The new agreement, once approved by shareholders, will be effective retroactively to April 21. China Mobile will also cut commission it receives from selling phone cards for China Mobile Communications Corp to 5 percent from 15 percent.
The new rate would result in a "fairer allocation of revenue" between China Mobile and its parent, China Mobile chairman Wang Xiaochu said in a statement. The change won't have a material impact on earnings, Wang said.
In its annual report, China Mobile said it paid 99 million yuan (US$13 million) last year in commission to its parent's 18 networks and received 114 million yuan in distribution fees. As the cuts offset each other, the impact on earnings will be minimal, analysts said.
Prepaid card users generate lower sales than regular mobile subscribers because they don't pay fixed monthly fees. About a third of China Mobile's 49 million subscribers use prepaid cards as of February. Only 18 percent of the customers of smaller rival China Unicom Ltd use prepaid cards.
China Mobile shares fell as much as 4.4 percent to HK$37.30, against a 2.5 percent decline in the benchmark index. The stock, which has lost 41 percent in value in the past 12 months, fell 4.1 percent to HK$37.40 as of the midday break.
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