FAQs
For the first quarter of 2018, the Company had solid performance in its overall results with steady enhancement in operating revenues and net profits. The operating revenues were RMB96,613 million, representing an increase of 5.6% over the same period of last year; of which the service revenues were RMB87,967 million, representing an increase of 7.1% over the same period of last year. The operating expenses increased by 5.6% over the same period of last year. Of which, the depreciation and amortization expenses increased by 7.1% over the same period of last year which was mainly due to the corresponding increase brought by the investment in 4G and fibre broadband in recent years. The network operations and support expenses increased by 14.5% over the same period of last year which was mainly attributable to the increase in operating and maintenance expenses to assure for high-quality network services and the write-off of certain obsolete network equipment. The selling, general and administrative expenses decreased by 1.4% over the same period of last year as a result of the optimization of the Company’s sales and marketing model and the impact on the implementation of new revenue recognition standard. The personnel expenses increased by 5.0% over the same period of last year whereas the growth magnitude was lower than the revenue growth rate. During the period, the net finance costs decreased by 5.8% over the same period of last year as a result of the increased efforts in stringent control over capital centralization and scale of interest-bearing debts as well as the optimization of debts structure. The profit attributable to equity holders of the Company was RMB5,698 million, representing an increase of 6.5% over the same period of last year. EBITDA was RMB26,508 million, representing an increase of 6.8% over the same period of last year. EBITDA margin (calculated based on EBITDA divided by service revenues) was 30.1%.
For the first quarter of 2018, facing the increasing intensified market competition, the Company stepped forward with keen determination to surmount tough difficulties. With thorough exploitation of all-rounded competitive capabilities persistently constructed and accumulated over the years as well as increased efforts in promotion of comprehensive in-depth reforms, the Company fully leveraged the advantages of “multi-mode” handsets, promoted large data traffic products and insisted on integrated operation strategy. As a result, mobile services maintained rapid growth momentum. The number of mobile subscribers reached approximately 265 million, representing a net addition of 15.34 million; of which the number of 4G users reached 200 million, representing a net addition of 18.22 million.
For the first quarter of 2018, the handset data traffic increased by 343% over the same period of last year and continued to maintain rapid growth. The monthly average data traffic per 4G user reached 3,907 MB.
The Company continued to deepen the integration of Fibre-to-the-Home (FTTH) and Smart Family products and fully promoted the rapid growth of emerging businesses including e-Surfing HD, IDC, cloud and Big Data. The wireline services achieved healthy growth momentum. For the first quarter of 2018, the wireline broadband subscribers reached 137 million, representing a net addition of 3.76 million; of which FTTH subscribers reached a total of 130 million. The net addition of e-Surfing HD subscribers was 7.62 million, reaching a total of 93.38 million.
In collaboration with its own strengths and resources endowment, the Company proactively established five business ecospheres, namely Intelligent Connections, Smart Family, New ICT Application, Internet of Things (IoT) and Internet Finance.

Intelligent Connections ecosphere is the foundation of service ecologicalization. The Company fully leveraged the advantages of "multi-mode" handsets, vigorously promoted large data usage products and insisted on integrated operation strategy. As a result, the subscriber scale of Intelligent Connections ecosphere expanded rapidly and its revenue increased by 4.7% over last year.

Smart Family ecosphere is a key area for value extension of connection capabilities. Based on broadband advantages as foundation, the Company strengthened ecological cooperation and enriched product offering series to facilitate the formation of three smart livelihood portals, including e-Surfing gateway, e-Surfing HD and Smart Family app. With the promotion of various integrated products and services such as smart home networking, family cloud and smart speaker, we boosted the consumption upgrade for smart homes and home entertainment. Revenue from Smart Family ecosphere for the year increased by more than 40% with rapid expansion of business scale, which became important differentiated development measures for Intelligent Connections ecosphere.

New ICT Application ecosphere and IoT ecosphere are valuable fields with vast development potential. Following the in-depth integration of Internet, cloud computing, Big Data, artificial intelligence with government management and corporate production, the integrated demand for New ICT Application and IoT increased rapidly. The Company's premium networks, extensive IDC resources, excellent government and enterprise customers service systems as well as enriched industry experience offered strong and powerful support for seizing market opportunities and confirming leading position. Revenue of New ICT Application ecosphere grew by 20% year-on-year. Of which, revenues from IDC, cloud and Big Data increased by 20%, 62% and 88% respectively. And revenue from IoT ecosphere increased by nearly 200%.

We proactively promoted mutual integration and mutual promotion of Internet Finance ecosphere and Intelligent Connections ecosphere. The Company launched BestPay red packet and integrated convenient and agile finance payment capabilities with enriched consumption mode in business districts, creating differentiated marketing initiatives. The increase of BestPay red packet users for the year exceeded 30 million, driving rapid growth in mobile subscribers scale. Meanwhile, with enormous mobile subscribers resources serving as foundation, we promoted enrichment in various financial products to expand mobile payment scale. The total gross merchandise value of "BestPay" for the year was approximately RMB1.6 trillion, representing an increase of 53% over last year.
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 that a final dividend equivalent to HK$0.115 per share for the year 2017 to be declared, representing an increase of 9.5% over the year 2016.
In 2017, CAPEX was RMB88.7 billion, representing a decrease of 8.4% over the year 2016, the third consecutive year of decrease.

In 2018, CAPEX budget is RMB75 billion, representing a decrease of 15.5% over last year, which will be focused on forging integrated edge for networks. With increasing coverage of 4G and fibre networks, the share of related CAPEX has been reducing, while that of emerging businesses will increase properly to drive sustainable growth in their scale and revenue.
In 2017, the Company constructed three superior networks, namely 4G network, IoT network and all-fibre network and based on these foundations, the Company also boosted the intelligentization evolution of network with further consolidation and enhancement of network advantages. During the year, 280,000 new 4G base stations were built, reaching a total of 1.17 million. We comprehensively established superior full coverage 4G network characterized with high- and low-frequency collaboration and simultaneously shaped network capabilities of VoLTE HD voice commercial launch, offering industry-leading integrated experience to our customers. Leveraging the 800MHz FDD 4G network, the Company became the pioneer in building the first NB-IoT network with the widest coverage and largest scale in the world and commenced commercial launch in 31 provinces nationwide. Meanwhile, eMTC was proactively introduced while a new generation of IoT capabilities with the characteristics of entire range and full speed is now being shaped and formed. Persisting in promoting the construction of fibre network, we established the world's largest Fibre-to-the-Home (FTTH) network while the fibre network coverage rate of households in cities and towns reached 96%. With comprehensive possession of Hundred-Mbps broadband service capabilities, we commenced deployment of Gbps broadband network in major cities. In overall, we continued to maintain our leading position in the industry.
With a vision looking forward into the future focusing on new opportunities with favorable return, we closely monitored trends and proactively accumulated capabilities to prospect the landscape of 5G development. The Company is deeply devoted to engaging in 5G standard formulation and network technology trial runs while taking the initiatives to explore and research on the feasibility study of collaborative development of 5G and 4G. 5G network trial was conducted in 6 cities in 2017 with extensive promotion of research and development of 5G applications.
In 2017, the Company proactively implemented the "Speed Upgrade and Tariff Reduction" measures, and will continue to push forward the measures in 2018. The Company will mitigate the impact with its own effort by accelerating step-up transformation, driving the convergence of information technology and government services, social administration, livelihood assurance and other areas, boosting growth of Smart Family, IoT, IDC, cloud and other innovative businesses to create new growth drivers and models, and persisting in cost reduction and efficiency enhancement.
The Company reasonably expanded tower leasing scale to cement mobile network edge. As at end of 2017, the number of tower leased was about 660,000, representing an increase of 50,000 towers leased from the end of 2016. Overall tower sharing ratio rose to 70%, while the newly leased tower sharing ratio was over 91%. The tower leasing supplemental agreement entered with Tower Company in February 2018 is conducive to the Company's sustainable healthy development in future.

Last updated on 4 May 2018