In 2016, the Company's operating revenues amounted to RMB352.3 billion, representing an increase of 6.4% over last year. Service revenues amounted to RMB309.6 billion, representing an increase of 5.6% over last year, achieving continuous improvement in growth rate. Emerging businesses accounted for 40% of service revenues, representing an increase of over 5 percentage points over last year with continual rapid optimisation in business structure. EBITDA was RMB95.1 billion while EBITDA margin (EBITDA divided by service revenues) was 30.7%. Net profit was RMB18.0 billion, representing an increase of 11.7% as compared to the net profit for the year 2015 excluding the one-off gain from the disposal of tower assets. (Note: Excluding the one-off gain from the disposal of tower assets amounted to approximately RMB3.9 billion, the net profit for the year 2015 was RMB16.1 billion)
Persevering with optimisation of existing customers, the Company comprehensively accelerated the users to upgrade their service from 3G to 4G. Through proactive expansion of customer acquisition, we strengthened integration to explore new markets. Aiming at all-round reinforcing business capabilities, we firmly seized the terminal benefits from "multi-mode" handsets, enhanced the sales capabilities of the entire channel and optimised the data traffic operation strategies. As a result, mobile business achieved rapid upgrade while scale and values were remarkably enhanced. The net increase of mobile subscribers for the year was 17.10 million, reaching a total of 215 million and accounting for 16.2% market share, representing an increase of 0.7 percentage points from the end of last year. The total number of 4G users doubled and reached a total of 122 million while the penetration rate reached 57%, accounting for 16.0% market share and representing an increase of 1.9 percentage points from the end of last year. The sales volume of 4G handsets for the year exceeded 100 million, of which more than 80% represented sales of "multi-mode" handsets. The aggregate handset Internet data traffic for the year increased by 130% over last year, of which the aggregate 4G handset Internet data traffic increased nearly 3 times. The monthly average data traffic per 4G user entered a GB era. The mobile handset Internet access revenues for the year increased by 43% over last year, promoting steady improvement in mobile ARPU while the mobile service revenues increased by 10.5% over last year, outperforming the industry growth.
The Company achieved growth in data traffic volume while preserving data traffic value. 4G DOU reached 1,029MB, and data traffic has become the top growth driver for revenue. In 2016, handset data traffic reached 1,277kTB, representing an increase of 130.2% over last year, of which 4G handset data Internet traffic accounted for 83.1%, representing an increase of 32.4 percentage points over last year. The handset Internet access revenue accounted for 49.6% of mobile service revenues, representing an increase of 11.2 percentage points over last year. The average mobile service revenue per user per month (ARPU) for 2016 was RMB55.5, while 4G ARPU was RMB72.8.
The Company persisted to adhere to differentiated competitive strategies. Driven by Hundred-Mbps products with trial run of Gbps products, the Company accelerated the transformation of network edges into market competitive capabilities. Through persistent promotion of end-to-end bandwidth upgrade and provision of premier service throughout the entire services process, we established high-quality brand image of broadband services. With deepened integration of Fibre-to-the-Home (FTTH) and "Smart Family" products, we offered all-in-one home entertainment and intelligent applications services to enhance the overall business values. The subscribers scale achieved rapid breakthrough for the year and the Company continued to maintain a leading position in the market. The net increase of wireline broadband subscribers was 10.06 million, reaching a total of 123 million. Of which the total number of FTTH subscribers was 106 million, representing a net increase of 35 million and the penetration rate reached 86%. The wireline broadband access revenues for the year increased by 3.3% over last year with good momentum in business development. Wireline service revenues reached RMB172.0 billion, representing an increase of 1.9% over last year.
With persistent and unwavering determination in innovation and integration and leveraging the advantages of its own strengths and resources endowment, the Company internally strengthened efficiently-centralised integration while externally expanded open cooperation, resulting in accelerated expansion in growth potential of new emerging businesses. With rapid breakthrough in the scale of e-Surfing HD, the revenues for the year increased by 24% over last year. The net increase of e-Surfing HD subscribers was 20.95 million, reaching a total of 61.33 million. The number of average monthly active users of "BestPay" increased more than 3 times over last year. The gross merchandise value of "BestPay" for the year increased by approximately 30% over last year, exceeding RMB1 trillion. Internet of Things (IoT) business was rapidly developed, achieving efficient centralisation for the entire network. The net increase of IoT connected devices for the year was 13.21 million. Cloud and Big Data business maintained rapid development momentum. The revenues of cloud and Big Data business for the year increased by 55% over last year. The "Internet+" business achieved scale expansion with remarkable strengthening of the influences in the areas including government administration, education, health and medical care and industrial Internet.
Taking into consideration the return to shareholders, the Company's profitability, cash flow level and capital requirements for its future development, the Board of Directors has decided to recommend at the forthcoming shareholders' meeting to appropriately increase the dividend level, that a dividend equivalent to HK$0.105 per share for the year 2016 to be declared.

Total CAPEX in 2016 was RMB96.8 billion, decreased by 11% year-over-year. In 2016, CAPEX continued to tilt towards rapidly expanding 4G & fibre broadband businesses, optimizing CAPEX structure and achieving precision investment to consolidate our network edge and support business growth. As a result of the 800MHz refarm, mobile network spending as a percentage of total CAPEX declined by 4.4 year-over-year. As at end 2016, the number of 4G base stations reached 890k, an increase of 380k in the year, representing an extra of 90k versus our plan at the beginning of the year. The Company's 4G network coverage reached 95% of population , with 4G+ deployment completed in all cities nationwide. Share of Broadband & Internet increased by 3.6pp year-over-year. In response to the strong market demand for high bandwidth access, the Company advanced investment in broadband network appropriately to maintain our network and service edges. To get prepared for future development, the Company increased appropriately the investment in five ecospheres to support and lay network foundation supporting business development. As a result, Information & Application Services as a percentage of total CAPEX increased by 1.8pp year-over-year.

CAPEX for 2017 is budgeted at RMB89 billion, further decrease by 8% year-over-year. Of which the share of 4G and fibre broadband will further reduce to 73%. Meanwhile, the Company will continue to increase CAPEX spending in emerging business appropriately.
As at the end of 2016, China Telecom leased around 610k towers from the Tower Company, representing an addition of 110k for the year. Sharing ratio of the newly leased towers was above 90% while the overall sharing ratio of all leased tower was around 66%.

The Company jointly promoted industry development with China Unicom, successfully promoting 6-mode all-frequencies compatible handsets to become national standard. Jointly announced "Broadband Services White Paper" and "4K TV Smart Set-top Box (STB) White Paper. We cooperated in network co-build and sharing for CAPEX and cost saving: in terms of mobile network, we formulated projects for sharing of about 70k 4G base stations; for transmission network, we have formulated projects for sharing of around 16,000km transmission fibre cables.
In 2016, the Company rose to the challenge and continued the implementation of "Speed Upgrade and Tariff Reduction", in turn encouraged mobile data usage and bandwidth upgrade among subscribers. In 2016, handset data unit price declined by 38% year-over-year, boosted handset data traffic and internet access revenue to surge by 130% and 43% year-over-year respectively; Wireline broadband unit price declined by 50% year-over-year, driving average access bandwidth and wireline broadband revenue increased by 72% and 3.3% year-over-year respectively.

Last updated on 20 Apr 2017