------------------------------------------------------------------- |  | -------------------------------------------------- | ------- |  | ------------- |  | - | --------------- |  |  | --------------- | - |  | ---------------- | -- |  | ---------------------- |  | ---- | ---------------- |  |  | ------- |  |  | -------------------------- | ------- | - | ------------ |  | ------- | - |  |  | ----- | - |  |  | ------- | -
|                                                                                                |  | Attributable to equity shareholders of the Company |         |  |               |  |   |                 | 
|                                                                                                |  | Share capital                                      |         |  | Share premium |  |   | Capital reserve |  |  | General reserve |   |  | Exchange reserve |    |  | PRC statutory reserves |  |      | Retained profits |  |  | Total   |  |  | Non- controlling interests |         |   | Total equity | 
|                                                                                                |  | Million                                            |         |  | Million       |  |   | Million         |  |  | Million         |   |  | Million          |    |  | Million                |  |      | Million          |  |  | Million |  |  | Million                    |         |   | Million      | 
|                                                                                                |  |                                                    |         |  |               |  |   |                 |  | 
|As of January 1, 2015 (As previously reported)                                                  |  |                                                    | 400,737 |  |               |  |  |                 |  |  | (294,992        | ) |  |                  | 72 |  |                        |  | (761 | )                |  |  | 258,918 |  |  |                            | 492,602 |   |              |  | 856,576 |   |  |  | 2,067 |   |  |  | 858,643 |  
|Adjusted for business combination under common control(note 2(b))                               |  |                                                    |        |  |               |  |  |                 |  |  | 63,038          |   |  |                  |   |  |                        |  | (7   | )                |  |  | 24      |  |  |                            | (32,715 | ) |              |  | 30,340  |   |  |  |      |   |  |  | 30,340  |  
|                                                                                                |  |                                                    |         |  |               |  |   |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|As of January 1, 2015 (As restated)                                                             |  |                                                    | 400,737 |  |               |  |  |                 |  |  | (231,954        | ) |  |                  | 72 |  |                        |  | (768 | )                |  |  | 258,942 |  |  |                            | 459,887 |   |              |  | 886,916 |   |  |  | 2,067 |   |  |  | 888,983 |  
|                                                                                                |  |                                                    |         |  |               |  |   |                 |  | 
|Changes in equity for 2015:                                                                     |  |                                                    |         |  |               |  |   |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|Profit for the year                                                                             |  |                                                    |        |  |               |  |  |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            | 108,539 |   |              |  | 108,539 |   |  |  | 116   |   |  |  | 108,655 |  
|Other comprehensive income                                                                      |  |                                                    |        |  |               |  |  |                 |  |  | 901             |   |  |                  |   |  |                        |  | 603  |                  |  |  |        |  |  |                            |        |   |              |  | 1,504   |   |  |  |      |   |  |  | 1,504   |  
|                                                                                                |  |                                                    |         |  |               |  |   |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|Total comprehensive income for the year                                                         |  |                                                    |        |  |               |  |  |                 |  |  | 901             |   |  |                  |   |  |                        |  | 603  |                  |  |  |        |  |  |                            | 108,539 |   |              |  | 110,043 |   |  |  | 116   |   |  |  | 110,159 |  
|                                                                                                |  |                                                    |         |  |               |  |   |                 |  | 
|Dividends approved in respect of previous year (note 35(a)(ii))                                 |  |                                                    |        |  |               |  |  |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            | (22,283 | ) |              |  | (22,283 | ) |  |  | (21   | ) |  |  | (22,304 | )
|Dividends declared in respect of current year(note 35(a)(i))                                    |  |                                                    |        |  |               |  |  |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            | (25,629 | ) |              |  | (25,629 | ) |  |  |      |   |  |  | (25,629 | )
|Shares issued under share option scheme(note 35(b))                                             |  |                                                    | 1,393   |  |               |  |  |                 |  |  | (369            | ) |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            |        |   |              |  | 1,024   |   |  |  |      |   |  |  | 1,024   |  
|Transfer to PRC statutory reserves(note 35(c)(ii))                                              |  |                                                    |        |  |               |  |  |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  | 20,542  |  |  |                            | (20,502 | ) |              |  | 40      |   |  |  |      |   |  |  | 40      |  
|Transfer between reserves upon expiry of options (note 34(b))                                   |  |                                                    |        |  |               |  |  |                 |  |  | (92             | ) |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            | 92      |   |              |  |        |   |  |  |      |   |  |  |        |  
|Consideration for business combination under common control (note 2(b))                         |  |                                                    |        |  |               |  |  |                 |  |  | (31,967         | ) |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            |        |   |              |  | (31,967 | ) |  |  |      |   |  |  | (31,967 | )
|Transfer of assets of entities under common control to the ultimate holding company (note 2(b)) |  |                                                    |        |  |               |  |  |                 |  |  | (808            | ) |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            |        |   |              |  | (808    | ) |  |  |      |   |  |  | (808    | )
|Capital injection from non-controlling interests of a subsidiary                                |  |                                                    |        |  |               |  |  |                 |  |  |                |   |  |                  |   |  |                        |  |     |                  |  |  |        |  |  |                            |        |   |              |  |        |   |  |  | 870   |   |  |  | 870     |  
|                                                                                                |  |                                                    |         |  |               |  |   |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  
|                                                                                                |  |                                                    |         |  |               |  |   |                 |  | 
|As of December 31, 2015                                                                         |  |                                                    | 402,130 |  |               |  |  |                 |  |  | (264,289        | ) |  |                  | 72 |  |                        |  | (165 | )                |  |  | 279,484 |  |  |                            | 500,104 |   |              |  | 917,336 |   |  |  | 3,032 |   |  |  | 920,368 |  
|                                                                                                |  |                                                    |         |  |               |  |   |                 |  |  |                 |   |  |                  |    |  |                        |  |      |                  |  |  |         |  |  |                            |         |   |              |  |         |   |  |  |       |   |  |  |         |  

The notes on pages F-16 to F-97 are an integral part of these consolidated financial statements.



F-11



---

##### Table of Contents

Consolidated Statements of Cash Flows

for the year ended December 31

(Expressed in RMB)



|                                                                       |  |      |  |         |         |             |         |  |             |         |  |  |         |  
|---------------------------------------------------------------------- |  | ---- |  | ------- | ------- | ----------- | ------- |  | ----------- | ------- |  |  | ------- | -
|                                                                       |  | Note |  | 2015    |         |             | 2014    |  |             | 2013    | 
|                                                                       |  |      |  |         |         | As restated |         |  | As restated |        
|                                                                       |  |      |  |         |         | (Note 2(b)) |         |  | (Note 2(b)) |        
|                                                                       |  |      |  | Million |         |             | Million |  |             | Million | 
|                                                                       |  |      |  |        
|Operating activities                                                   |  |      |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                       |  |      |  |        
|Profit before taxation                                                 |  |      |  |         | 143,734 |             |         |  | 142,522     |         |  |  | 153,649 |  
|Adjustments for:                                                       |  |      |  |         |         |             |         |  |             |         |  |  |         |  
|- Depreciation of property, plant and equipment                        |  |      |  |         | 136,832 |             |         |  | 122,805     |         |  |  | 111,493 |  
|- Amortization of other intangible assets                              |  | 6    |  |         | 274     |             |         |  | 112         |         |  |  | 80      |  
|- Amortization of land lease prepayments                               |  | 16   |  |         | 426     |             |         |  | 407         |         |  |  | 387     |  
|- Gain on the transfer of Tower Assets                                 |  | 7    |  |         | (15,525 | )           |         |  |            |         |  |  |        |  
|- Gain on disposal of property, plant and equipment                    |  | 6    |  |         | (4      | )           |         |  | (1          | )       |  |  | (3      | )
|- Write-off and impairment of property, plant and equipment            |  | 6    |  |         | 7,614   |             |         |  | 2,383       |         |  |  | 5,145   |  
|- Impairment loss of doubtful accounts                                 |  | 6    |  |         | 4,839   |             |         |  | 5,536       |         |  |  | 5,126   |  
|- Write-down of inventories                                            |  | 6    |  |         | 272     |             |         |  | 293         |         |  |  | 202     |  
|- Interest income                                                      |  |      |  |         | (15,852 | )           |         |  | (16,270     | )       |  |  | (15,368 | )
|- Finance costs                                                        |  | 9    |  |         | 455     |             |         |  | 487         |         |  |  | 1,195   |  
|- Dividend income from unlisted securities                             |  | 8    |  |         | (11     | )           |         |  |            |         |  |  | (34     | )
|- Share of profit of investments accounted for using the equity method |  | 19   |  |         | (8,090  | )           |         |  | (8,248      | )       |  |  | (7,063  | )
|- Unrealized exchange loss/(gain), net                                 |  |      |  |         | 182     |             |         |  | 80          |         |  |  | (58     | )
|- Loss on disposal of a subsidiary                                     |  |      |  |         |        |             |         |  |            |         |  |  | 18      |  
|- Impairment loss of goodwill                                          |  | 6    |  |         |        |             |         |  | 1,594       |         |  |  |        |  
|- Gain on disposal of other financial assets                           |  |      |  |         | (14     | )           |         |  |            |         |  |  |        |  
|                                                                       |  |      |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                       |  |      |  |        
|Operating cash flows before changes in working capital                 |  |      |  |         | 255,132 |             |         |  | 251,700     |         |  |  | 254,769 |  
|Increase in inventories                                                |  |      |  |         | (1,005  | )           |         |  | (271        | )       |  |  | (2,113  | )
|Increase in accounts receivable                                        |  |      |  |         | (5,830  | )           |         |  | (8,165      | )       |  |  | (7,288  | )
|Increase in other receivables                                          |  |      |  |         | (1,341  | )           |         |  | (960        | )       |  |  | (239    | )
|Decrease/(increase) in prepayments and other current assets            |  |      |  |         | 276     |             |         |  | (8,010      | )       |  |  | (2,217  | )
|(Increase)/decrease in amount due from ultimate holding company        |  |      |  |         | (135    | )           |         |  | (18         | )       |  |  | 12      |  
|(Decrease)/increase in accounts payable                                |  |      |  |         | (6,832  | )           |         |  | 8,191       |         |  |  | 3,498   |  
|Increase/(decrease) in bills payable                                   |  |      |  |         | 12      |             |         |  | (144        | )       |  |  | (563    | )
|Increase in deferred revenue                                           |  |      |  |         | 14,005  |             |         |  | 1,200       |         |  |  | 4,205   |  
|Increase in accrued expenses and other payables                        |  |      |  |         | 18,633  |             |         |  | 7,722       |         |  |  | 20,088  |  
|(Decrease)/increase in amount due to ultimate holding company          |  |      |  |         | (32     | )           |         |  | 4,249       |         |  |  | (17     | )
|                                                                       |  |      |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                       |  |      |  |        
|Cash generated from operations                                         |  |      |  |         | 272,883 |             |         |  | 255,494     |         |  |  | 270,135 |  
|                                                                       |  |      |  |        
|Tax paid                                                               |  |      |  |         |         |             |         |  |             |         |  |  |         |  
|- Hong Kong profits tax paid                                           |  |      |  |         | (232    | )           |         |  | (272        | )       |  |  | (27     | )
|- PRC enterprise income tax paid                                       |  |      |  |         | (37,562 | )           |         |  | (38,784     | )       |  |  | (43,203 | )
|                                                                       |  |      |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                       |  |      |  |        
|Net cash generated from operating activities                           |  |      |  |         | 235,089 |             |         |  | 216,438     |         |  |  | 226,905 |  
|                                                                       |  |      |  |         |         |             |         |  |             |         |  |  |         |  



F-12



---

##### Table of Contents

Consolidated Statements of Cash Flows (Continued)

for the year ended December 31

(Expressed in
RMB)





|                                                                       |  |      |  |         |          |             |         |  |             |         |  |  |          |  
|---------------------------------------------------------------------- |  | ---- |  | ------- | -------- | ----------- | ------- |  | ----------- | ------- |  |  | -------- | -
|                                                                       |  | Note |  | 2015    |          |             | 2014    |  |             | 2013    | 
|                                                                       |  |      |  |         |          | As restated |         |  | As restated |        
|                                                                       |  |      |  |         |          | (Note 2(b)) |         |  | (Note 2(b)) |        
|                                                                       |  |      |  | Million |          |             | Million |  |             | Million | 
|                                                                       |  |      |  |        
|Investing activities                                                   |  |      |  |         |          |             |         |  |             |         |  |  |          |  
|                                                                       |  |      |  |        
|Capital expenditure                                                    |  |      |  |         | (172,243 | )           |         |  | (174,673    | )       |  |  | (148,063 | )
|Land lease prepayments                                                 |  |      |  |         | (1,450   | )           |         |  | (1,028      | )       |  |  | (1,058   | )
|Acquisition of other intangible assets                                 |  |      |  |         | (212     | )           |         |  | (23         | )       |  |  | (355     | )
|Proceeds from disposal of property, plant and equipment                |  |      |  |         | 7        |             |         |  | 2           |         |  |  | 50       |  
|Decrease/(increase) in bank deposits                                   |  |      |  |         | 30,177   |             |         |  | 21,620      |         |  |  | (42,632  | )
|Decrease/(increase) in restricted bank deposits                        |  |      |  |         | 4,877    |             |         |  | (2,609      | )       |  |  | (1,399   | )
|Interest received                                                      |  |      |  |         | 15,655   |             |         |  | 14,513      |         |  |  | 12,472   |  
|Proceeds from disposal of a joint venture                              |  |      |  |         |         |             |         |  |            |         |  |  | 6        |  
|Proceeds from disposal of a subsidiary                                 |  |      |  |         |         |             |         |  |            |         |  |  | 124      |  
|Payment for investment accounted for using the equity method           |  | 19   |  |         | (376     | )           |         |  | (9,508      | )       |  |  | (1,363   | )
|Dividends received from associates                                     |  | 19   |  |         | 2,842    |             |         |  | 2,476       |         |  |  | 2,062    |  
|Dividends received from unlisted securities                            |  | 8    |  |         | 11       |             |         |  |            |         |  |  | 34       |  
|Purchase of available-for-sale financial assets                        |  |      |  |         | (24,965  | )           |         |  | (2,000      | )       |  |  |         |  
|Maturity of available-for-sale financial assets                        |  |      |  |         | 8,294    |             |         |  |            |         |  |  |         |  
|Short-term loans granted by China Mobile Finance and other investments |  | 25   |  |         | (5,500   | )           |         |  |            |         |  |  |         |  
|Proceeds from disposal of other financial assets                       |  |      |  |         | 140      |             |         |  |            |         |  |  |         |  
|                                                                       |  |      |  |         |          |             |         |  |             |         |  |  |          |  
|                                                                       |  |      |  |        
|Net cash used in investing activities                                  |  |      |  |         | (142,743 | )           |         |  | (151,230    | )       |  |  | (180,122 | )
|                                                                       |  |      |  |         |          |             |         |  |             |         |  |  |          |  



F-13



---

##### Table of Contents

Consolidated Statements of Cash Flows (Continued)

for the year ended December 31

(Expressed in
RMB)





|                                                                                |  |          |  |         |         |             |         |  |             |         |  |  |         |  
|------------------------------------------------------------------------------- |  | -------- |  | ------- | ------- | ----------- | ------- |  | ----------- | ------- |  |  | ------- | -
|                                                                                |  | Note     |  | 2015    |         |             | 2014    |  |             | 2013    | 
|                                                                                |  |          |  |         |         | As restated |         |  | As restated |        
|                                                                                |  |          |  |         |         | (Note 2(b)) |         |  | (Note 2(b)) |        
|                                                                                |  |          |  | Million |         |             | Million |  |             | Million | 
|                                                                                |  |          |  |        
|Financing activities                                                            |  |          |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                |  |          |  |        
|Proceeds from issuance of shares under share option scheme                      |  | 35(b)    |  |         | 1,024   |             |         |  | 8,215       |         |  |  | 43      |  
|Capital injection from ultimate holding company to Target Assets and Businesses |  | 35(c)(i) |  |         |        |             |         |  |            |         |  |  | 33,788  |  
|Capital injection from non-controlling shareholders of a subsidiary             |  |          |  |         | 870     |             |         |  |            |         |  |  |        |  
|Interest paid                                                                   |  |          |  |         | (442    | )           |         |  | (480        | )       |  |  | (1,284  | )
|Dividends paid to the Companys equity shareholders                             |  | 35(a)    |  |         | (47,912 | )           |         |  | (50,924     | )       |  |  | (55,491 | )
|Dividends paid to non-controlling shareholders of subsidiaries                  |  |          |  |         | (21     | )           |         |  | (10         | )       |  |  | (21     | )
|Consideration for business combination under common control                     |  | 2(b)     |  |         | (31,880 | )           |         |  |            |         |  |  |        |  
|Proceeds from entrusted loans                                                   |  | 36(a)    |  |         | 8,592   |             |         |  | 10,242      |         |  |  | 43,661  |  
|Repayment of entrusted loans                                                    |  | 36(a)    |  |         | (18,834 | )           |         |  | (9,573      | )       |  |  | (67,875 | )
|Short-term deposits placed by ultimate holding company                          |  | 36(a)    |  |         | 7,274   |             |         |  |            |         |  |  |        |  
|Maturity of short-term deposits placed by ultimate holding company              |  | 36(a)    |  |         | (4,181  | )           |         |  |            |         |  |  |        |  
|Repayment of bonds                                                              |  | 33       |  |         | (1,000  | )           |         |  |            |         |  |  |        |  
|Repayment of deferred considerations and other borrowings                       |  |          |  |         |        |             |         |  |            |         |  |  | (24,133 | )
|                                                                                |  |          |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                |  |          |  |        
|Net cash used in financing activities                                           |  |          |  |         | (86,510 | )           |         |  | (42,530     | )       |  |  | (71,312 | )
|                                                                                |  |          |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                |  |          |  |        
|Net increase/(decrease) in cash and cash equivalents                            |  |          |  |         | 5,836   |             |         |  | 22,678      |         |  |  | (24,529 | )
|                                                                                |  |          |  |        
|Cash and cash equivalents at beginning of year                                  |  |          |  |         | 73,812  |             |         |  | 51,180      |         |  |  | 75,764  |  
|                                                                                |  |          |  |        
|Effect of changes in foreign exchange rate                                      |  |          |  |         | 194     |             |         |  | (46         | )       |  |  | (55     | )
|                                                                                |  |          |  |         |         |             |         |  |             |         |  |  |         |  
|                                                                                |  |          |  |        
|Cash and cash equivalents at end of year                                        |  | 29       |  |         | 79,842  |             |         |  | 73,812      |         |  |  | 51,180  |  
|                                                                                |  |          |  |         |         |             |         |  |             |         |  |  |         |  



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##### Table of Contents

Consolidated Statements of Cash Flows (Continued)

for the year ended December 31

(Expressed in
RMB)



Significant non-cash transactions

The Group recorded payables of RMB125,210,000,000 (2014: RMB120,327,000,000; 2013: RMB103,001,000,000) to equipment suppliers as of December 31, 2015
for additions of construction in progress during the year then ended.

On October 31, 2015, the Group completed the transfer of its
telecommunications towers and related assets to China Tower Corporation Limited (China Tower). In addition to 45,151,000,000 equity shares at a par value of RMB1 per share issued to the Group by China Tower to pay the consideration,
China Tower would also pay cash consideration of RMB57,585,000,000. In February 2016, China Tower has paid RMB5,000,000,000, and the remaining balance of cash consideration is deferred and will be settled before December 31, 2017. See note 7
for details.

The notes on pages F-16 to F-97 are an integral part of these consolidated financial statements.



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##### Table of Contents

Notes to the consolidated financial statements

(Expressed in RMB unless otherwise indicated)



|1 | GENERAL INFORMATION
|- | -------------------

China Mobile Limited (the Company) was incorporated in the Hong Kong Special Administrative Region (Hong Kong) of the Peoples Republic of China (the PRC) on
September 3, 1997. The principal activities of the Company and its subsidiaries (together referred to as the Group) are the provision of telecommunications and related services in Mainland China and in Hong Kong (For the purpose of
preparing these consolidated financial statements, Mainland China refers to the PRC excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan). The Companys immediate holding company is China Mobile Hong Kong (BVI) Limited
(incorporated in British Virgin Islands), and the Companys ultimate holding company is China Mobile Communications Corporation (CMCC). The address of the Companys registered office is 60thFloor, The Center, 99 Queens Road Central, Hong Kong.

The shares of the Company were listed on The Stock Exchange of Hong Kong Limited (the HKEx) on October 23,
1997 and the American Depositary Shares of the Company were listed on the New York Stock Exchange on October 22, 1997.



|2 | SIGNIFICANT ACCOUNTING POLICIES
|- | -------------------------------



| | (a) | Statement of compliance
| | --- | -----------------------

These financial statements have been prepared in accordance with all applicable International Financial Reporting Standards
(IFRSs) issued by the International Accounting Standards Board (IASB), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards
(IASs) and Interpretations issued by the IASB. A summary of the significant accounting policies adopted by the Group is set out below.



F-16



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (b) | Basis of preparation
| | --- | --------------------

The consolidated financial statements comprise the Group and the Groups interest in associates and joint ventures.

The measurement basis used in the preparation of the financial statements is the historical cost basis, as modified by the revaluation of available-for-sale financial assets which are carried at fair
value.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRSs that have significant effect on the financial statements and major sources of
estimation uncertainty are discussed in note 40.



F-17



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (b) | Basis of preparation (Continued)
| | --- | --------------------------------



Acquisition of Target Assets and Businesses from China Tietong Telecommunications
Corporation

On November 27, 2015, China Mobile TieTong Company Limited (CM TieTong), a wholly-owned
subsidiary of the Company, entered into an acquisition agreement with China Tietong Telecommunications Corporation (TieTong), a wholly-owned subsidiary of CMCC, under which CM TieTong has agreed to acquire, and TieTong has agreed to
sell, certain assets, businesses and related liabilities as well as its related employees in relation to the fixed-line telecommunications operations (Target Assets and Businesses). The final consideration for the acquisition of the
Target Assets and Businesses based on the acquisition agreement was RMB31,967,000,000. The acquisition was completed on December 31, 2015 (Completion Date).

The acquisition of the Target Assets and Businesses was considered as a business combination under common control as CM TieTong and the Target Assets and Businesses are both ultimately controlled by CMCC.

Under IFRSs, the acquisition of the Target Assets and Businesses was accounted for using merger accounting in accordance with
the Accounting Guideline 5 Merger Accounting for Common Control Combinations (AG 5) issued by the Hong Kong Institute of Certified Public Accountants (note 2(c)). Accordingly, the acquired Target Assets and Businesses are
stated at predecessor values, and were included in the consolidated financial statements from the beginning of the earliest period presented as if the Target Assets and Businesses acquired had always been part of the Group. As a result, the Group
has restated the 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 the Target Assets and Businesses, as
if the acquisition had been completed on the earliest date of the periods being presented, i.e., January 1, 2013. The consolidated balance sheets of the Group as of December 31, 2014 was restated to include the assets and liabilities of
Target Assets and Businesses. Certain assets that had not been acquired by the Group were included in the consolidated financial statements before the Completion Date, as they formed an integral part of the Target Assets and Businesses. Upon the
completion of the acquisition of the Target Assets and Businesses on December 31, 2015, these assets amounting to RMB808,000,000 were recorded as a distribution to the ultimate holding company.



F-18



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (b) | Basis of preparation (Continued)
| | --- | --------------------------------



Acquisition of the Target Assets and Businesses from China Tietong Telecommunications
Corporation (Continued)

The following is a reconciliation of the effect arising from the common control combination on the
consolidated statements of comprehensive income and consolidated balance sheets in connection with the acquisition of Target Assets and Businesses:



|                                            |  |                                 |         |  |                                                              |  |        |                       |  |  |         | 
|------------------------------------------- |  | ------------------------------- | ------- |  | ------------------------------------------------------------ |  | ------ | --------------------- |  |  | ------- | 
|                                            |  | The Group
As previouslyreported |         |  | Effect arising fromacquisition of TargetAssets andBusinesses |  |        | The Group
As restated | 
|                                            |  | Million                         |         |  | Million                                                      |  |        | Million               | 
|                                            |  |                                 |        
|Profit for the year ended December 31, 2013 |  |                                 | 121,803 |  |                                                              |  | (4,900 | )                     |  |  | 116,903 | 
|                                            |  |                                 |         |  |                                                              |  |        |                       |  |  |         | 
|Profit for the year ended December 31, 2014 |  |                                 | 109,405 |  |                                                              |  | (62    | )                     |  |  | 109,343 | 
|Net assets as of December 31, 2014          |  |                                 | 858,643 |  |                                                              |  | 30,340 |                       |  |  | 888,983 | 
|                                            |  |                                 |         |  |                                                              |  |        |                       |  |  |         | 
|                                            |  |                                 |        
|                                            |  | The Group                       |         |  | Effect arising fromacquisition of TargetAssets andBusinesses |  |        | The Group
As reported | 
|                                            |  | Million                         |         |  | Million                                                      |  |        | Million               | 
|                                            |  |                                 |        
|Profit for the year ended December 31, 2015 |  |                                 | 108,661 |  |                                                              |  | (6     | )                     |  |  | 108,655 | 
|Net assets as of December 31, 2015          |  |                                 | 890,828 |  |                                                              |  | 29,540 |                       |  |  | 920,368 | 
|                                            |  |                                 |         |  |                                                              |  |        |                       |  |  |         | 

The effect arising from the acquisition of Target Assets and Businesses has included the operating
results, assets and liabilities of Target Assets and Businesses and the elimination on its transactions with the Group. The effect amounting to RMB29,540,000,000 as of December 31, 2015 was offset by the cash consideration of RMB31,967,000,000,
resulting a decrease of RMB2,427,000,000 in the Groups net assets.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (c) | Subsidiaries and non-controlling interests
| | --- | ------------------------------------------



| | (i) | Subsidiaries
| | --- | ------------

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and
any unrealized gains arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealized losses resulting from intra-group transactions are eliminated in the same way as unrealized gains but
only to the extent that there is no evidence of impairment. Accounting policies of subsidiaries would be changed where necessary in the consolidated financial statements to ensure consistency with the policies adopted by the Group.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in respect of
which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. For
each business combination, the Group can elect to measure any non-controlling interests either at fair value or at their proportionate share of the subsidiarys net identifiable assets.

Non-controlling interests are presented in the consolidated balance sheets within equity, separately from equity attributable to the
equity shareholders of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated statements of comprehensive income as an allocation of the total profit or loss and total comprehensive income
for the year between non-controlling interests and the equity shareholders of the Company.

Changes in the Groups
interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in
relative interests, but no adjustments are made to goodwill and no gain or loss is recognized.

When the Group loses control
of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognized in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is
recognized at fair value and this amount is regarded as the fair value on initial recognition of a financial asset or, when appropriate, the cost on initial recognition of an investment in an associate or a joint venture.



F-20



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (c) | Subsidiaries and non-controlling interests (Continued)
| | --- | ------------------------------------------------------



| | (ii) | Business combination other than under common control
| | ---- | ----------------------------------------------------

The Group applies the acquisition method to account for business combination of entities and businesses which are not under common control. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related
costs are expensed as incurred.



| | (iii) | Business combination under common control
| | ----- | -----------------------------------------

Under IFRSs, the Group use merger accounting to account for the business combination of entities and businesses under common control in accordance with AG 5.

The consolidated financial statements incorporate the financial statements of the combining entities or businesses in which the common
control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.

The assets and liabilities of the combining entities or businesses are combined using the carrying book values from the controlling parties perspective. No amount is recognized in consideration for
goodwill or excess of acquirers interest in the net fair value of acquirees identifiable assets, liabilities and contingent liabilities over the consideration at the time of common control combination, to the extent of the continuation
of the controlling partys interest.

The consolidated statements of comprehensive income include the results of each of
the combining entities or businesses from the earliest date presented or since the date when the combining entities or businesses first came under the common control, where there is a shorter period, regardless of the date of the common control
combination. Transaction costs, including professional fees, registration fees, costs of furnishing information to shareholders, costs or losses incurred in combining operations of the previously separate businesses, etc., incurred in relation to
the common control combination that is to be accounted for by using merger accounting is recognized as an expense in the period in which they were incurred.





F-21



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (d) | Investments accounted for using the equity method
| | --- | -------------------------------------------------

Investments accounted for using the equity method include investment in associates and joint ventures.

An associate is an entity in which the Group has significant influence, but not control or joint control, over its management, including participation in the financial and operating policy decisions.

The Group has applied IFRS 11 to all joint arrangements. Under IFRS 11, investments in joint arrangements are classified as
either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.

Under the equity method, the investment is initially recorded at cost. Thereafter, the investment is adjusted for the post-acquisition
change in the Groups share of the investees net assets and any impairment loss relating to the investment (see note 2(j)). The Groups share of the post-acquisition post-tax results of the investee for the year is recognized as
share of profit or loss of investments accounted for using the equity method in the consolidated statements of comprehensive income, whereas the Groups share of the post-acquisition post-tax items of the investees other comprehensive
income is recognized as its share of other comprehensive income in the consolidated statements of comprehensive income.

When
the Groups share of losses exceeds its interest in the associate or joint ventures, the Groups interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the investee. For this purpose, the Groups interest in the investee is the carrying amount of the investment under the equity method together with the Groups long-term interests that
in substance form part of the Groups net investment in the associates or joint ventures.

Unrealized profits and losses
resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Groups interest in the investee, except where unrealized losses provide evidence of an impairment of the asset transferred,
in which case they are recognized immediately in profit or loss. Accounting policies of associates or joint ventures would be changed where necessary in the consolidated financial statements to ensure consistency with the policies adopted by the
Group.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (e) | Goodwill
| | --- | --------

Goodwill
represents the excess of



| | (i) | the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the Groups
previously held equity interest in the acquiree; over
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | the net fair value of the acquirees identifiable assets and liabilities measured as of the acquisition date.
| | ---- | -------------------------------------------------------------------------------------------------------------

When (ii) is greater than (i), then this excess is recognized immediately in profit or loss as a gain on a bargain
purchase.

Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is
allocated to each cash-generating unit, or groups of cash-generating units, that is expected to benefit from the synergies of the combination and is tested annually for impairment (see note 2(j)). Each unit or groups of units to which the goodwill
is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose. Goodwill is monitored at the operating segment level.

On disposal of a cash-generating unit during the year, any attributable amount of purchased goodwill is included in the calculation of the
gain or loss on disposal.



| | (f) | Other intangible assets
| | --- | -----------------------

Other intangible assets that are acquired by the Group are stated in the balance sheet at cost less accumulated amortization (where the
estimated useful life is finite) and impairment losses (see note 2(j)). Amortization of intangible assets with finite useful lives is recorded in other operating expenses on a straight-line basis over the assets estimated useful lives, from
the date they are available for use. Both the period and method of amortization are reviewed annually.

Intangible assets are
not amortized where their useful lives are assessed to be indefinite. The useful life of an intangible asset that is not being amortized is reviewed annually to determine whether events and circumstances continue to support the indefinite useful
life assessment for that asset. Otherwise, the change in useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortization of intangible assets with finite
lives as set out above.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (g) | Other financial assets
| | --- | ----------------------

Other financial assets represent investments in unquoted equity securities (other than investments in subsidiaries and interest in
associates), which are recognized in the balance sheet at cost less impairment losses (see note 2(j)) when those investments in equity securities do not have a quoted market price in an active market and their fair value cannot be reliably measured.



| | (h) | Property, plant and equipment
| | --- | -----------------------------

Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see note 2(j)).

The cost of property, plant and equipment comprises the purchase price and any directly attributable costs of bringing the asset to its
working location and condition for its intended use. Subsequent expenditure relating to an item of property, plant and equipment that has already been recognized is added to the carrying amount of the asset when it is probable that future economic
benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the entity. All other subsequent expenditure is recognized as an expense in the period in which it is incurred.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference
between the net disposal proceeds and the carrying amount of the item and are recognized in profit or loss on the date of retirement or disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as
follows:



|                                                                                             |  |  |              | 
|-------------------------------------------------------------------------------------------- |  |  | ------------ | 
|Buildings                                                                                    |  |  | 8 - 30 years | 
|Telecommunications transceivers, switching centers, transmission and other network equipment |  |  | 5 - 10 years | 
|Office equipment, furniture, fixtures and others                                             |  |  | 3 - 10 years | 

Both the assets useful lives and residual values, if any, are reviewed annually.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (i) | Leased assets
| | --- | -------------

An
arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series
of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.



| | (i) | Classification of assets leased to the Group
| | --- | --------------------------------------------

Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not
transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases.



| | (ii) | Assets acquired under finance leases
| | ---- | ------------------------------------

Where the Group acquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if lower, the present value of the minimum lease payments of such assets
is included in property, plant and equipment and the corresponding liabilities, net of finance charges, are recorded as obligations under finance leases. Depreciation is provided for at rates, which write off the cost of the assets over the term of
the relevant lease or, where it is likely the Group will obtain ownership of the asset, the useful life of the asset as set out in note 2(h). Impairment losses are accounted for in accordance with the accounting policy as set out in note 2(j).
Finance charges implicit in the lease payments are charged to profit or loss over the period of the leases so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period.
Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. There were no contingent rentals recognized by the Group during the years presented.



| | (iii) | Operating lease charges
| | ----- | -----------------------

Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal
instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognized in profit or loss as
an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. There were no contingent rentals recognized by the Group during the years presented.

The cost of acquiring land held under an operating lease is amortized on a straight-line basis over the period of the lease
term.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (i) | Leased assets (Continued)
| | --- | -------------------------



| | (iv) | Sale and leaseback
| | ---- | ------------------

A
sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset. The accounting treatment of a sale and leaseback transaction depends upon the type of lease involved. If a sale and leaseback transaction results in
a finance lease, any excess of sales proceeds over the carrying amount shall not be immediately recognized as income by a seller-lessee. Instead, it shall be deferred and amortized over the lease term. If a sale and leaseback transaction results in
an operating lease, and it is clear that the transaction is established at fair value, any profit or loss shall be recognized immediately. If the sale price is below fair value, any profit or loss shall be recognized immediately except that, if the
loss is compensated for by future lease payments at below market price, it shall be deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used. If the sale price is above fair value, the
excess over fair value shall be deferred and amortized over the period for which the asset is expected to be used.



| | (j) | Impairment of assets
| | --- | --------------------



| | (i) | Impairment of investments in equity securities, available-for-sale financial assets and receivables
| | --- | ---------------------------------------------------------------------------------------------------

Investments in equity securities (other than investments in subsidiaries), available-for-sale financial assets and receivables are
reviewed at the end of each reporting date to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the following loss
events:



| |  |  | significant financial difficulty of the entity;
| | - |  | -----------------------------------------------



| |  |  | a breach of contract, such as a default or delinquency in interest or principal payments;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | it becoming probable that the entity will enter bankruptcy or other financial reorganization;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | significant changes in the technological, market, economic or legal environment that have an adverse effect on the entity; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
| | - |  | -------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (j) | Impairment of assets (Continued)
| | --- | --------------------------------



| | (i) | Impairment of investments in equity securities, available-for-sale financial assets and receivables (Continued)
| | --- | ---------------------------------------------------------------------------------------------------------------

If any such evidence exists, any impairment loss is determined and recognized as follows:



| |  |  | For investment accounted for using the equity method (see note 2(d)), the impairment loss is measured by comparing the recoverable amount of the
investment with its carrying amount in accordance with note 2(j)(ii). The impairment loss is reversed if there has been a favorable change in the estimates used to determine the recoverable amount in accordance with note 2(j)(ii).
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset
and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for such equity securities are not reversed.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For debt instruments classified as available-for-sale financial assets, if any impairment evidence exists, the cumulative loss (measured as the
difference between the acquisition cost (net of any principal repayment and amortization) and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss) is removed from equity and recognized in
profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss,
the impairment loss is reversed through profit or loss. For equity instruments classified as available-for-sale financial assets, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets
are impaired. If any impairment evidence exists, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss) is
removed from equity and recognized in profit or loss. Impairment losses recognized in profit or loss on equity instruments are not reversed through profit or loss.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-27



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (j) | Impairment of assets (Continued)
| | --- | --------------------------------



| | (i) | Impairment of investments in equity securities, available-for-sale financial assets and receivables (Continued)
| | --- | ---------------------------------------------------------------------------------------------------------------



| |  |  | For trade and other current receivables and other financial assets carried at amortized cost, the impairment loss is measured as the difference between
the assets carrying amount and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets),
where the effect of discounting is material. This assessment is made collectively where these financial assets share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash
flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group. If in a subsequent period the amount of an impairment loss
decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognized, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the assets
carrying amount exceeding that which would have been determined had no impairment loss been recognized in prior years.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognized in respect of debtors included within trade and other receivables, whose recovery is
considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade
debtors directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the
allowance account and subsequent recoveries of amounts previously written off directly are recognized in profit or loss.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (j) | Impairment of assets (Continued)
| | --- | --------------------------------



| | (ii) | Impairment of other assets
| | ---- | --------------------------

Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, except in the case of goodwill and
intangible assets with indefinite useful lives, an impairment loss previously recognized no longer exists or may have decreased:



| |  |  | property, plant and equipment;
| | - |  | ------------------------------



| |  |  | construction in progress;
| | - |  | -------------------------



| |  |  | prepaid interests in leasehold land classified as being held under an operating lease;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | investments in subsidiaries;
| | - |  | ----------------------------



| |  |  | goodwill; and
| | - |  | -------------



| |  |  | other intangible assets.
| | - |  | ------------------------

If any such indication exists, the assets recoverable amount is estimated. For goodwill and other intangible assets that have indefinite useful lives, the recoverable amount is estimated annually
whether or not there is any indication of impairment.



| |  |  | Calculation of recoverable amount
| | - |  | ---------------------------------

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the
recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (j) | Impairment of assets (Continued)
| | --- | --------------------------------



| | (ii) | Impairment of other assets (Continued)
| | ---- | --------------------------------------



| |  |  | Recognition of impairment losses
| | - |  | --------------------------------

An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in
respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units)
on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal, or value in use, if determinable.



| |  |  | Reversals of impairment losses
| | - |  | ------------------------------

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favorable change in the estimates used to determine the recoverable amount. An impairment loss in respect of
goodwill is not reversed.

A reversal of an impairment loss is limited to the assets carrying amount that would have
been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.



| | (k) | Construction in progress
| | --- | ------------------------

Construction in progress is stated at cost less impairment losses (see note 2(j)). Cost comprises direct costs of construction as well as
interest expense and exchange differences capitalized during the periods of construction and installation. Capitalization of these costs ceases and the construction in progress is transferred to property, plant and equipment when substantially all
the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for in respect of construction in progress until it is completed and ready for its intended use.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (l) | Inventories
| | --- | -----------

Inventories
are carried at the lower of cost and net realizable value. Cost represents purchase cost of goods calculated using the weighted average cost method. Net realizable value is determined by reference to the sales proceeds of items sold in the ordinary
course of business or to managements estimates based on prevailing market conditions.

When inventories are sold, the
carrying amount of those inventories is recognized as cost of products sold. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs.
The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs. No reversal
of any write-down of inventories occurred during the years presented.



| | (m) | Accounts receivable and other receivables
| | --- | -----------------------------------------

Accounts receivable and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method less allowance for impairment loss (see note
2(j)), except where the effect of discounting would be immaterial.



| | (n) | Available-for-sale financial assets
| | --- | -----------------------------------

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the
investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

Regular way
purchases and sales of available-for-sale financial assets are recognized on the trade-date (the date on which the Group commits to purchase or sell the asset). The investments are initially recognized at fair value plus transaction costs and are
subsequently carried at fair value. Changes in the fair value of available-for-sale financial assets are recognized in other comprehensive income.

Available-for-sale financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks
and rewards of ownership.

When available-for-sale financial assets are sold, the accumulated fair value adjustments recognized
in equity is removed and recognized in profit or loss.

Interest on available-for-sale debt instruments calculated using the
effective interest method is recognized in profit or loss. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Groups right to receive payments is established.



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|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (o) | Deferred revenue
| | --- | ----------------

Deferred revenue consists primarily of prepaid service fees received from customers which are generally not refundable and revenue
deferred for unredeemed point rewards under Customer Point Reward Program (Reward Program, see note 2(s)(iv)).

The
prepaid service fees are stated at the amount of proceeds received less the amount already recognized as revenue.



| | (p) | Interest-bearing borrowings
| | --- | ---------------------------

Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any
difference between the amount initially recognized and redemption value being recognized in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.



| | (q) | Accounts payable and other payables
| | --- | -----------------------------------

Accounts payable and other payables are initially recognized at fair value and subsequently stated at amortized cost unless the effect of discounting would be immaterial.



| | (r) | Cash and cash equivalents
| | --- | -------------------------

Cash and cash equivalents comprise bank deposits with original maturity within three months, cash at banks and in hand, demand deposits
with banks, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.



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|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (s) | Revenue recognition
| | --- | -------------------

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will
flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows:



| | (i) | revenue derived from voice and data services are recognized when the service is rendered;
| | --- | -----------------------------------------------------------------------------------------



| | (ii) | sales of products are recognized when the title is passed to the buyer;
| | ---- | -----------------------------------------------------------------------



| | (iii) | for offerings which include the provision of services and sale of mobile handset, the Group determines the revenue from the sale of the mobile handset by deducting the
fair value of the service element from the total contract consideration; and
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | for transactions which offer customer points reward when services are provided, the consideration allocated to the customer points reward is based on its fair value
which is recorded as deferred revenue when the rewards are granted and recognized as revenue when the points are redeemed or expired.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (t) | Interest income
| | --- | ---------------

Interest income is recognized as it accrues using the effective interest method.



| | (u) | Income tax
| | --- | ----------

Income tax
for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognized in profit or loss except items recognized in other comprehensive income or
directly in equity, in which case the relevant amounts of tax are recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of
previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively,
being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.



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|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (u) | Income tax (Continued)
| | --- | ----------------------

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that
future taxable profits will be available against which the asset can be utilized, are recognized. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will
arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the
deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the
recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or
periods, in which the tax loss or credit can be utilized.

The limited exceptions to recognition of deferred tax assets and
liabilities are those temporary differences arising from initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and
temporary differences relating to investments in subsidiaries and associates to the extent that, in the case of taxable temporary differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in
the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The amount of deferred tax recognized is measured based on the expected manner of realization or settlement of the carrying amount of the
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.



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|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (u) | Income tax (Continued)
| | --- | ----------------------



Current tax balances and deferred tax balances, and movements therein, are presented
separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Group has the legally enforceable right to set off current tax assets
against current tax liabilities and the following additional conditions are met:



| |  |  | in the case of current tax assets and liabilities, the Group intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously; or
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | the same taxable entity; or
| | - |  | ---------------------------



| |  |  | different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled
or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (v) | Provisions and contingent liabilities
| | --- | -------------------------------------

Provisions are recognized for liabilities of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of
economic benefits will be required to settle the obligation and the amount can be estimated reliably. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably,
the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events,
are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.



| | (w) | Employee benefits
| | --- | -----------------



| | (i) | Short-term employee benefits and contributions to defined contribution retirement plans
| | --- | ---------------------------------------------------------------------------------------

Salaries, annual bonuses, paid annual leave, leave passage, contributions to defined contribution retirement plans and the cost of
non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.





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|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (w) | Employee benefits (Continued)
| | --- | -----------------------------



| | (i) | Short-term employee benefits and contributions to defined contribution retirement plans (Continued)
| | --- | ---------------------------------------------------------------------------------------------------



The Company and subsidiaries incorporated in Hong Kong are required to make
contributions to Mandatory Provident Funds under the Hong Kong Mandatory Provident Fund (MPF) Schemes Ordinance. Under the MPF scheme, the employer and its employees are each required to make contributions to the scheme at 5% of the
employees relevant income, subject to a cap of monthly relevant income of HK$30,000 (HK$25,000 prior to June 2014). Such contributions are recognized as an expense in profit or loss as incurred.

The employees of the subsidiaries in Mainland China participate in the defined contribution retirement plans managed by the local
government authorities whereby the subsidiaries are required to contribute to the schemes at fixed rates of the employees salary costs. In addition to the local governmental defined contribution retirement plans, the subsidiaries also
participate in a pension scheme launched by the Group managed by an independent insurance company whereby the subsidiaries are required to make contributions to the retirement plans at fixed rates of the employees salary costs or in accordance
with the terms of the plans. The Groups contributions to these plans are charged to profit or loss when incurred.

The
Company and subsidiaries have no obligations for the payment of retirement and other post-retirement benefits of staff other than the contributions described above.



| | (ii) | Share-based payments
| | ---- | --------------------

The fair value of share options granted to employees is recognized as an employee cost with a corresponding increase in a capital reserve
within equity. The fair value is measured at grant date using the binomial lattice model, taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming
unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking into account the probability that the options will vest.



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|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (w) | Employee benefits (Continued)
| | --- | -----------------------------



| | (ii) | Share-based payments (Continued)
| | ---- | --------------------------------



During the vesting period, the number of share options that is expected to vest is
reviewed at each balance sheet date. Any resulting adjustment to the cumulative fair value recognized in prior years is credited/charged to the profit or loss for the year of the review, unless the original employee expenses qualify for recognition
as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that vest (with a corresponding adjustment to the capital reserve).
The equity amount is recognized in the capital reserve until either the option is exercised (when it is transferred to the share capital account (share premium account before March 3, 2014)) or the option expires (when it is released directly
to retained profits).



| | (iii) | Termination benefits
| | ----- | --------------------

Termination benefits are recognized when, and only when, the Group demonstrably commits itself to terminate employment which is without
realistic possibility of withdrawal or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal.



| | (x) | Borrowing costs
| | --- | ---------------

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalization of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being
incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalization of borrowing costs is suspended or ceased when substantially all the activities
necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.



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|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (y) | Translation of foreign currencies
| | --- | ---------------------------------

The functional currency of major entities within the Group is RMB. The Group adopted RMB as its presentation currency in the preparation of the financial statements, which is the currency of the primary
economic environment in which most of the Groups entities operate.

Foreign currency transactions during the year are
translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in currencies other than the functional currency are retranslated at the foreign exchange rates ruling at the balance sheet date.
Exchange gains and losses are recognized in profit or loss.

Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the
foreign exchange rates ruling at the dates the fair value was determined.

The results of overseas entities are translated into
RMB at the exchange rates approximating the foreign exchange rate ruling at the dates of transactions. Balance sheet items are translated into RMB at the exchange rates ruling at the balance sheet date. The resulting exchange differences are
recognized in other comprehensive income and accumulated separately in equity in the exchange reserve. On disposal of an overseas entity, the cumulative amount of the exchange differences relating to that particular foreign operation is reclassified
from equity to profit or loss.

For the purpose of the consolidated statements of cash flows, the cash flows of overseas
entities within the Group are translated into RMB by using the exchange rates approximating the foreign exchange rate ruling at the dates of the cash flows.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (z) | Related parties
| | --- | ---------------



| | (a) | A person, or a close member of that persons family, is related to the Group if that person:
| | --- | --------------------------------------------------------------------------------------------



| | (i) | has control or joint control of the Group;
| | --- | ------------------------------------------



| | (ii) | has significant influence over the Group; or
| | ---- | --------------------------------------------



| | (iii) | is a member of the key management personnel of the Group or the Groups parent.
| | ----- | -------------------------------------------------------------------------------



| | (b) | An entity is related to the Group if any of the following conditions applies:
| | --- | -----------------------------------------------------------------------------



| | (i) | The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | Both entities are joint ventures of the same third party;
| | ----- | ---------------------------------------------------------



| | (iv) | One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
| | ---- | ---------------------------------------------------------------------------------------------------------



| | (v) | The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
| | --- | --------------------------------------------------------------------------------------------------------------------------------



| | (vi) | The entity is controlled or jointly controlled by a person identified in note 2(z)(a); or
| | ---- | -----------------------------------------------------------------------------------------



| | (vii) | A person identified in note 2(z)(a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the
entity).
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Close members of the family of a person are those family members who may be expected to influence, or
be influenced by, that person in their dealings with the entity.



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##### Table of Contents

|2 | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|- | -------------------------------------------



| | (aa) | Segment reporting
| | ---- | -----------------

An
operating segment is a component of the Group that engages in business activities from which the Group may earn revenue and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed
by the Groups Chief Operating Decision Maker (CODM) in order to allocate resources and assess performance of the segment. The CODM has been identified as the Executive Directors of the Company. For the years presented, the Group as
a whole is an operating segment since the Group is only engaged in telecommunications and related businesses. No geographical information has been disclosed as the majority of the Groups operating activities are carried out in Mainland China.
The Groups assets located and operating revenue derived from activities outside Mainland China are less than 5% of the Groups assets and operating revenue, respectively.



| | (ab) | Dividend distribution
| | ---- | ---------------------

Dividend distribution to the Companys shareholders is recognized as a liability in the Groups financial statements in the
period in which the dividends are approved by the Companys shareholders or directors, where appropriate.



|3 | CHANGES IN ACCOUNTING POLICIES
|- | ------------------------------

The Group has adopted certain amended IFRS effective for accounting period beginning on January 1, 2015. Details of the adoption are as follows:



| |  |  | Amendment to IAS 19, Employee Benefits.
| | - |  | -----------------------------------------



| |  |  | Amendments from annual improvements to IFRSs 20102012 Cycle, on IFRS 8, Operating Segments, IAS 16, Property, Plant and
Equipment, IAS 38, Intangible Assets and IAS 24, Related Party Disclosures.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Amendments from annual improvements to IFRSs 20112013 Cycle, on IFRS 3, Business Combinations, IFRS 13, Fair Value
Measurement and IAS 40, Investment Property.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The adoption of the above amended standards
did not have material impact on the Groups financial statements. The Group did not apply any other amendments, new standards or interpretation that is not yet effective for the current accounting year (see note 41).



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##### Table of Contents

|4 | OPERATING REVENUE
|- | -----------------



2015


2014


2013As restated


As restatedMillion


Million


MillionRevenue from telecommunications servicesVoice services


261,896



313,476



360,425Data services


303,425



258,462



211,973Others


18,768



19,664



28,026584,089



591,602



600,424Revenue from sales of products and others


84,246



59,907



39,624668,335



651,509



640,048


On April 29, 2014, a notification (the Cai Shui [2014] No. 43) was jointly
issued by the Ministry of Finance and the State Administration of Taxation of the Peoples Republic of China (SAT), and as approved by the State Council of the Peoples Republic of China, the telecommunications industry would
be included in the scope of the pilot program for the transformation from business tax to value-added tax (the VAT Program) from June 1, 2014. According to the Cai Shui [2014] No. 43, the value-added tax rates for the provision
of basic telecommunications services and value-added telecommunications services are 11% and 6%, respectively. With the implementation of the VAT Program from June 1, 2014, the Group is not required to pay the business tax of 3% on the
telecommunications services.



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##### Table of Contents

|5 | EMPLOYEE BENEFIT AND RELATED EXPENSES
|- | -------------------------------------



2015


2014


2013As restated


As restatedMillion


Million


MillionSalaries, wages, labor service expenses and other benefits


67,622



64,715



61,834Retirement costs: contributions to defined contribution retirement plans


7,183



5,670



4,84774,805



70,385



66,681


In accordance with requirements of reducing the proportion of labor sourced by third parties that
provide services to the Group (outsourcing labor) among total labor under Amendment to Labor Contract Law of the PRC and its associated rules and regulations, the Group has made adjustment on the structure of employees and
outsourcing labor. Such adjustment leads to the increase in number of employees and the decrease in number of outsourcing labor in 2015. In order to reasonably reflect the composition and fluctuation of employee benefit and related expenses, the
Group presents employee benefit and related expenses by combining personnel expenses and labor service expenses, the latter of which was presented under other operating expenses prior to 2015. The comparative figures have been presented on the same
basis.



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##### Table of Contents

|6 | OTHER OPERATING EXPENSES
|- | ------------------------



2015


2014


2013Note




As restated


As restatedMillion


Million


MillionMaintenance




53,991



52,883



45,981Impairment loss of doubtful accounts




4,839



5,536



5,126Impairment loss of goodwill (note 17)








1,594



Write-down of inventories




272



293



202Amortization of other intangible assets




274



112



80Operating lease charges- land and buildings




13,447



12,722



11,025- others

(i)


6,186



4,834



3,858Gain on disposal of property, plant and equipment




(4
)


(1
)


(3
)Write-off and impairment of property, plant and equipment (note 14)




7,614



2,383



5,145Auditors remuneration- audit services

(ii)


97



91



85- tax services




1







1- other services




4



6



6Others

(iii)


75,572



71,051



65,017162,293



151,504



136,523


Note:



| | (i) | Other operating lease charges represent the operating lease charges for motor vehicles, computer and other office equipment.
| | --- | ----------------------------------------------------------------------------------------------------------------------------

| | (ii) | Audit services include reporting on the Groups internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of the United
States of America with the service fee amount of RMB20,000,000 (2014: RMB20,000,000; 2013: RMB18,000,000).
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii) | Others consist of office expenses, utilities charges, travelling expenses, entertainment expenses, spectrum charges, consultancy and professional fees, consumables and
supplies, and other miscellaneous expenses.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|7 | GAIN ON THE TRANSFER OF TOWER ASSETS
|- | ------------------------------------

In 2014, China Mobile Communication Co., Ltd. (CMC), a wholly-owned subsidiary of the Company, entered into an agreement with China United Network Communications Corporation Limited
(China Unicom) and China Telecom Corporation Limited (China Telecom) to establish China Tower. Pursuant to the agreement, CMC contributed RMB4,000,000,000 in cash, which represents 40.0% of the registered capital of China
Tower upon its establishment. China Tower engages in construction, maintenance and operation of telecommunications towers. The Group recognized the investment as interest in an associate considering the Group can exercise significant influence over
financial and operating policy decisions of China Tower.

On October 14, 2015, CMC, jointly with China Unicom, China
Telecom, and China Reform Holdings Corporation Ltd. (CRHC), entered into an agreement with China Tower, pursuant to which China Tower (i) purchased telecommunications towers and related assets (Tower Assets) from CMC,
China Unicom and China Telecom and (ii) issued new equity shares to CRHC. The consideration of Tower Assets was determined based on the appraised value and subject to adjustment in accordance with the terms of the transaction agreement by each
party as of the date of delivery. China Tower agreed to settle the consideration by way of issuing its equity shares to each party, plus cash consideration equalling to the excess of total consideration over the amount settled by equity shares. Upon
completion of the above transactions, China Tower would be owned by CMC, China Unicom, China Telecom and CRHC with their respective shares of equity interests of 38.0%, 28.1%, 27.9% and 6.0%.

On October 31, 2015, CMC completed the transfer of its Tower Assets to China Tower. In return, China Tower issued 45,151,000,000
equity shares at a par value of RMB1 per share to CMC. In addition, China Tower shall pay CMC the remaining cash consideration of RMB57,585,000,000, within which China Tower has made the first payment of RMB5,000,000,000 in February 2016. The
remaining balance of cash consideration amounting to RMB52,585,000,000 is deferred and to be settled before December 31, 2017. In addition, China Tower will pay interest associated with the unpaid cash consideration to CMC from November 1,
2015 at a pre-determined interest rate, which is 90% of the financial institutions one year benchmark lending rate announced by the Peoples Bank of China (PBOC) on the completion date of the transaction, i.e. October 31,
2015.



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##### Table of Contents

|7 | GAIN ON THE TRANSFER OF TOWER ASSETS (CONTINUED)
|- | ------------------------------------------------



The gain arising from the transfer of CMCs Tower Assets, which has eliminated
unrealized profits due to the Groups interest in China Tower, is recorded as Gain on the transfer of Tower Assets in the consolidated statements of comprehensive income for the year ended December 31, 2015. The following table
summarizes the calculation of the gain on the transfer of Tower Assets:



2015MillionTotal consideration


102,736- Consideration in equity shares


45,151- Consideration in cash, deferred and undiscounted


57,585Net book value of the Tower Assets


(78,763
)Taxes, surcharges and others


(2,260
)Elimination of unrealized profits resulting from transactions between the Group and its associate


(6,188
)Gain on the transfer of Tower Assets


15,525


The gain, net of taxation, on transfer of Tower Assets, after considering the income tax effect
associated with the transfer of Tower Assets, amounted to RMB10,096,000,000.

Upon the completion of the transfer of Tower
Assets, based on the proposed pricing calculation mechanism of Tower Assets usage and the actual usage, the Company has accrued the corresponding expense of approximately RMB5,563,000,000 in the Groups consolidated statements of
comprehensive income for the year ended December 31, 2015.



F-45



---

##### Table of Contents

|8 | OTHER GAINS
|- | -----------



2015


2014


2013As restated


As restatedMillion


Million


MillionPenalty income


658



515



411Dividend income from unlisted securities


11







34Others


1,131



656



5441,800



1,171



989




|9 | FINANCE COSTS
|- | -------------



2015


2014


2013As restated


As restatedMillion


Million


MillionInterest on bonds


257



274



273Interest on entrusted loans and bank deposits (note 36(a))


194



211



862Others


4



2



122Total borrowings costs


455



487



1,257Less: Amount capitalized as construction in progress










(62
)455



487



1,195




F-46



---

##### Table of Contents

|10 | DIRECTORS REMUNERATION
|-- | -----------------------

Directors remuneration is as follows:



|                                                                    |  |                |         |  |                                |  |         |                                                                           |  |  |           |  |  |  |         | 
|------------------------------------------------------------------- |  | -------------- | ------- |  | ------------------------------ |  | ------- | ------------------------------------------------------------------------- |  |  | --------- |  |  |  | ------- | 
|                                                                    |  | Directorsfees |         |  | Salaries,allowancesand bonuses |  |         | Contributionsrelating tosocial insurance,housing fundand retirementscheme |  |  | 2015Total | 
|                                                                    |  | 000           |         |  | 000                           |  |         | 000                                                                      |  |  | 000      | 
|                                                                    |  |                |         | 
|Executive directors (Expressed in RMB)                              |  |                |         |  |                                |  |         |                                                                           |  |  |           |  |  |  |         | 
|                                                                    |  |                |         | 
|SHANG Bing*                                                         |  |                |        |  |                                |  | 106.7   |                                                                           |  |  | 30.0      |  |  |  | 136.7   | 
|XI Guohua**                                                         |  |                |        |  |                                |  | 376.6   |                                                                           |  |  | 113.0     |  |  |  | 489.6   | 
|LI Yue (Chief Executive Officer)                                    |  |                |        |  |                                |  | 437.1   |                                                                           |  |  | 137.8     |  |  |  | 574.9   | 
|XUE Taohai                                                          |  |                |        |  |                                |  | 386.9   |                                                                           |  |  | 134.6     |  |  |  | 521.5   | 
|HUANG Wenlin***                                                     |  |                |        |  |                                |  | 138.8   |                                                                           |  |  | 21.6      |  |  |  | 160.4   | 
|SHA Yuejia                                                          |  |                |        |  |                                |  | 365.4   |                                                                           |  |  | 132.7     |  |  |  | 498.1   | 
|LIU Aili                                                            |  |                |        |  |                                |  | 365.4   |                                                                           |  |  | 132.7     |  |  |  | 498.1   | 
|                                                                    |  |                |         |  |                                |  |         |                                                                           |  |  |           |  |  |  |         | 
|                                                                    |  |                |        |  |                                |  | 2,176.9 |                                                                           |  |  | 702.4     |  |  |  | 2,879.3 | 
|                                                                    |  |                |         |  |                                |  |         |                                                                           |  |  |           |  |  |  |         | 
|                                                                    |  |                |         | 
|Independent non-executive directors (Expressed in Hong Kong dollar) |  |                |         |  |                                |  |         |                                                                           |  |  |           |  |  |  |         | 
|                                                                    |  |                |         | 
|LO Ka Shui                                                          |  |                | 325.0   |  |                                |  |        |                                                                           |  |  |          |  |  |  | 325.0   | 
|WONG Kwong Shing, Frank                                             |  |                | 470.0   |  |                                |  |        |                                                                           |  |  |          |  |  |  | 470.0   | 
|CHENG Mo Chi, Moses                                                 |  |                | 440.0   |  |                                |  |        |                                                                           |  |  |          |  |  |  | 440.0   | 
|CHOW Man Yiu, Paul                                                  |  |                | 330.0   |  |                                |  |        |                                                                           |  |  |          |  |  |  | 330.0   | 
|                                                                    |  |                |         |  |                                |  |         |                                                                           |  |  |           |  |  |  |         | 
|                                                                    |  |                | 1,565.0 |  |                                |  |        |                                                                           |  |  |          |  |  |  | 1,565.0 | 
|                                                                    |  |                |         |  |                                |  |         |                                                                           |  |  |           |  |  |  |         | 



|                                    |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|----------------------------------- |  | -------------- | ----- |  | -------------------------------------- |  | ----- | ------------------------- |  |  | ----------------------------- |  |  | --------- | ----- |  |  |  | ------ | 
|                                    |  | Directorsfees |       |  | Salaries,allowancesand benefitsin kind |  |       | Performancerelatedbonuses |  |  | Retirementschemecontributions |  |  | 2014Total |      
|(Expressed in Hong Kong dollar)     |  | 000           |       |  | 000                                   |  |       | 000                      |  |  | 000                          |  |  | 000      |      
|                                    |  |                |       |  |                                       
|Executive directors                 |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                    |  |                |       |  |                                       
|XI Guohua                           |  |                | 180   |  |                                        |  | 1,174 |                           |  |  | 565                           |  |  |           | 256   |  |  |  | 2,175  | 
|LI Yue (Chief Executive Officer)    |  |                | 180   |  |                                        |  | 1,067 |                           |  |  | 513                           |  |  |           | 234   |  |  |  | 1,994  | 
|XUE Taohai                          |  |                | 180   |  |                                        |  | 960   |                           |  |  | 462                           |  |  |           | 210   |  |  |  | 1,812  | 
|HUANG Wenlin                        |  |                | 180   |  |                                        |  | 960   |                           |  |  | 462                           |  |  |           | 210   |  |  |  | 1,812  | 
|SHA Yuejia                          |  |                | 180   |  |                                        |  | 960   |                           |  |  | 462                           |  |  |           | 210   |  |  |  | 1,812  | 
|LIU Aili                            |  |                | 180   |  |                                        |  | 960   |                           |  |  | 462                           |  |  |           | 210   |  |  |  | 1,812  | 
|                                    |  |                |       |  |                                       
|Independent non-executive directors |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                    |  |                |       |  |                                       
|LO Ka Shui                          |  |                | 325   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 325    | 
|WONG Kwong Shing, Frank             |  |                | 470   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 470    | 
|CHENG Mo Chi, Moses                 |  |                | 440   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 440    | 
|CHOW Man Yiu, Paul                  |  |                | 330   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 330    | 
|                                    |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                    |  |                |       |  |                                       
|                                    |  |                | 2,645 |  |                                        |  | 6,081 |                           |  |  | 2,926                         |  |  |           | 1,330 |  |  |  | 12,982 | 
|                                    |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 



F-47



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##### Table of Contents

|10 | DIRECTORS REMUNERATION (CONTINUED)
|-- | -----------------------------------



Directors remuneration is as follows (Continued):



Directorsfees


Salaries,allowancesand benefitsin kind


Performancerelatedbonuses


Retirementschemecontributions


2013Total(Expressed in Hong Kong dollar)

000


000


000


000


000Executive directorsXI Guohua


180



1,174



634



287



2,275LI Yue (Chief Executive Officer)


180



1,067



577



263



2,087XUE Taohai


180



960



520



237



1,897HUANG Wenlin


180



960



520



237



1,897SHA Yuejia


180



960



520



236



1,896LIU Aili


180



960



520



236



1,896Independent non-executive directorsLO Ka Shui


399















399WONG Kwong Shing, Frank


458















458CHENG Mo Chi, Moses


440















440CHOW Man Yiu, Paul****


194















1942,571



6,081



3,291



1,496



13,439




| | * | Mr. SHANG Bing was appointed as an executive director and chairman of the Company with effect from September 10, 2015.
| | - | ----------------------------------------------------------------------------------------------------------------------



| | ** | Mr. XI Guohua resigned from the position as executive director and chairman of the Company with effect from August 24, 2015.
| | -- | ----------------------------------------------------------------------------------------------------------------------------



| | *** | Madam HUANG Wenlin resigned from the position as executive director of the Company with effect from March 19, 2015.
| | --- | -------------------------------------------------------------------------------------------------------------------



| | **** | Mr. Paul CHOW Man Yiu has been appointed as an Independent Non-executive Director of the Company with effect from May 30, 2013.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------

In 2015, executive directors of the Company voluntarily waived their directors fees.

The unpaid portion of executive directors performance related bonuses for 2015 will be paid based on the evaluation conducted in
2016, and the additional bonuses related to their term of service will be paid based on the evaluation conducted upon the completion of three-year evaluation period.



F-48



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##### Table of Contents

|11 | INDIVIDUALS WITH HIGHEST EMOLUMENTS
|-- | -----------------------------------

For the year ended December 31, 2013 and 2014, all of the five individuals with the highest emoluments are directors whose emoluments are disclosed in note 10.

For the year ended December 31, 2015, none of the five individuals with the highest emoluments in the Group are directors. The
emoluments payable to the five individuals during 2015 are as follows:



2015(Expressed in RMB)

000Salaries, allowances and benefits in kind


8,134.8Performance related bonuses


1,814.1Retirement scheme contributions


148.210,097.1


The emoluments fell within the following bands:



Number ofindividuals2015Emolument bands (in RMB)1,500,001 - 2,000,000


42,000,001 - 2,500,000


1




F-49



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##### Table of Contents

|12 | TAXATION
|-- | --------



| | (a) | Taxation in the consolidated statements of comprehensive income represents:
| | --- | ---------------------------------------------------------------------------



2015


2014


2013Note




As restated


As restatedMillion


Million


MillionCurrent taxProvision for Hong Kong profits tax on the estimated assessable profits for the year

(i)


164



113



173Provision for the PRC enterprise income tax on the estimated taxable profits for the year

(ii)


39,588



36,204



40,42039,752



36,317



40,593Deferred taxOrigination and reversal of temporary differences (note 20)

(iii)


(4,673
)


(3,138
)


(3,847
)35,079



33,179



36,746


Note:



| | (i) | The provision for Hong Kong profits tax is calculated at 16.5% (2014: 16.5%; 2013: 16.5%) of the estimated assessable profits for the year ended December 31, 2015.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | The provision for the PRC enterprise income tax is based on the statutory tax rate of 25% (2014: 25%; 2013: 25%) on the estimated taxable profits determined in
accordance with the relevant income tax rules and regulations of the PRC for the year ended December 31, 2015. Certain subsidiaries of the Company enjoy the preferential tax rate of 15% (2014: 15%; 2013: 15%).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | Deferred taxes of the Group are recognized based on tax rates that are expected to apply to the periods when the temporary differences are realized or settled.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | On April 22, 2009, SAT issued the Notice regarding Matters on Determination of Tax Residence Status of Chinese-controlled Offshore Incorporated Enterprises
under Rules of Effective Management (2009 Notice). The Company is qualified as a PRC offshore-registered resident enterprise for purposes of the 2009 Notice. In accordance with the 2009 Notice and the PRC enterprise income tax law,
the dividend income of the Company from its subsidiaries in the PRC is exempted from PRC enterprise income tax.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-50



---

##### Table of Contents

|12 | TAXATION (CONTINUED)
|-- | --------------------



| | (b) | Reconciliation between income tax expense and accounting profit at applicable tax rates:
| | --- | ----------------------------------------------------------------------------------------



2015


2014


2013As restated


As restatedMillion


Million


MillionProfit before taxation


143,734



142,522



153,649Notional tax on profit before tax, calculated at the PRCs statutory tax rate of 25% (note)


35,934



35,631



38,412Tax effect of non-taxable items- Share of profit of associates


(2,023
)


(2,062
)


(1,766
)- Interest income


(31
)


(26
)


(31
)Tax effect of non-deductible expenses on the PRC operations


986



693



548Tax effect of non-deductible expenses on Hong Kong operations


68



46



54Rate differential of certain PRC operations (note 12(a)(ii))


(1,576
)


(1,329
)


(1,243
)Rate differential on Hong Kong operations


(122
)


(107
)


(95
)Tax effect of goodwill impairment loss






398



Tax credit on purchase of domestic telecommunications equipment










(9
)Tax effect of unrecognized temporary difference


98







533Tax effect of unrecognized tax loss for which no deferred tax asset was recognized


356



116



98Tax effect on the eliminated unrealized profits related to the transfer of Tower Assets


1,547







Others


(158
)


(181
)


245Taxation


35,079



33,179



36,746


Note: The PRCs statutory tax rate is adopted as the majority of the Groups operations
are subject to this rate.



F-51



---

##### Table of Contents

|13 | EARNINGS PER SHARE
|-- | ------------------



| | (a) | Basic earnings per share
| | --- | ------------------------

The calculation of basic earnings per share for the year is based on the profit attributable to equity shareholders of the Company of
RMB108,539,000,000 (2014: RMB109,218,000,000; 2013: RMB116,791,000,000) and the weighted average number of 20,473,119,088 shares (2014: 20,293,253,516 shares; 2013: 20,101,232,387 shares) in issue during the year, calculated as follows:

Weighted average number of shares



2015


2014


2013Number of shares


Number of shares


Number of sharesIssued shares as of January 1


20,438,426,514



20,102,539,665



20,100,340,600Effect of share options exercised


34,692,574



190,713,851



891,787Weighted average number of shares in issue during the year


20,473,119,088



20,293,253,516



20,101,232,387




| | (b) | Diluted earnings per share
| | --- | --------------------------

The calculation of diluted earnings per share for the year is based on the profit attributable to equity shareholders of the Company of
RMB108,539,000,000 (2014: RMB109,218,000,000; 2013: RMB116,791,000,000) and the weighted average number of 20,479,705,763 shares (2014: 20,408,441,343 shares; 2013: 20,343,120,320 shares), calculated as follows:

Weighted average number of shares (diluted)



2015


2014


2013Number of shares


Number of shares


Number of sharesWeighted average number of shares in issue during the year


20,473,119,088



20,293,253,516



20,101,232,387Dilutive equivalent shares arising from share options


6,586,675



115,187,827



241,887,933Weighted average number of shares (diluted) during the year


20,479,705,763



20,408,441,343



20,343,120,320




F-52



---

##### Table of Contents

|14 | PROPERTY, PLANT AND EQUIPMENT
|-- | -----------------------------



Buildings


Telecommunicationstransceivers,switching centers,transmission andother networkequipment


Officeequipment,furniture,fixtures andothers


TotalMillion


Million


Million


MillionCost:As of January 1, 2014 (As previously reported)


126,205



927,634



19,334



1,073,173Acquisition of Target Assets and Businesses (note 2(b))


3,735



76,876



830



81,441As of January 1, 2014 (As restated)


129,940



1,004,510



20,164



1,154,614Additions


184



801



835



1,820Transferred from construction in progress


13,906



191,950



1,998



207,854Disposals


(3
)


(7
)


(10
)


(20
)Assets written-off


(431
)


(42,416
)


(1,450
)


(44,297
)Exchange differences


6



10







16As of December 31, 2014 (As restated)


143,602



1,154,848



21,537



1,319,987As of January 1, 2015 (As previously reported)


139,851



1,074,593



20,611



1,235,055Acquisition of Target Assets and Businesses (note 2(b))


3,751



80,255



926



84,932As of January 1, 2015 (As restated)


143,602



1,154,848



21,537



1,319,987Additions


119



837



580



1,536Transferred from construction in progress


13,225



178,285



2,099



193,609Transfer of Tower Assets to China Tower (note 7)


(25,014
)


(133,164
)


(212
)


(158,390
)Disposals


(1
)


(84
)


(24
)


(109
)Assets written-off


(2,588
)


(26,130
)


(1,199
)


(29,917
)Exchange differences


117



211



3



331As of December 31, 2015


129,460



1,174,803



22,784



1,327,047Accumulated depreciation and impairment:As of January 1, 2014 (As previously reported)


33,325



548,690



11,931



593,946Acquisition of Target Assets and Businesses (note 2(b))


1,464



38,094



539



40,097As of January 1, 2014 (As restated)


34,789



586,784



12,470



634,043Charge for the year


5,997



114,243



2,604



122,844Written back on disposals


(1
)


(7
)


(9
)


(17
)Assets written-off


(389
)


(40,190
)


(1,335
)


(41,914
)Exchange differences


3



5







8As of December 31, 2014 (As restated)


40,399



660,835



13,730



714,964As of January 1, 2015 (As previously reported)


38,796



618,275



13,189



670,260Acquisition of Target Assets and Businesses (note 2(b))


1,603



42,560



541



44,704As of January 1, 2015 (As restated)


40,399



660,835



13,730



714,964Charge for the year


6,542



127,888



2,428



136,858Transfer of Tower Assets to China Tower (note 7)


(8,317
)


(80,765
)


(97
)


(89,179
)Written back on disposals


(1
)


(84
)


(21
)


(106
)Assets written-off and impairment loss


(1,813
)


(18,456
)


(1,014
)


(21,283
)Exchange differences


15



146



1



162As of December 31, 2015


36,825



689,564



15,027



741,416Net book value:As of December 31, 2015


92,635



485,239



7,757



585,631As of December 31, 2014 (As restated)


103,203



494,013



7,807



605,023




F-53



---

##### Table of Contents

|14 | PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
|-- | -----------------------------------------



During 2015, CMC transferred its Tower Assets including property, plant and equipment
with cost and accumulated depreciation and impairment of RMB158,390,000,000 and RMB89,179,000,000, respectively, to China Tower. The gain arising from the transfer of the Tower Assets is recorded as Gain on the transfer of Tower Assets
in the consolidated statements of comprehensive income for the year ended December 31, 2015. Please refer to note 7 for details.

Write-off of property, plant and equipment mainly represents the retirement of individual network asset due to obsolescence or damages. Such assets have been disconnected from existing network, abandoned
or demolished. Total net book value of such assets written off was RMB2,667,000,000 in 2015 (2014: RMB2,383,000,000; 2013: RMB3,021,000,000), including the assets of net book value amounting to RMB765,000,000 attributable to the ultimate holding
company. These assets were disposed at scrap value.

With the rapid growth of the Groups 4G operation in 2015, the
strategy of ramping up the internet connection speed with lower tariff, continuing technology changes, and further development of wireline broadband business, management anticipates more pressure on the growth and profitability of the Wireless Local
Area Network (WLAN) business. Therefore, management performed impairment testing on the WLAN and related terminal transmission equipment (WLAN Equipment) as of December 31, 2015. For the impairment testing purpose, the
recoverable values of WLAN Equipment was determined based on value-in-use calculations, i.e. the present value of estimated future net cash flows expected to arise from the continuing use of the WLAN Equipment. In estimating the present value of
future net cash flows, after considering the historical results, the prevailing market trends and the expected remaining useful lives of related WLAN Equipment, the Group has made key assumptions and estimates on the appropriate pre-tax discount
rate of 10%, the period covered by the cash flow forecast of 3 years, and the estimated decrease in revenue by 10% per annum on average. Based on the impairment testing results, the Group recognized an impairment loss of RMB5,967,000,000 for
the year ended December 31, 2015 (2014: nil; 2013: nil).



F-54



---

##### Table of Contents

|15 | CONSTRUCTION IN PROGRESS
|-- | ------------------------



2015


2014As restatedMillion


MillionAs of January 1


95,110



91,600Additions


192,737



211,364Transferred to property, plant and equipment


(193,609
)


(207,854
)Transfer of Tower Assets to China Tower (note 7)


(6,226
)


As of December 31


88,012



95,110


Construction in progress primarily comprises expenditure incurred on the network expansion projects
but not yet completed as of December 31, 2015.



|16 | LAND LEASE PREPAYMENTS AND OTHERS
|-- | ---------------------------------

For the year ended December 31, 2015, the land lease prepayments expensed in the profit or loss amounted to approximately RMB426,000,000 (2014: approximately RMB407,000,000; 2013: approximately
RMB387,000,000).



|17 | GOODWILL
|-- | --------



2015


2014As restatedMillion


MillionAs of January 1


35,343



36,937Impairment






(1,594
)As of December 31


35,343



35,343


Impairment tests for goodwill

As set out in IAS 36 Impairment of Assets, a cash-generating unit is the smallest identifiable group of assets that generate
cash inflows from continuing use that are largely independent of the cash flows from other assets or groups of assets. For the purpose of impairment tests of goodwill, goodwill is allocated to groups of cash-generating units (being subsidiaries
acquired in each acquisition). Such groups of cash-generating units represent the lowest level within the Group for which the goodwill is monitored for internal management purposes.



F-55



---

##### Table of Contents

|17 | GOODWILL (CONTINUED)
|-- | --------------------



| | Impairment | tests for goodwill (Continued)
| | ---------- | ------------------------------



As of December 31, 2015, the goodwill of RMB35,300,000,000 is attributable to the
cash-generating unit in relation to the operation in Mainland China which management currently monitors. The recoverable amount of the cash-generating unit is determined based on the value-in-use calculations. Value-in-use is calculated by using the
discounted cash flow method. This method considers the pre-tax cash flows of the subsidiaries (cash-generating unit) for the five years ending December 31, 2020 with subsequent transition to perpetuity. For the five years ending
December 31, 2020, the average growth rate is assumed 1.5% for the operation in Mainland China. For the years beyond December 31, 2020, the assumed continual growth rates to perpetuity of 1% is used for the operation in Mainland China. The
present value of cash flows is calculated by discounting the cash flow using pre-tax interest rates of approximately 12%. The management performed impairment test for the goodwill in relation to the operation in Mainland China and determined such
goodwill was not impaired. Reasonably possible changes in key assumptions will not lead to the goodwill impairment loss.

For
the year ended December 31, 2014, with the development of the 4G operation in Hong Kong, the competition in Hong Kong telecommunications market had become increasingly fierce. Management anticipated more pressure on the operating performance in
future considering the necessity of investment in capital expenditure and increased marketing expenses to sustain the development of business. As a result, the management made a provision for impairment loss of goodwill amounting to RMB1,594,000,000
in relation to the operation in Hong Kong based on the annual impairment test result.



F-56



---

##### Table of Contents

|18 | SUBSIDIARIES
|-- | ------------

The
following list contains only the particulars of subsidiaries as of December 31, 2015, which principally affected the results, assets or liabilities of the Group. The class of shares held is ordinary unless otherwise stated.



Place of





Proportion ofincorporation/


Particulars


ownership interestestablishment


of issued and


Held by the

Held by aName of company*

and operation


paid up capital


Company

subsidiary

Principal activityChina Mobile Communication (BVI) Limited


British VirginIslands (BVI)



HK$1


100%



Investment holding companyCMC * *


PRC



RMB1,641,848,326




100%

Network and business coordination centerChina Mobile Group Guangdong Co., Ltd. (Guangdong Mobile)


PRC



RMB5,594,840,700




100%

Mobile telecom- munications operatorChina Mobile Group Zhejiang Co., Ltd.


PRC



RMB2,117,790,000




100%

Mobile telecom- munications operatorChina Mobile Group Jiangsu Co., Ltd.


PRC



RMB2,800,000,000




100%

Mobile telecom- munications operatorChina Mobile Group Fujian Co., Ltd.


PRC



RMB5,247,480,000




100%

Mobile telecom- munications operatorChina Mobile Group Henan Co., Ltd.


PRC



RMB4,367,733,641




100%

Mobile telecom- munications operatorChina Mobile Group Hainan Co., Ltd.


PRC



RMB643,000,000




100%

Mobile telecom- munications operatorChina Mobile Group Beijing Co., Ltd. (Beijing Mobile)


PRC



RMB6,124,696,053




100%

Mobile telecom- munications operatorChina Mobile Group Shanghai Co., Ltd.


PRC



RMB6,038,667,706




100%

Mobile telecom- munications operatorChina Mobile Group Tianjin Co., Ltd.


PRC



RMB2,151,035,483




100%

Mobile telecom- munications operatorChina Mobile Group Hebei Co., Ltd.


PRC



RMB4,314,668,600




100%

Mobile telecom- munications operatorChina Mobile Group Liaoning Co., Ltd.


PRC



RMB5,140,126,680




100%

Mobile telecom- munications operatorChina Mobile Group Shandong Co., Ltd.


PRC



RMB6,341,851,146




100%

Mobile telecom- munications operatorChina Mobile Group Guangxi Co., Ltd.


PRC



RMB2,340,750,100




100%

Mobile telecom- munications operatorChina Mobile Group Anhui Co., Ltd.


PRC



RMB4,099,495,494




100%

Mobile telecom- munications operatorChina Mobile Group Jiangxi Co., Ltd.


PRC



RMB2,932,824,234




100%

Mobile telecom- munications operatorChina Mobile Group Chongqing Co., Ltd.


PRC



RMB3,029,645,401




100%

Mobile telecom- munications
operator




F-57



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##### Table of Contents

|18 | SUBSIDIARIES (CONTINUED)
|-- | ------------------------



Place of





Proportion ofincorporation/


Particulars


ownership interestestablishment


of issued and


Held by the


Held by aName of company*

and operation


paid up capital


Company


subsidiary


Principal activityChina Mobile Group Sichuan Co., Ltd.


PRC



RMB7,483,625,572







100%


Mobile telecom- munications operatorChina Mobile Group Hubei Co., Ltd.


PRC



RMB3,961,279,556







100%


Mobile telecom- munications operatorChina Mobile Group Hunan Co., Ltd.


PRC



RMB4,015,668,593







100%


Mobile telecom- munications operatorChina Mobile Group Shaanxi Co., Ltd.


PRC



RMB3,171,267,431







100%


Mobile telecom- munications operatorChina Mobile Group Shanxi Co., Ltd.


PRC



RMB2,773,448,313







100%


Mobile telecom- munications operatorChina Mobile Group Neimenggu Co., Ltd.


PRC



RMB2,862,621,870







100%


Mobile telecom- munications operatorChina Mobile Group Jilin Co., Ltd.


PRC



RMB3,277,579,314







100%


Mobile telecom- munications operatorChina Mobile Group Heilongjiang Co., Ltd.


PRC



RMB4,500,508,035







100%


Mobile telecom- munications operatorChina Mobile Group Guizhou Co., Ltd.


PRC



RMB2,541,981,749







100%


Mobile telecom- munications operatorChina Mobile Group Yunnan Co., Ltd.


PRC



RMB4,137,130,733







100%


Mobile telecom- munications operatorChina Mobile Group Xizang Co., Ltd.


PRC



RMB848,643,686







100%


Mobile telecom- munications operatorChina Mobile Group Gansu Co., Ltd.


PRC



RMB1,702,599,589







100%


Mobile telecom- munications operatorChina Mobile Group Qinghai Co., Ltd.


PRC



RMB902,564,911







100%


Mobile telecom- munications operatorChina Mobile Group Ningxia Co., Ltd.


PRC



RMB740,447,232







100%


Mobile telecom- munications operatorChina Mobile Group Xinjiang Co., Ltd.


PRC



RMB2,581,599,600







100%


Mobile telecom- munications operatorChina Mobile Group Design Institute Co., Ltd.


PRC



RMB160,232,500







100%


Provision of telecommunications network planning design and consulting
services




F-58



---

##### Table of Contents

|18 | SUBSIDIARIES (CONTINUED)
|-- | ------------------------



Place of





Proportion ofincorporation/


Particulars


ownership interestestablishment


of issued and


Held by the


Held by aName of company*

and operation


paid up capital


Company


subsidiary


Principal activityChina Mobile Holding Company Limited * *


PRC



US$30,000,000



100%






Investment holding companyChina Mobile (Shenzhen) Limited * *


PRC



US$7,633,000







100%


Provision of roaming clearance servicesAspire Holdings Limited


CaymanIslands



HK$93,964,583



66.41%






Investment holding companyAspire (BVI) Limited#


BVI



US$1,000







100%


Investment holding companyAspire Technologies (Shenzhen) Limited * *#


PRC



US$10,000,000







100%


Technology platform development and maintenanceAspire Information Network (Shenzhen) Limited * *#


PRC



US$5,000,000







100%


Provision of mobile data solutions, system integration and developmentAspire Information Technologies (Beijing) Limited * *#


PRC



US$5,000,000







100%


Technology platform development and maintenanceFujian FUNO Mobile Communication Technology Company Limited * * *


PRC



US$3,800,000







51%


Network planning and optimizing construction testing and supervising, technology support, development and training of Nokia
GSM900/1800 Mobile Communication SystemAdvanced Roaming & Clearing House Limited


BVI



US$2



100%






Provision of roaming clearance servicesFit Best Limited


BVI



US$1



100%






Investment holding companyChina Mobile Hong Kong Company Limited (CMHK)


Hong Kong



HK$951,046,930







100%


Provision of mobile telecommunications and related servicesChina Mobile International
Holdings Limited (CMI
Holdings)


Hong Kong



HK$10,500,000,000



100%






Investment
holding companyChina Mobile International Limited


Hong Kong



HK$3,000,000,000







100%


Provision of voice and roaming clearance services, internet services and value-added servicesChina Mobile Group Device Co., Ltd.


PRC



RMB6,200,000,000







99.97%


Provision of electronic communication products design and sale of related
products




F-59



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##### Table of Contents

|18 | SUBSIDIARIES (CONTINUED)
|-- | ------------------------



Place of





Proportion ofincorporation/


Particulars


ownership interestestablishment


of issued and


Held by the


Held by aName of company*

and operation


paid up capital


Company


subsidiary


Principal activityChina Mobile Group Finance Co., Ltd. (China Mobile Finance)# #


PRC



RMB11,627,783,669







92%


Provision of non-banking financial servicesChina Mobile M2M Company Limited (M2M Company)


PRC



RMB1,000,000,000







100%


Provision of network servicesChina Mobile (Suzhou) Software Technology Co., Ltd.


PRC



RMB700,000,000







100%


Provision of computer hardware and software research and development servicesChina Mobile (Hangzhou) Information Technology Co., Ltd.


PRC



RMB900,000,000







100%


Provision of computer hardware and software research and development servicesChina Mobile Online Service Co., Ltd.


PRC



RMB50,000,000







100%


Provision of call center servicesMIGU Company Limited


PRC



RMB5,500,000,000







100%


Provision of Mobile Internet digital content servicesCM TieTong


PRC



RMB15,000,000,000







100%


Provision of telecommunications servicesChina Mobile Internet Company Limited


PRC



RMB2,000,000,000







100%


Provision of value added telecommunications services




| | * | The nature of all the legal entities established in the PRC is limited liability company.
| | - | -----------------------------------------------------------------------------------------



| | ** | Companies registered as wholly owned foreign enterprises in the PRC.
| | -- | --------------------------------------------------------------------



| | *** | Company registered as a sino-foreign equity joint venture in the PRC.
| | --- | ---------------------------------------------------------------------



| | # | Effective interest held by the Group is 66.41%.
| | - | -----------------------------------------------



| | # # | China Mobile Finance was established by CMCC and Beijing Mobile, a wholly-owned subsidiary of the Company, with original equity interest of 8% and 92%, respectively. In
2015, China Mobile Finance received capital injections from CMCC and CMC, after which the equity interest held by CMCC, CMC and Beijing Mobile are 8.00%, 52.44% and 39.56% respectively.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-60



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##### Table of Contents

|19 | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
|-- | -------------------------------------------------

The amounts recognized in the consolidated balance sheets are as follows:



As of December 31,2015


As of December 31,2014Million


As restatedMillionAssociates


115,558



70,451Joint ventures


375



115,933



70,451


Details of major associates are as follows:



Name of associate

Place ofincorporation/establishmentand operation

Proportion 
ofownershipinterest heldby the Company orits subsidiary


Principal ActivityUnlisted companyChina Tower

PRC


38%


Construction,maintenance and
operation of
telecommunications
towersListed companyShanghai Pudong Development Bank Co., Ltd. (SPD Bank)

PRC


20%


Provision ofbanking servicesIFLYTEK Co., Ltd. (IFLYTEK)

PRC


14%


Provision ofChinese speech and
language    technology products and servicesTrue Corporation Public Company Limited (True Corporation)

Thailand


18%


Provision oftelecommunications
services




F-61



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##### Table of Contents

|19 | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
|-- | -------------------------------------------------------------



During 2014, CMI Holdings, a wholly-owned subsidiary of the Company subscribed for
4,429,427,068 ordinary shares of True Corporation (a fully-integrated, nationwide telecommunications service provider in Thailand) at the price of Baht6.45 per share with a total consideration of Baht28.57 billion (equivalent to approximately
RMB5.51 billion). Upon the completion of the subscription, CMI Holdings owns 18% of the share capital and has become the second largest shareholder of True Corporation and two designees nominated by CMI Holdings have been appointed as directors of
True Corporation. Accordingly, the Group recognized the investment as interest in an associate considering the Group can exercise significant influence over financial and operating policy decisions of True Corporation.

Also in 2014, China Tower was established, of which the Group owns 40.0% of the registered capital upon establishment. In 2015, upon the
completion of the transaction of transfer of Tower Assets to China Tower (see note 7), the Group owns 38.0% of the equity interest in China Tower. The Group recognized the investment as interest in an associate considering the Group can exercise
significant influence over financial and operating policy decisions of China Tower.



F-62



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##### Table of Contents

|19 | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
|-- | -------------------------------------------------------------



Summary financial information on principal associates:



|                                                                            |  |                   |           |  |         |  |           | 
|--------------------------------------------------------------------------- |  | ----------------- | --------- |  | ------- |  | --------- | 
|                                                                            |  | SPD Bank          |          
|                                                                            |  | As of December 31 |          
|                                                                            |  | 2015              |           |  | 2014    | 
|                                                                            |  | Million           |           |  | Million | 
|Total assets                                                                |  |                   | 5,044,352 |  |         |  | 4,195,924 | 
|Total liabilities                                                           |  |                   | 4,725,752 |  |         |  | 3,932,639 | 
|Total equity                                                                |  |                   | 318,600   |  |         |  | 263,285   | 
|                                                                            |  |                   |           |  |         |  |           | 
|Total equity attributable to ordinary equity shareholders                   |  |                   | 285,250   |  |         |  | 245,209   | 
|Percentage of ownership of the Group                                        |  |                   | 20%       |  |         |  | 20%       | 
|                                                                            |  |                   |           |  |         |  |           | 
|Total equity attributable to the Group                                      |  |                   | 57,050    |  |         |  | 49,042    | 
|The impact of fair value adjustments atthe time of acquisition and goodwill |  |                   | 9,361     |  |         |  | 10,512    | 
|                                                                            |  |                   |           |  |         |  |           | 
|Interest in associates                                                      |  |                   | 66,411    |  |         |  | 59,554    | 
|                                                                            |  |                   |           |  |         |  |           | 



|                                                                                              |  |                   |       |  |                   |  |       |                   |  |  |         |  |  |         |        |  |         |  |         |   |  |  |       | 
|--------------------------------------------------------------------------------------------- |  | ----------------- | ----- |  | ----------------- |  | ----- | ----------------- |  |  | ------- |  |  | ------- | ------ |  | ------- |  | ------- | - |  |  | ----- | 
|                                                                                              |  | IFLYTEK           |       |  | True Corporation  |  |       | China Tower       | 
|                                                                                              |  | As of December 31 |       |  | As of December 31 |  |       | As of December 31 | 
|                                                                                              |  | 2015              |       |  | 2014              |  |       | 2015              |  |  | 2014    |  |  | 2015    |        |  | 2014    | 
|                                                                                              |  | Million           |       |  | Million           |  |       | Million           |  |  | Million |  |  | Million |        |  | Million | 
|Total current assets                                                                          |  |                   | 4,767 |  |                   |  | 2,565 |                   |  |  | 14,038  |  |  |         | 16,487 |  |         |  | 38,586  |   |  |  | 9,676 | 
|Total non-current assets                                                                      |  |                   | 3,623 |  |                   |  | 2,605 |                   |  |  | 36,959  |  |  |         | 27,428 |  |         |  | 231,793 |   |  |  | 454   | 
|Total current liabilities                                                                     |  |                   | 1,601 |  |                   |  | 1,076 |                   |  |  | 20,158  |  |  |         | 22,026 |  |         |  | 47,717  |   |  |  | 244   | 
|Total non-current liabilities                                                                 |  |                   | 266   |  |                   |  | 193   |                   |  |  | 17,279  |  |  |         | 8,608  |  |         |  | 96,535  |   |  |  |      | 
|Total equity                                                                                  |  |                   | 6,523 |  |                   |  | 3,901 |                   |  |  | 13,560  |  |  |         | 13,281 |  |         |  | 126,127 |   |  |  | 9,886 | 
|                                                                                              |  |                   |       |  |                   |  |       |                   |  |  |         |  |  |         |        |  |         |  |         |   |  |  |       | 
|Total equity attributable to equity shareholders                                              |  |                   | 6,268 |  |                   |  | 3,707 |                   |  |  | 13,441  |  |  |         | 13,170 |  |         |  | 126,127 |   |  |  | 9,886 | 
|Percentage of ownership of the Group                                                          |  |                   | 14%   |  |                   |  | 15%   |                   |  |  | 18%     |  |  |         | 18%    |  |         |  | 38%     |   |  |  | 40%   | 
|                                                                                              |  |                   |       |  |                   |  |       |                   |  |  |         |  |  |         |        |  |         |  |         |   |  |  |       | 
|Total equity attributable to the Group                                                        |  |                   | 878   |  |                   |  | 556   |                   |  |  | 2,419   |  |  |         | 2,371  |  |         |  | 47,928  |   |  |  | 3,954 | 
|The impact of fair value adjustments at the time of acquisition and goodwill                  |  |                   | 827   |  |                   |  | 876   |                   |  |  | 3,077   |  |  |         | 3,133  |  |         |  |        |   |  |  |      | 
|Elimination of unrealized profits resulting from transfer of Tower Assets and its realisation |  |                   |      |  |                   |  |      |                   |  |  |        |  |  |         |       |  |         |  | (5,989  | ) |  |  |      | 
|                                                                                              |  |                   |       |  |                   |  |       |                   |  |  |         |  |  |         |        |  |         |  |         |   |  |  |       | 
|Interest in associates                                                                        |  |                   | 1,705 |  |                   |  | 1,432 |                   |  |  | 5,496   |  |  |         | 5,504  |  |         |  | 41,939  |   |  |  | 3,954 | 
|                                                                                              |  |                   |       |  |                   |  |       |                   |  |  |         |  |  |         |        |  |         |  |         |   |  |  |       | 



F-63



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##### Table of Contents

|19 | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
|-- | -------------------------------------------------------------



Summary financial information on principal associates (Continued):



|                                                                 |  |          |         |  |         |  |         |         |  |  |         |   |  |         |       |  |         |  |       |  |  |  |       | 
|---------------------------------------------------------------- |  | -------- | ------- |  | ------- |  | ------- | ------- |  |  | ------- | - |  | ------- | ----- |  | ------- |  | ----- |  |  |  | ----- | 
|                                                                 |  | SPD Bank |         |  | IFLYTEK | 
|                                                                 |  | 2015     |         |  | 2014    |  |         | 2013    |  |  | 2015    |   |  | 2014    |       |  | 2013    | 
|                                                                 |  | Million  |         |  | Million |  |         | Million |  |  | Million |   |  | Million |       |  | Million | 
|Revenue                                                          |  |          | 146,550 |  |         |  | 123,181 |         |  |  | 100,015 |   |  |         | 2,501 |  |         |  | 1,775 |  |  |  | 1,254 | 
|Profit before taxation                                           |  |          | 66,877  |  |         |  | 62,030  |         |  |  | 53,849  |   |  |         | 465   |  |         |  | 434   |  |  |  | 321   | 
|Profit attributable to ordinary equity shareholders for the year |  |          | 49,704  |  |         |  | 47,026  |         |  |  | 40,922  |   |  |         | 425   |  |         |  | 379   |  |  |  | 279   | 
|Other comprehensive income                                       |  |          | 4,458   |  |         |  | 6,119   |         |  |  | (3,835  | ) |  |         |      |  |         |  |      |  |  |  |      | 
|Total comprehensive income                                       |  |          | 54,162  |  |         |  | 53,145  |         |  |  | 37,087  |   |  |         | 425   |  |         |  | 379   |  |  |  | 279   | 
|Dividends received from associates                               |  |          | 2,824   |  |         |  | 2,462   |         |  |  | 2,052   |   |  |         | 18    |  |         |  | 14    |  |  |  | 10    | 



|                                   |  |                  |        |  |             |  |        |         |  |  |         |   |  |  |      |  
|---------------------------------- |  | ---------------- | ------ |  | ----------- |  | ------ | ------- |  |  | ------- | - |  |  | ---- | -
|                                   |  | True Corporation |        |  | China Tower | 
|                                   |  | 2015             |        |  | 2014        |  |        | 2015    |  |  | 2014    |  
|                                   |  | Million          |        |  | Million     |  |        | Million |  |  | Million |  
|Revenue                            |  |                  | 21,416 |  |             |  | 20,447 |         |  |  | 10,325  |   |  |  |     |  
|Profit/(loss) before taxation      |  |                  | 839    |  |             |  | (129   | )       |  |  | (3,864  | ) |  |  | (114 | )
|Profit/(loss) for the year         |  |                  | 795    |  |             |  | 267    |         |  |  | (2,944  | ) |  |  | (114 | )
|Other comprehensive income         |  |                  |       |  |             |  |       |         |  |  |        |   |  |  |     |  
|Total comprehensive income/(loss)  |  |                  | 795    |  |             |  | 267    |         |  |  | (2,944  | ) |  |  | (114 | )
|Dividends received from associates |  |                  |       |  |             |  |       |         |  |  |        |   |  |  |     |  

The fair values of the interests in SPD Bank, IFLYTEK and True Corporation are disclosed as follows:



|                              |  |                        |        |  |                        |  |        |                |  |  |           |  |  |  |        | 
|----------------------------- |  | ---------------------- | ------ |  | ---------------------- |  | ------ | -------------- |  |  | --------- |  |  |  | ------ | 
|                              |  | As of December 31,2015 |        |  | As of December 31,2014 | 
|                              |  | Carryingamount         |        |  | Fairvalue              |  |        | Carryingamount |  |  | Fairvalue | 
|                              |  | Million                |        |  | Million                |  |        | Million        |  |  | Million   | 
|                              |  |                        |        | 
|SPD Bank                      |  |                        | 66,411 |  |                        |  | 68,160 |                |  |  | 59,554    |  |  |  | 58,535 | 
|IFLYTEK                       |  |                        | 1,705  |  |                        |  | 6,639  |                |  |  | 1,432     |  |  |  | 3,184  | 
|True Corporation              |  |                        | 5,496  |  |                        |  | 5,339  |                |  |  | 5,504     |  |  |  | 9,205  | 
|                              |  |                        |        |  |                        |  |        |                |  |  |           |  |  |  |        | 
|                              |  |                        |        | 
|Interest in listed associates |  |                        | 73,612 |  |                        |  | 80,138 |                |  |  | 66,490    |  |  |  | 70,924 | 
|                              |  |                        |        |  |                        |  |        |                |  |  |           |  |  |  |        | 



F-64



---

##### Table of Contents

|19 | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
|-- | -------------------------------------------------------------



The fair values of interest in SPD Bank, IFLYTEK and True Corporation are based on
quoted market prices (level 1: quoted price (unadjusted) in active markets) at the balance sheet date without any deduction for transaction costs.

As of December 31, 2015, the fair value of investment in SPD Bank was RMB68,160,000,000 (2014: RMB58,535,000,000), exceeding its carrying amount by approximately 2.6% (2014: approximately 1.7%
below).

As of December 31, 2015, the fair value of investment in True Corporation was RMB5,339,000,000, below its
carrying amount by approximately 2.9%, which was primarily due to the depreciation of Thai Baht during 2015. Since the decline in the fair value of investment in True Corporation is not significant or prolonged, there was no objective evidence of
impairment as of December 31, 2015.

For the year ended December 31, 2015, China Tower has carried out operation for
a short period. There was no objective evidence of impairment associated with the investment in China Tower as of December 31, 2015.

The management has determined that there was no impairment indicator of the Groups interests in other associates as of December 31, 2014 and 2015.

On May 18, 2015, CMC entered into a partnership agreement with State Development & Investment Corporation and China Mobile
State Development & Investment Management Company Limited (45% of its registered capital is owned by CMCC), under which they agreed to establish China Mobile Innovative Business Fund (Shenzhen) Partnership (Limited Partnership) (the
Fund). The principal business of the Fund is investment in portfolio companies with high-growth potential in mobile internet and related sectors and seek favorable opportunities to exit by appropriate means. CMC committed to invest
RMB1,500,000,000 in cash, which represents 58.8% equity interest in the Fund. As of December 31, 2015, CMC has contributed RMB360,000,000 to the Fund and has a commitment to invest RMB1,140,000,000 to the fund upon the request by the Fund.

There are no contingent liabilities relating to the Groups interest in the joint ventures.



F-65



---

##### Table of Contents

|20 | DEFERRED TAX ASSETS AND LIABILITIES
|-- | -----------------------------------

The analysis of deferred tax assets and liabilities are as follows:



As ofDecember 31,2015


As ofDecember 31,2014As restatedMillion


MillionDeferred tax assets:- Deferred tax asset to be recovered after 12 months


4,935



4,639- Deferred tax asset to be recovered within 12 months


20,488



16,01525,423



20,654Deferred tax liabilities:- Deferred tax liabilities to be settled after 12 months


(166
)


(80
)- Deferred tax liabilities to be settled within 12 months


(37
)


(18
)(203
)


(98
)




F-66



---

##### Table of Contents

|20 | DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
|-- | -----------------------------------------------



Deferred tax assets and liabilities recognized and the movements during 2015



As ofJanuary 1,2015


Credited/(charged) toprofit or loss


Exchangedifferences


As ofDecember 31,2015As restatedMillion


Million


Million


MillionDeferred tax assets arising from:Write-down for obsolete inventories


188



29







217Write-off and impairment of certain network equipment and related assets


2,624



1,528







4,152Accrued operating expenses


10,641



3,484







14,125Deferred revenue from Reward Program


5,621



(271
)






5,350Impairment loss for doubtful accounts


1,580



(1
)






1,57920,654



4,769







25,423Deferred tax liabilities arising from:Depreciation allowance in excess of related depreciation


(98
)


(96
)


(9
)


(203
)Total


20,556



4,673



(9
)


25,220




F-67



---

##### Table of Contents

|20 | DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
|-- | -----------------------------------------------



Deferred tax assets and liabilities recognized and the movements during 2014



As ofJanuary 1,2014


Credited toprofit or loss


As ofDecember 31,2014As restated


As restated


As restatedMillion


Million


MillionDeferred tax assets arising from:Write-down for obsolete inventories


132



56



188Write-off of certain network equipment and related assets


2,256



368



2,624Accrued operating expenses


9,184



1,457



10,641Deferred revenue from Reward Program


4,500



1,121



5,621Impairment loss for doubtful accounts


1,450



130



1,58017,522



3,132



20,654Deferred tax liabilities arising from:Depreciation allowance in excess of related depreciation


(104
)


6



(98
)Total


17,418



3,138



20,556




F-68



---

##### Table of Contents

|21 | RESTRICTED BANK DEPOSITS
|-- | ------------------------



As of December 31, 2015


As of December 31, 2014Non-currentassets


Currentassets


Total


Non-currentassets


Currentassets


TotalNote










As restated


Asrestated


AsrestatedMillion


Million


Million


Million


Million


MillionRestricted bank deposits- Statutory deposit reserves

(i)


4,526







4,526



8,666







8,666- Pledged bank deposits

(ii)


49



15



64



65



736



8014,575



15



4,590



8,731



736



9,467


Note:



| | (i) | The statutory deposit reserves are deposited by China Mobile Finance with PBOC as required, which are not available for use in the Groups daily operations.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Non-current pledged bank deposits are primarily related to the performance bonds issued by banks in favor of the Office of the Communications Authority of Hong Kong, in
order to secure CMHKs due performance of network and service rollout requirement in or before 2017 and 2018, respectively.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2014, current pledged bank deposits primarily represent standby letters of credit in favor of the Office of the Communications Authority of Hong Kong for CMHK fulfilling the
deposit requirement for the public auction of spectrum with original maturity within one year.



|22 | OTHER FINANCIAL ASSETS
|-- | ----------------------



As of December 31,2015


As of December 31,2014As restatedMillion


MillionInvestment in unlisted equity securities in the PRC


3



128




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##### Table of Contents

|23 | INVENTORIES
|-- | -----------



As of December 31,2015


As of December 31,2014As restatedMillion


MillionSIM cards and handsets


8,604



8,194Other consumables


1,390



1,0989,994



9,292




|24 | ACCOUNTS RECEIVABLE
|-- | -------------------



| | (a) | Aging analysis
| | --- | --------------

Aging
analysis of accounts receivable, net of allowance for impairment loss of doubtful accounts is as follows:



As of December 31,2015


As of December 31,2014As restatedMillion


MillionWithin 30 days


10,343



10,00731 - 60 days


2,082



2,24761 - 90 days


1,457



1,244Over 90 days


3,861



3,21717,743



16,715


Accounts receivable primarily comprise receivables from customers and telecommunications operators.
Accounts receivable from the provision of telecommunications services to customers are mainly due for payment within one month from date of billing. Customers with balances that are overdue or exceed credit limits are required to settle all
outstanding balances before any further telecommunications services can be provided. The increase of accounts receivable over 90 days is mainly due to receivables arising from other telecommunications operators and certain corporate customers that
are within credit term.

Accounts receivable are expected to be recovered within one year.



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##### Table of Contents

|24 | ACCOUNTS RECEIVABLE (CONTINUED)
|-- | -------------------------------



| | (b) | Impairment of accounts receivable
| | --- | ---------------------------------

Impairment loss in respect of accounts receivable is recorded using an allowance account unless the Group is satisfied that recovery of the amount is remote, in which case the impairment loss is written
off against accounts receivable directly.

The following table summarizes the changes in impairment loss of doubtful accounts:



2015


2014As restatedMillion


MillionAs of January 1


6,575



6,081Impairment loss recognized


4,921



5,674Accounts receivable written off


(4,947
)


(5,180
)As of December 31


6,549



6,575




| | (c) | Accounts receivable that are not impaired
| | --- | -----------------------------------------

Accounts receivable that are neither individually nor collectively considered to be impaired are as follows:



As of December 31,2015


As of December 31,2014As restatedMillion


MillionNeither past due nor impaired


17,240



16,034Less than 1 month past due


503



68117,743



16,715


Receivables that were neither past due nor impaired relate to a wide range of customers for which
there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent
customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the
balances are still considered fully recoverable. The Group does not hold any collateral over these balances.



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|25 | OTHER RECEIVABLES, PREPAYMENTS AND OTHER CURRENT ASSETS
|-- | -------------------------------------------------------

Other receivables comprise certain items which are expected to be recovered within one year, primarily including interest receivable from banks, utilities deposits and rental deposits, and short-term
loans of RMB5,000,000,000 granted to other companies through China Mobile Finance at the interest rate agreed by each party with reference to the market interest rate.

Prepayments and other current assets primarily consist of rental prepayments.

As
of December 31, 2014 and 2015, there were no significant overdue amounts for other receivables.



|26 | AMOUNTS DUE FROM/TO ULTIMATE HOLDING COMPANY
|-- | --------------------------------------------

Amount due from ultimate holding company is unsecured, interest free, repayable on demand and arising in the ordinary course of business.

As of December 31, 2015, amount due to ultimate holding company comprises the short-term deposits of CMCC in China Mobile Finance
amounting to RMB7,274,000,000 (2014: RMB4,181,000,000) and the corresponding interest payable arising from the deposits. The deposits are unsecured and carry interest at prevailing market rate.

As of December 31, 2014, amount due to ultimate holding company also comprised entrusted loans of RMB10,242,000,000 provided by CMCC
to TieTong. The entrusted loans carried interest rate at 2% per annum and have been fully repaid by TieTong during 2015.



|27 | AVAILABLE-FOR-SALE FINANCIAL ASSETS
|-- | -----------------------------------



As of December 31,2015

As of December 31,2014Million

MillionWealth management products issued by banks

19,167


2,000


The available-for-sale financial assets represent wealth management products issued by banks. These
wealth management products will mature within one year with variable return rates indexed to the performance of underlying assets. As of December 31, 2015, the carrying amount approximated the fair value (level 3: inputs for the assets or
liability that are not based on observable market data (that is, unobservable inputs)). The fair values are based on cash flow discounted using the judgement that expected return will be obtained upon maturity.



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##### Table of Contents

|28 | BANK DEPOSITS
|-- | -------------

Bank
deposits represent term deposits with banks with original maturity exceeding three months. The applicable interest rate is determined in accordance with the benchmark interest rate published by PBOC.



|29 | CASH AND CASH EQUIVALENTS
|-- | -------------------------



As of December 31,2015


As of December 31,2014As restatedMillion


MillionBank deposits with original maturity within three months


7,312



30,095Cash at banks and in hand


72,530



43,71779,842



73,812




|30 | ACCOUNTS PAYABLE
|-- | ----------------

Accounts payable primarily include payables for network expansion projects expenditure, maintenance and interconnection expenses.

The aging analysis of accounts payable is as follows:



As of December 31,2015


As of December 31,2014As restatedMillion


MillionDue within 1 month or on demand


205,724



194,006Due after 1 month but within 3 months


17,002



14,071Due after 3 months but within 6 months


8,980



6,897Due after 6 months but within 9 months


3,488



3,808Due after 9 months but within 12 months


8,385



8,795243,579



227,577


All of the accounts payable are expected to be settled within one year or are repayable on demand.



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##### Table of Contents

|31 | DEFERRED REVENUE
|-- | ----------------

Deferred revenue primarily includes prepaid service fees received from customers and unredeemed point rewards.



2015




2014As restatedMillion




MillionAs of January 1


65,386





64,342- Current portion


63,916





63,155- Non-current portion


1,470





1,187Additions during the year


321,417





236,910Recognized in the consolidated statements of comprehensive income


(307,412
)




(235,866
)As of December 31


79,391





65,386Less: Current portion


(78,100
)




(63,916
)Non-current portion


1,291





1,470




|32 | ACCRUED EXPENSES AND OTHER PAYABLES
|-- | -----------------------------------



As ofDecember 31,2015


As ofDecember 31,2014As restatedMillion


MillionReceipts-in-advance


74,040



66,774Other payables


21,789



17,794Accrued salaries, wages, labor service expenses and other benefits


5,776



5,667Accrued expenses


61,799



48,471163,404



138,706




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##### Table of Contents

|33 | INTEREST-BEARING BORROWINGS
|-- | ---------------------------



As of December 31,2015


As of December 31,2014Note




As restatedMillion


MillionBonds issued by Guangdong Mobile

(i)


4,995



4,992Bonds issued by TieTong

(ii)






1,0004,995



5,992Less: current portion








1,000Non-current portion




4,995



4,992


Note:



| | (i) | The bonds represent the balance of fifteen-year guaranteed bonds issued by Guangdong Mobile, a subsidiary of the Company, with a principal amount of RMB5,000,000,000,
at an issue price equal to the face value of the bonds. The bonds are unsecured and bear interest at the rate of 4.5% per annum which is payable annually. The bonds, redeemable at 100% of the principal amount, will mature on October 28,
2017.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company has issued a joint and irrevocable guarantee (the Guarantee) for the performance
of the bonds. CMCC, the ultimate holding company, has also issued a further guarantee in relation to the performance by the Company of its obligations under the Guarantee.



| | (ii) | The bonds were issued by TieTong on August 18, 2005, with a principal amount of RMB1,000,000,000, at an issue price equal to the face value of the bonds. The bonds
are unsecured and bear interest at rate of 4.6% per annum which is payable annually. The bonds were fully repaid on August 18, 2015.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|34 | EQUITY SETTLED SHARE-BASED TRANSACTIONS
|-- | ---------------------------------------

Pursuant to a resolution passed at the Annual General Meeting held on June 24, 2002, the current share option scheme (the Current Scheme) was adopted.

Under the Current Scheme, the directors of the Company may, at their discretion, invite employees, including executive directors and
non-executive directors of the Company, any of its holding companies and any of their respective subsidiaries and any entity in which the Company or any of its subsidiaries holds an equity interest, to receive options to subscribe for shares of the
Company. The consideration payable for the grant of option under the Current Scheme is HK$1.00.

The maximum aggregate number
of shares which can be subscribed for pursuant to options that are or may be granted under the above scheme equals to 10% of the total issued share capital of the Company as of the date of adoption of the Current Scheme. Options lapsed or cancelled
in accordance with the terms of the Current Scheme will not be counted for the purpose of calculating this 10% limit.

The HKEx
requires the exercise price of options to be at least the higher of the nominal value of a share (no longer existed after March 3, 2014, see note 35(b)), the closing price of the shares on the HKEx on the date on which the option was granted
and the average closing price of the shares on the HKEx for the five trading days immediately preceding the date on which the option was granted.

For options granted under the Current Scheme, the exercise price of options shall be determined by the directors of the Company at their discretion provided that such price may not be set below a minimum
price which is the highest of:

| | (i) | the nominal value of a share (no longer exists after March 3, 2014, see note 35(b));
| | --- | ------------------------------------------------------------------------------------



| | (ii) | the closing price of the shares on the HKEx on the date on which the option was granted; and
| | ---- | --------------------------------------------------------------------------------------------



| | (iii) | the average closing price of the shares on the HKEx for the five trading days immediately preceding the date on which the option was granted.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------

Under the Current Scheme, the term of the option is determined by the directors at their discretion, provided that all options shall be
exercised within 10 years after the date on which the option is granted.



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##### Table of Contents

|34 | EQUITY SETTLED SHARE-BASED TRANSACTIONS (CONTINUED)
|-- | ---------------------------------------------------



| | (a) | The terms and conditions of the grants that existed as of the end of the years are as follows, whereby all options are settled by physical delivery of shares:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



Number of instruments


Vesting conditions

Contractual
life of options2015


2014Options granted to directors- on November 8, 2005






2,881,500


40% one year from the date of grant,


10 years30% two years from the date of grant,30% three years from the date of grantOptions granted to other employees- on November 8, 2005






43,351,922


40% one year from the date of grant,


10 years30% two years from the date of grant,30% three years from the date of grantTotal share options






46,233,422




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##### Table of Contents

|34 | EQUITY SETTLED SHARE-BASED TRANSACTIONS (CONTINUED)
|-- | ---------------------------------------------------



| | (b) | The number and weighted average exercise prices of share options are as follows:
| | --- | --------------------------------------------------------------------------------



2015


2014Weightedaverageexerciseprice


Number ofsharesinvolved in theoptions


Weightedaverageexerciseprice


Number ofshares involvedin the optionsHK$





HK$As of January 1


34.87



46,233,422



31.28



385,273,559Exercised


34.87



(37,056,383
)


30.86



(335,886,849
)Expired


34.87



(9,177,039
)


23.33



(3,153,288
)As of December 31










34.87



46,233,422Options vested as of December 31










34.87



46,233,422


The weighted average share price at the date of exercise for shares options exercised during the
year was HK$98.58 (2014: HK$79.40).

No options were outstanding as of December 31, 2015. The options outstanding as of
December 31, 2014 had exercise price HK$34.87 and a weighted average remaining contractual life of 0.9 year.

The fair
value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the share options granted is measured based on a binomial lattice model. The
contractual life of the option is used as an input into this model. Expectations of early exercise are incorporated into the binomial lattice model. No share options were granted during 2014 and 2015.



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##### Table of Contents

|35 | CAPITAL, RESERVES AND DIVIDENDS
|-- | -------------------------------



| | (a) | Dividends
| | --- | ---------



| | (i) | Dividends attributable to the year:
| | --- | -----------------------------------



2015


2014


2013Million


Million


MillionOrdinary interim dividend declared and paid of HK$1.525 (equivalent to approximately RMB1.203) (2014: HK$1.540 (equivalent to
approximately RMB1.222); 2013: HK$1.696 (equivalent to approximately RMB1.351)) per share


25,629



24,880



27,031Ordinary final dividend proposed after the balance sheet date of HK$1.196 (equivalent to approximately RMB1.002) (2014: HK$1.380
(equivalent to approximately RMB1.089); 2013: HK$1.615 (equivalent to approximately RMB1.270)) per share


20,516



22,290



25,64446,145



47,170



52,675


The proposed ordinary final dividend which is declared in Hong Kong dollar is translated into RMB
at the rate HK$1 = RMB0.83778, being the rate announced by the State Administration of Foreign Exchange in the PRC on December 31, 2015 (2014: HK$1 = RMB0.78887; 2013: HK$1 = RMB0.78623). As the ordinary final dividend is declared after the
balance sheet date, such dividend is not recognized as liability as of December 31, 2015.

In accordance with the 2009
Notice and the PRC enterprise income tax law, the Company is required to withhold enterprise income tax equal to 10% of any dividend when it is distributed to non-resident enterprise shareholders whose names appeared on the Companys register
of members, as of the record date for such dividend, and who were not individuals.



| | (ii) | Dividends attributable to the previous financial year, approved and paid during the year:
| | ---- | -----------------------------------------------------------------------------------------



2015


2014


2013Million


Million


MillionOrdinary final dividend in respect of the previous financial year, approved and paid during the year, of HK$1.380 (equivalent to
approximately RMB1.089) (2014: HK$1.615(equivalent to approximately RMB1.270); 2013: HK$1.778 (equivalent to approximately RMB1.442)) per share


22,283



26,044



28,460




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##### Table of Contents

|35 | CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)
|-- | -------------------------------------------



| | (b) | Share capital
| | --- | -------------



| |  | Ordinary shares, issued and fully paid:
| |  | ---------------------------------------



2015


2014Number of shares





Equivalent


Number of shares





EquivalentHK$ Million


RMB Million





HK$ Million


RMB MillionAs of January 1


20,438,426,514



380,590



400,737



20,102,539,665



2,010



2,142Shares issued under share option scheme


37,056,383



1,673



1,393



335,886,849



11,004



9,279Transition to no-par value regime


















367,576



389,316As of December 31


20,475,482,897



382,263



402,130



20,438,426,514



380,590



400,737


The holders of ordinary shares are entitled to receive dividends as declared from time to time and
are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Companys residual assets.

Shares issued under share option scheme

During 2015, options were
exercised to subscribe for 37,056,383 ordinary shares in the Company at a consideration of HK$1,292,000,000 (equivalent to RMB1,024,000,000) which was credited to share capital. RMB369,000,000 has been transferred from the capital reserve to the
share capital account in accordance with policy set out in note 2(w)(ii).

In accordance with the transitional provisions set
out in section 37 of Schedule 11 to the new Hong Kong Companies Ordinance (Cap. 622), on March 3, 2014, any amount standing to the credit of the share premium account has become part of the Companys share capital.



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##### Table of Contents

|35 | CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)
|-- | -------------------------------------------



| | (c) | Nature and purpose of reserves
| | --- | ------------------------------



| | (i) | Capital reserve
| | --- | ---------------

The
capital reserve mainly comprises the following:



| |  |  | The fair value of unexercised share options granted to employees of the Group recognized in accordance with the accounting policy adopted for
share-based payments in note 2(w)(ii); and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | RMB295,665,000,000 debit balance brought forward as a result of the elimination of goodwill arising on the acquisition of subsidiaries before
January 1, 2001 against the capital reserve in previous years.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The capital injection from ultimate holding company to Target Assets and Businesses in 2013 amounted to RMB33,788,000,000.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| | (ii) | PRC statutory reserves
| | ---- | ----------------------

PRC statutory reserves mainly include statutory surplus reserve and discretionary surplus reserve.

In accordance with the Company Law of the PRC, domestic enterprises in Mainland China are required to transfer 10% of their profit after
taxation, as determined under accounting principles generally accepted in the PRC (PRC GAAP), to the statutory surplus reserve until such reserve balance reaches 50% of the registered capital of relevant subsidiaries. Moreover, upon a
resolution made by the shareholders, a certain percentage of domestic enterprises profit after taxation, as determined under PRC GAAP, is transferred to the discretionary surplus reserve. During the year, appropriations were made by such
subsidiaries to the statutory surplus reserves and discretionary surplus reserves accordingly.

The statutory and
discretionary surplus reserves can be used to reduce previous years losses, if any, and may be converted into paid-up capital, provided that the statutory reserve after such conversion is not less than 25% of the registered capital of relevant
subsidiaries.

In accordance with relevant regulations issued by the Ministry of Finance of the PRC, a subsidiary of the
Company, China Mobile Finance, is required to set aside a reserve through appropriations of profit after tax according to a certain ratio of the ending balance of its gross risk-bearing assets to cover potential losses against such assets.



| | (iii) | Exchange reserve
| | ----- | ----------------

The
exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of overseas entities. The reserve is dealt with in accordance with the accounting policies set out in note 2(y).



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##### Table of Contents

|35 | CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)
|-- | -------------------------------------------



| | (d) | Capital management
| | --- | ------------------



The Groups primary objectives of capital management are to maintain a reasonable
capital structure and to safeguard the Groups ability to continue as a going concern in order to provide returns for shareholders. The Group actively and regularly reviews and manages its capital structure to stabilize the capital position and
prevent operation risk. Meanwhile, the Group will maximize the shareholders return when having high level of borrowings and will make adjustment on the capital structure in accordance with the changes in economic conditions.

The Group monitors capital on the basis of total debt-to-book capitalization ratio. This ratio is calculated as total borrowings divided
by book capitalization (equal to the total equity attributable to equity shareholders of the Company as shown in the consolidated balance sheets and total borrowings).

As of December 31, 2015, the Groups total debt-to-book capitalization ratio was 0.5% (2014: 1.8%).

Except China Mobile Finance, the Company and its subsidiaries are not subject to externally imposed capital requirements.



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##### Table of Contents

|36 | RELATED PARTY TRANSACTIONS
|-- | --------------------------



| | (a) | Transactions with CMCC Group
| | --- | ----------------------------

The following is a summary of principal related party transactions entered into by the Group with CMCC and its subsidiaries (CMCC Group), for the years ended December 31, 2013, 2014 and
2015.

Please refer to note 2(b) for the acquisition of Targets Assets and Businesses, which constitutes a related party
transaction with CMCC Group. Since the acquisition of Target Assets and Businesses from TieTong has been accounted for using merger accounting in accordance with AG 5, the transactions between the Group and TieTong for the years ended
December 31, 2013, 2014 and 2015 were eliminated and not disclosed as related party transactions in the consolidated financial statements.



2015


2014


2013Note




As restated


As restatedMillion


Million


MillionTelecommunications services revenue

(i)


474



869



1,223Telecommunications services charges

(i)






66



11Property leasing and management services revenue

(ii)


191



181



213Property leasing and management services charges

(ii)


956



923



870Network assets leasing charges

(iii)


4,376



4,617



4,374Network capacity leasing charges

(iii)


4,757



5,012



3,876Entrusted loans received

(iv)


8,592



10,242



43,661Entrusted loans repaid

(iv)


18,834



9,573



67,875Short-term bank deposits received

(iv)


7,274



4,181



Short-term bank deposits repaid

(iv)


4,181







Interest expenses

(iv)


194



211



965


Note:



| | (i) | The amounts represent telecommunications services settlement received/receivable from or paid/payable to CMCC Group for the telecommunications project planning, design
and construction services, telecommunications line and pipeline construction services, telecommunications line maintenance services, and installation and maintenance services in respect of transmission towers.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) | The amount represents the rental and property management fees received/receivable from or paid/payable to CMCC Group in respect of business premises and offices, retail
outlets and warehouses.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|36 | RELATED PARTY TRANSACTIONS (CONTINUED)
|-- | --------------------------------------



| | (a) | Transactions with CMCC Group (Continued)
| | --- | ----------------------------------------



| | (iii) | The amounts represent the network assets leasing settlement received/receivable from or paid/payable to CMCC Group and the TD-SCDMA network capacity charges paid/
payable to CMCC Group. On December 29, 2008, the Company entered into a network capacity leasing agreement (the Network Capacity Leasing Agreement) with CMCC Group for the provision of TD-SCDMA related services. The lease was effective
from January 1, 2009 to December 31, 2009 and is automatically renewed for successive one-year periods unless otherwise notified by one party to the other party. The Group is permitted to terminate the lease by giving 60 days advance written notice
to CMCC Group. No penalty will be imposed in the event of a lease termination. Pursuant to the Network Capacity Leasing Agreement, the Group leases TD-SCDMA network capacity from CMCC Group and pays leasing fees to CMCC Group. The leasing fees are
determined on a basis that reflects the actual usage of CMCC Groups TD-SCDMA network capacity and compensates CMCC Group for the costs of such network capacity. At the end of the lease terms, there is no purchase option granted to the Group to
purchase the leased network assets. The Group also does not bear any gains or losses in the fluctuation in the fair value of the leased network assets at the end of the lease terms. As a result, the Group does not bear the risks associated with the
ownership of the leased network assets, and accordingly the Group accounts for the network assets leasing and the network capacity leasing as operating leases.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv) | The amounts represent the entrusted loans/bank deposits received from or repaid to CMCC, interest expenses paid/payable to CMCC in respect of the entrusted loans/bank
deposits and the interest expenses paid to China Mobile Hong Kong (BVI) Limited, the Companys immediate holding company, in respect of the balance of purchase consideration for acquisitions of subsidiaries.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|36 | RELATED PARTY TRANSACTIONS (CONTINUED)
|-- | --------------------------------------



| | (b) | Amounts due from/to CMCC Group
| | --- | ------------------------------

Amounts due from/to CMCC Group, other than amount due from/to ultimate holding company, are included in the following accounts captions summarized as follows:



|                                    |  |                        |       |  |                        |  |       | 
|----------------------------------- |  | ---------------------- | ----- |  | ---------------------- |  | ----- | 
|                                    |  | As of December 31,2015 |       |  | As of December 31,2014 | 
|                                    |  |                        |       |  | As restated            | 
|                                    |  | Million                |       |  | Million                | 
|                                    |  |                       
|Accounts receivable                 |  |                        | 558   |  |                        |  | 790   | 
|Other receivables                   |  |                        | 519   |  |                        |  | 3     | 
|Accounts payable                    |  |                        | 4,564 |  |                        |  | 2,705 | 
|Accrued expenses and other payables |  |                        | 181   |  |                        |  | 272   | 
|                                    |  |                        |       |  |                        |  |       | 

The amounts are unsecured, interest-free, repayable on demand/on contract terms and arise in the ordinary
course of business.



| | (c) | Significant transactions with associates of the Group and of CMCC Group
| | --- | -----------------------------------------------------------------------

The Group has entered into transactions with associates over which the Group or CMCC Group can exercise significant influence. The major transactions entered into by the Group and the associates and
amount due from/to the associates are follows:



|                                                              |  |      |  |                       |        |  |                       |  |        | 
|------------------------------------------------------------- |  | ---- |  | --------------------- | ------ |  | --------------------- |  | ------ | 
|                                                              |  |      |  | As ofDecember 31,2015 |        |  | As ofDecember 31,2014 | 
|                                                              |  | Note |  |                       |        |  | As restated           | 
|                                                              |  |      |  | Million               |        |  | Million               | 
|                                                              |  |      | 
|Bank deposits                                                 |  |      |  |                       | 33,888 |  |                       |  | 43,265 | 
|Available-for-sale financial assets                           |  |      |  |                       | 9,300  |  |                       |  | 1,000  | 
|Interest receivable                                           |  |      |  |                       | 1,187  |  |                       |  | 934    | 
|Accounts payable                                              |  |      |  |                       | 358    |  |                       |  | 513    | 
|Accrued expenses                                              |  | (i)  |  |                       | 5,563  |  |                       |  |       | 
|Other payable                                                 |  |      |  |                       | 128    |  |                       |  |       | 
|Proceeds receivable for the transfer of Tower Assets (note 7) |  |      |  |                       | 56,737 |  |                       |  |       | 
|Other receivables                                             |  | (ii) |  |                       | 8,907  |  |                       |  |       | 
|                                                              |  |      |  |                       |        |  |                       |  |        | 



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##### Table of Contents

|36 | RELATED PARTY TRANSACTIONS (CONTINUED)
|-- | --------------------------------------



| | (c) | Significant transactions with associates of the Group and of CMCC Group (Continued)
| | --- | -----------------------------------------------------------------------------------



|                                                 |  |       |  |         |        |  |             |  |       |             |  |  |       | 
|------------------------------------------------ |  | ----- |  | ------- | ------ |  | ----------- |  | ----- | ----------- |  |  | ----- | 
|                                                 |  |       |  | 2015    |        |  | 2014        |  |       | 2013        | 
|                                                 |  | Note  |  |         |        |  | As restated |  |       | As restated | 
|                                                 |  |       |  | Million |        |  | Million     |  |       | Million     | 
|                                                 |  |       |  |        
|Interest income                                  |  | (iii) |  |         | 1,699  |  |             |  | 1,659 |             |  |  | 1,358 | 
|Mobile telecommunications services revenue       |  | (iv)  |  |         | 767    |  |             |  | 127   |             |  |  | 84    | 
|Mobile telecommunications services charges       |  | (v)   |  |         | 774    |  |             |  | 1,839 |             |  |  | 2,261 | 
|Gain on the transfer of Tower Assets             |  | (i)   |  |         | 15,525 |  |             |  |      |             |  |  |      | 
|Charges for use of tower assets                  |  | (i)   |  |         | 5,563  |  |             |  |      |             |  |  |      | 
|Dividend income                                  |  |       |  |         | 2,842  |  |             |  | 2,476 |             |  |  | 2,062 | 
|Property leasing and management services revenue |  | (vi)  |  |         | 6      |  |             |  | 6     |             |  |  | 6     | 
|                                                 |  |       |  |         |        |  |             |  |       |             |  |  |       | 

Note:



| | (i) | The amounts represent the gain arising from the transfer of Tower Assets on October 31, 2015 and the charges payable to China Tower for the use of relevant tower
assets (note 7).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) | Other receivables represent the short-team loans granted by China Mobile Finance to China Tower and amounts due from China Tower. The loans will mature by December
2016.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii) | Interest income primarily represents interest earned from deposits placed with SPD Bank, which interest rate is determined in accordance with the benchmark interest
rate published by PBOC.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv) | The amount represents the mobile telecommunications services revenue received/receivable from SPD Bank and China Tower.
| | ---- | -----------------------------------------------------------------------------------------------------------------------

| | (v) | The amount represents the mobile telecommunications services charges paid/payable to Union Mobile Pay Co., Ltd., an associate of CMCC Group.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------

| | (vi) | The amount represents the property leasing services revenue received/receivable from SPD Bank.
| | ---- | ----------------------------------------------------------------------------------------------



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|36 | RELATED PARTY TRANSACTIONS (CONTINUED)
|-- | --------------------------------------



| | (d) | Transactions with other government-related entities in the PRC
| | --- | --------------------------------------------------------------

The Group is a government-related enterprise and operates in an economic regime currently dominated by entities directly or indirectly controlled by the PRC government through government authorities,
agencies, affiliations and other organization (collectively referred to as government-related entities).

Apart
from transactions with CMCC Group (notes 26 and 36(a)) and associates (note 36(c)) and the transaction to establish the Fund (note 19), the Group has collectively, but not individually, significant transactions with other government-related entities
which include but not limited to the following:



| |  |  | rendering and receiving telecommunications services, including interconnection revenue/charges
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | purchasing of goods, including use of public utilities
| | - |  | ------------------------------------------------------



| |  |  | placing of bank deposits
| | - |  | ------------------------

These transactions are conducted in the ordinary course of the Groups business on terms comparable to the terms of transactions with other entities that are not government-related. The Group prices
its telecommunications services and products in accordance with rules and regulations stipulated by related authorities of the PRC Government, where applicable, or based on commercial negotiations. The Group has also established its procurement
policies and approval processes for purchases of products and services, which do not depend on whether the counterparties are government-related entities or not.



| | (e) | For key management personnel remuneration, please refer to note 10.
| | --- | -------------------------------------------------------------------



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|37 | FINANCIAL RISK MANAGEMENT AND FAIR VALUES
|-- | -----------------------------------------



Exposure to credit, liquidity, interest rate and foreign currency risks arises in the
normal course of the Groups business. The Groups exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below:



| | (a) | Credit risk and concentration risk
| | --- | ----------------------------------

The Groups credit risk is primarily attributable to the financial assets in the consolidated balance sheets, which mainly include deposits with banks, wealth management products issued by banks,
accounts receivable, other receivables and deferred consideration for the transfer of Tower Assets. The maximum exposure to credit risk is represented by the carrying amount of the financial assets.

Substantially all the Groups cash at banks and bank deposits are deposited in financial institutions in Mainland China and Hong
Kong. The credit risk on liquid funds is limited as the majority of counterparties are financial institutions with high credit ratings assigned by international credit-rating agencies and large state-controlled financial institutions. Wealth
management products are issued by major domestic banks investing in low risk underlying assets, which mainly consist of bank deposits, treasury bond, central bank bill, local government debt, corporate bond or debt with high credit ratings and low
credit risks.

The accounts receivable of the Group is primarily comprised of receivables due from customers and
telecommunications operators. Accounts receivable from customers are spread among an extensive number of customers and the majority of the receivables from customers are due for payment within one month from the date of billing. Other receivables
primarily comprise interest receivable from banks, utilities deposits and rental deposits. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis, taking into account the counter
parties financial position, the Groups past experience and other factors. As such, management considers the aggregate risks arising from the possibility of credit losses is limited and to be acceptable.

Except for the deferred consideration for the transfer of Tower Assets, concentrations of credit risk with respect to accounts receivable
are limited due to the Groups customer base being large and unrelated. As such, management does not expect any significant losses of accounts receivable that have not been provided for by way of allowances as shown in note 24(c).

The deferred consideration for the transfer of Tower Assets are due from China Tower, which is the Companys associate. China Tower
is expected to generate stable cash flows from its principal business of leasing tower related assets. Therefore, management considers the risk that the deferred consideration for the transfer of Tower Assets are uncollectible is low.



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|37 | FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED)
|-- | -----------------------------------------------------



| | (b) | Liquidity risk
| | --- | --------------



Liquidity risk refers to the risk that funds will not be available to meet liabilities
as they fall due, and results from timing and amount mismatches of cash inflow and outflow. The Group manages liquidity risk by maintaining sufficient cash balances and bank deposits (which are readily convertible to known amounts of cash) to meet
its funding needs, including working capital, principal and interest payments on debts, dividend payments and capital expenditures.

The following table sets out the remaining contractual maturities at the balance sheet date of the Groups financial liabilities, which are based on the undiscounted cash flows (including interest
payments computed using contractual rates or, if floating, based on prevailing rates at the balance sheet date) and the earliest date the Group would be required to repay:



As of December 31, 2015Carryingamount


Totalcontractualundiscountedcash flow


Within 1year or ondemand


More than1 year butless than3 years


More than3 years butless than5 yearsMillion


Million


Million


Million


MillionAccounts payable


243,579



243,579



243,579







Bills payable


645



645



645







Accrued expenses and other payables


163,404



163,404



163,404







Amount due to ultimate holding company


7,276



7,339



7,339







Interest-bearing borrowings


4,995



5,410



225



5,185



419,899



420,377



415,192



5,185








As of December 31, 2014 (As restated)Carryingamount


Totalcontractualundiscountedcash flow


Within 1year or ondemand


More than1 year butless than3 years


More than3 years butless than5 yearsMillion


Million


Million


Million


MillionAccounts payable


227,577



227,577



227,577







Bills payable


674



674



674







Accrued expenses and other payables


138,706



138,706



138,706







Amount due to ultimate holding company


14,519



14,588



14,588







Interest-bearing borrowings


5,992



6,664



1,254



5,410



Obligations under finance leases


68



71



71







387,536



388,280



382,870



5,410








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|37 | FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED)
|-- | -----------------------------------------------------



| | (c) | Interest rate risk
| | --- | ------------------

The
Group consistently monitors the current and potential fluctuation of interest rates to monitor the interest rate risk on a reasonable level. As of December 31, 2015, the Group did not have any interest-bearing borrowings at variable rates, but
had RMB5,000,000,000 (2014: RMB5,000,000,000) of bonds and RMB7,274,000,000 (2014: RMB4,181,000,000) of short-term bank deposits placed by CMCC, both of which were at fixed rate and expose the Group to fair value interest rate risk. The Group
determines the amount of its fixed rate borrowings depending on the prevailing market condition. Management does not expect fair value interest rate risk to be high as the interest involved will not be significant.

As of December 31, 2015, total cash and bank balances of the Group amounted to RMB407,762,000,000 (2014: RMB436,786,000,000), and
interest-bearing receivables amounted to RMB63,085,000,000 (2014: nil), which mainly included undiscounted deferred consideration of RMB57,585,000,000 in connection with the transfer of Tower Assets and short-term loans of RMB5,000,000,000 provided
to other companies. The interest income for 2015 was RMB15,852,000,000 (2014: RMB16,270,000,000; 2013: RMB15,368,000,000) and the average interest rate was 3.75% (2014: 3.74%; 2013: 3.63%). Assuming the total cash and bank balances and
interest-bearing receivables are stable in the coming year and interest rate increases/decreases by 100 basis points, the profit for the year and total equity would approximately increase/decrease by RMB3,531,000,000 (2014: RMB3,276,000,000; 2013:
RMB3,249,000,000).



| | (d) | Foreign currency risk
| | --- | ---------------------

The Group has foreign currency risk as certain cash and deposits with banks are denominated in foreign currencies, principally US dollars
and Hong Kong dollars. As the amount of the Groups foreign currency cash and deposits with banks represented 1.4% (2014: 1.4%) of the total cash and deposits with banks and predominantly all of the business operations of the Group are
transacted in RMB, the Group does not expect the appreciation or depreciation of the RMB against foreign currency will materially affect the Groups financial position and result of operations.





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|37 | FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED)
|-- | -----------------------------------------------------



| | (e) | Fair values
| | --- | -----------

All
financial instruments are carried at amounts not materially different from their fair values as of December 31 except as follows:



As of December 31, 2015


As of December 31, 2014CarryingAmount


Fairvalue


Carryingamount


FairvalueMillion


Million


Million


MillionInterest-bearing borrowings  bonds issued by Guangdong Mobile


4,995



5,150



4,992



4,951


The fair value of bonds is based on quoted market prices (level 1: quoted price (unadjusted) in
active markets) at the balance sheet date without any deduction for transaction costs.



|38 | COMMITMENTS
|-- | -----------



| | (a) | Capital commitments
| | --- | -------------------

The
Groups capital expenditure contracted for as of December 31 but not provided in the consolidated financial statements were as follows:



|                             |  |         |        |  |             |  |        | 
|---------------------------- |  | ------- | ------ |  | ----------- |  | ------ | 
|                             |  | 2015    |        |  | 2014        | 
|                             |  |         |        |  | As restated | 
|                             |  | Million |        |  | Million     | 
|                             |  |        
|Land and buildings           |  |         | 9,054  |  |             |  | 7,549  | 
|Telecommunications equipment |  |         | 25,612 |  |             |  | 24,951 | 
|                             |  |         |        |  |             |  |        | 
|                             |  |        
|                             |  |         | 34,666 |  |             |  | 32,500 | 
|                             |  |         |        |  |             |  |        | 



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|38 | COMMITMENTS (CONTINUED)
|-- | -----------------------



| | (b) | Operating lease commitments
| | --- | ---------------------------

The total future minimum lease payments under non-cancellable operating leases as of December 31, are as follows:



Land andbuildings


Leased linesand networkassets


Others


TotalMillion


Million


Million


MillionAs of December 31, 2015Within one year


9,785



14,776



1,197



25,758After one year but within five years


19,211



6,446



1,211



26,868After five years


5,375



2,666



73



8,11434,371



23,888



2,481



60,740As of December 31, 2014 (As restated)Within one year


9,801



7,351



953



18,105After one year but within five years


18,975



4,020



1,046



24,041After five years


5,848



991



21



6,86034,624



12,362



2,020



49,006


The Group leases certain land and buildings, leased lines and network assets, motor vehicles,
computer and other office equipment under operating leases. None of the leases include contingent rentals.



|39 | POST BALANCE SHEET EVENT
|-- | ------------------------

After the balance sheet date, the Board of Directors proposed a final dividend for the year ended December 31, 2015. Further details
are disclosed in note 35(a)(i).



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|40 | ACCOUNTING ESTIMATES AND JUDGEMENTS
|-- | -----------------------------------

Key sources of estimation uncertainty

Note 17 contains information
about the assumptions relating to goodwill impairment, and note 36 contains information about the judgements on the lease classification of leasing of TD-SCDMA network capacity. Other key sources of estimation uncertainty are as follows:

Impairment loss for doubtful accounts

The Group assesses impairment loss for doubtful accounts based upon evaluation of the recoverability of the accounts receivable and other receivables at each balance sheet date. The estimates are based on
the aging of the accounts receivable and other receivables balances and the historical write-off experience, net of recoveries. If the financial conditions of the customers were to deteriorate, additional impairment may be required.

Depreciation

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives.
The Group reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives and residual values are determined based on
the Groups historical experience with similar assets and take into account anticipated technological changes. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates.



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|40 | ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
|-- | -----------------------------------------------



Impairment of property, plant and equipment, interest in associates, goodwill and
other intangible assets

The Groups property, plant and equipment comprise a significant portion of the
Groups total assets. Changes in technology or industry conditions may cause the estimated period of use or the value of these assets to change. Property, plant and equipment, interest in associates and other intangible assets subject to
amortization, are reviewed at least annually to determine whether there is any indication of impairment. The recoverable amount is estimated whenever events or changes in circumstances have indicated that their carrying amounts may not be
recoverable. In addition, for goodwill and other intangible assets with indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment.

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value-in-use. In assessing value-in-use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset, which requires significant judgement
relating to level of revenue and amount of operating costs. The Group uses all readily available information in determining an amount that is a reasonable estimation of the recoverable amount, including estimates based on reasonable and supportable
assumptions and projections of revenue and operating costs. Changes in these estimates could have a significant impact on the carrying value of the assets and could result in further impairment charge or reversal of impairment in future periods.
Additional information for the impairment assessment of property, plant and equipment and the goodwill impairment is disclosed in notes 14 and 17, respectively.



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|41 | POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS, INTERPRETATIONS AND DISCLOSURES ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED DECEMBER 31, 2015
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------

Up to the date of issue of these consolidated financial statements, the IASB has issued a number of
amendments and new standards and interpretations which are not yet effective for the year ended December 31, 2015 and which have not been adopted in these consolidated financial statements.

Of these developments, the following relate to matters that may be relevant to the Groups operations and financial statements:



Effective for
accounting periods beginning on or afterAmendment to IFRS 11, Joint Arrangements


January 1, 2016Amendment to IAS 16, Property, Plant and Equipment


January 1, 2016Amendment to IAS 38, Intangible Assets


January 1, 2016Amendment to IFRS 10, Consolidated Financial Statements


January 1, 2016Amendment to IAS 28, Investments in Associates and Joint Ventures


*Amendment to IAS 27, Separate Financial Statements


January 1, 2016Annual Improvement to IFRSs 2012-2014 cycle


January 1, 2016IFRS 15 Revenue from Contracts with Customers


January 1, 2018IFRS 9 Financial Instrument


January 1, 2018IFRS 16 Leases


January 1, 2019




| | * | The amendments were originally intended to be effective for annual periods beginning on or after January 1, 2016. The effective date has now been deferred/removed.
Early application of the amendments continues to be permitted.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management is assessing the impact of such new
standards, amendments to standards and will adopt the relevant standards, amendments to standards in the subsequent periods as required.



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|42 | CONDENSED FINANCIAL INFORMATION OF THE COMPANY
|-- | ----------------------------------------------



| | (a) | Condensed statements of comprehensive income
| | --- | --------------------------------------------



2015


2014


2013Million


Million


MillionDividend income


43,848



50,451



67,806Operating expenses


(77
)


(81
)


(87
)Interest income


25



53



14Other gains/(losses)


61



(93
)


54Finance costs


(3
)


(2
)


(105
)Profit before taxation


43,854



50,328



67,682Taxation










PROFIT FOR THE YEAR


43,854



50,328



67,682Other comprehensive income for the year










TOTAL COMPREHENSIVE INCOME FOR THE YEAR


43,854



50,328



67,682




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|42 | CONDENSED FINANCIAL INFORMATION OF THE COMPANY (CONTINUED)
|-- | ----------------------------------------------------------



| | (b) | Condensed balance sheets
| | --- | ------------------------



As ofDecember 31,2015


As ofDecember 31,2014Million


MillionNon-current assets


485,109



485,110Current assets


2,103



4,864Current liabilities


281



12Non-current liabilities


4,995



4,992NET ASSETS


481,936



484,970TOTAL EQUITY


481,936



484,970


In the Companys balance sheets, an investment in a subsidiary is stated at cost less
impairment losses. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.



| | (c) | Condensed statements of cash flows
| | --- | ----------------------------------



2015


2014


2013Million


Million


MillionNet cash used in operating activities


(78
)


(81
)


(69
)Net cash generated from investing activities


9,760



7,431



14,785Net cash used in financing activities


(11,964
)


(5,515
)


(14,447
)Net (decrease)/increase in cash and cash equivalents


(2,282
)


1,835



269Cash and cash equivalents at beginning of year


3,030



1,295



974Effect of changes in foreign exchange rate


5



(100
)


52Cash and cash equivalents at end of year


753



3,030



1,295




F-97