For the first three quarters of 2017, China Telecom had solid performance in its overall results with steady enhancement in operating revenues and net profits. The operating revenues were RMB274,702 million, representing an increase of 4.1% over the same period last year, of which the service revenues were RMB249,722 million, representing an increase of 7.0% over the same period last year. EBITDA was RMB78,844 million, representing an increase of 3.7% over the same period of last year while EBITDA margin (calculated based on EBITDA divided by service revenues) was 31.6%. The profit attributable to equity holders of the Company was RMB18,502 million, representing an increase of 5.5% over the same period of last year.
For the first three quarters of 2017, facing intensified market competition coupled with complicated and changing industry environments, China Telecom unwaveringly promoted transformation with continual improvement in overall operation. The Company consolidated competitive strengths and deepened data traffic operation, resulting in acceleration of scale development of mobile business. With implementation of “Speed Upgrade and Tariff Reduction”, the Company has ceased to charge mobile domestic long-distance and roaming fees from 1 September 2017. The number of mobile subscribers reached approximately 241 million, representing a net addition of 25.56 million; of which the number of 4G terminal users reached 168 million, representing a net addition of 45.65 million.
For the first three quarters of 2017, the handset data traffic grew rapidly and reached 2,020kTB, representing an increase of 142% over the same period of last year. While the monthly average data traffic per 4G user reached 1.5GB while the average mobile service revenue per user per month (ARPU) increased steadily over the same period of last year.
Focusing on integration and innovation, revenues from wireline services achieved healthy growth momentum. For the first three quarters of 2017, wireline broadband subscribers reached 131 million, representing a net addition of 8.19 million; of which Fibre-to-the-Home (FTTH) subscribers reached 122 million, representing a net addition of 15.81 million and achieving in-depth integration with Smart Family products. With strengthened ecological strengths, emerging businesses maintained rapid growth. FTTH strongly supported the rapid development of Smart Family business. The net addition of e-Surfing HD subscribers was 17.14 million, reaching a total of 78.47 million while IDC, cloud and Big Data persistently maintained sound growth momentum.
In the first half of the year, revenues from Intelligent Connection ecosphere increased by 4.4% over the same period last year, accounting for 84.9% of service revenues. Revenues from the ecospheres of Smart Family, new ICT applications, Internet of Things (IoT) and Internet Finance accounted for 15.1% of service revenues, representing an increase of 2.0 percentage points over the same period last year. Revenues from the four ecospheres increased by 22.8% over the same period last year while the proportion of the incremental revenues of the four ecospheres as a percentage to the incremental service revenues of the Company reached 43.5%. New revenue growth engines are being rapidly shaped and formed.

The net increase of e-Surfing HD subscribers was 10.79 million, reaching a total of 72.12 million. The number of IoT connected devices nearly doubled as compared to the end of last year, reaching a total of 27.98 million. The number of actively participated merchants of “BestPay” was close to 400,000 while the number of average monthly active users exceeded 28 million, concurrently increased more than 2 times over the same period last year.

In the first half of the year, the Company consolidated internal resources and enhanced fundamental capabilities. Through creation of platforms, open capabilities, extended influence on industry value chain and cross-platforms integration, ecology synergies was reinforced. With converged efforts on the establishment of five business ecospheres, namely Intelligent Connection, Smart Family, new ICT applications, IoT and Internet Finance, we jointly promoted service ecologicalisation with our co-operative partners surrounding the theme of “co-sharing, co-innovation, co-prosperity”.

In the area of Intelligent Connection, the Company promoted the certification of “6-mode” handset standard by Global Certification Forum (GCF) and Global System for Mobile Communications Association (GSMA), which was upgraded as an international standard. Customers' choice of terminals was enriched while growth potential of customers was expanded, leading to the prosperous development of terminal markets. Aiming at carrying out deepened data traffic operation, we embarked on extensive cooperation with Internet enterprises. With data traffic as the core, we innovated the form of supply and enhanced product competitiveness.

In the area of Smart Family, we created an open platform of Smart Family and co-shared capabilities such as home gateway access and integration of cloud and network, participating in the development and sales of smart devices while collaborating with co-operative partners to provide high quality and diversified Smart Family products and services.

In the area of new ICT applications, the Company integrated the capabilities including cloud, Big Data and “Internet+” and converged co-operative partners in areas of contents, applications and solutions to create cloud platform with open capabilities for government and enterprise customers.

In the area of IoT, the Company jointly formulated the IoT module standard together with co-operative partners and assisted terminal manufacturers to expedite product launch. We launched open platform and jointly created platform capabilities featuring global connectivity, safety and reliability and intelligent decision-making. In addition, with the co-establishment of open laboratory, the threshold of research and development was reduced while the launch of new IoT applications was accelerated.

In the area of Internet Finance, leveraging rich customers resources and reliable mobile payment capabilities, we innovated sales and marketing model and launched BestPay red packet, deeply promoting the integration of Internet Finance ecosphere and Intelligent Connection ecosphere and achieving the outcome of mutual promotion and mutual driven.
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.
Full year CAPEX budget remains unchanged at RMB89 billion.

In 1H17, CAPEX was RMB41.1 billion, of which the share of mobile network, broadband & Internet declined 1.5 percentage points yoy, while the share of information & application services increased 1.2 percentage points yoy.

The number of 4G base stations is planned to reach 1.16 million by the end of 2017. The Company also plans to deploy Gbps demo in hundreds of cities and appropriately increases CAPEX in emerging business.
In the first half of the year, the Company endeavoured to construct three superior networks, namely 4G network, IoT network and all-fibre network with further reinforcement of network edges. With full accomplishment of refarming of 800MHz frequency and establishment of excellent full coverage 4G network, we offered superior industry-leading integrated experience to our customers. With simultaneous deployment of VoLTE, network capabilities of commercial trial were shaped and formed, laying a robust foundation for the upgrade of mobile voice business. Leveraging the 800MHz 4G network with full exploitation of low-frequency edges, the Company became the pioneer in building the first NB-IoT network with the widest coverage, largest scale and best quality in the world, which has comprehensively commenced the commercial launch and has gained network advantages of the business development of IoT. With our persistent efforts in promoting the construction of fibre network, the fibre network household coverage rate of cities and towns reached 92% while the overall average bandwidth of wireline broadband subscribers reached 62Mbps. The Company deployed Gbps access capabilities in major cities with reference to demand, expanded the coverage of Data Centre Interconnect (DCI) and effectively promoted the construction of integrated and efficiently-centralised Content Distribution Network (CDN), resulting in further enhancement of high-speed and superior end-to-end network experience.
With a vision looking forward into the future, the Company accelerated the promotion and implementation of network evolution. On the one hand, we are deeply devoted to engaging in 5G standard formulation and technology trial runs while proactively exploring and researching the networking plan for the evolution from 4G to 5G. 5G network field trial will be conducted in 6 cities and the joint research and development of 5G applications and solutions will be launched collaborating with co-operative partners from various industries, laying foundation for 5G development. In addition, we steadily promoted the evolution of network intelligentisation, expedited the introduction and deployment of technologies such as Software-Defined Networking (SDN) and Network Functions Virtualisation (NFV) and achieved the highly efficient collaboration of network and IT. As a result, a new generation of network with the characteristics of flexibility, swiftness and elasticity with extensible functions is progressively constructed, offering state-of-the-art network experience with embedded self-selective, visible and self-served features.
As at end-June 2017, the number of tower leased was about 640,000. Tower leasing fee rose yoy to about RMB7.6 billion for the period.

Last updated on 16 November 2017