In 2017, the Company deepened its reform and innovation and accelerated the scale development leading by its step-up transformation strategy. Development capabilities were continuously accumulated while efficiency and return were successfully enhanced. As a result, the overall operating results achieved steady growth. Operating revenues in 2017 were RMB366,229 million, representing an increase of 3.9% from year 2016; service revenues were RMB331,044 million, representing an increase of 6.9% over last year with revenue growth surpassing the industry average for three consecutive years. Operating expenses were RMB339,009 million, representing an increase of 4.2% from year 2016; profit attributable to equity holders of the Company was RMB18,617 million, representing an increase of 3.3% from year 2016; basic earnings per share were RMB0.23; EBITDA was RMB102,171 million, representing an increase of 7.4% from year 2016 and the EBITDA margin (calculated based on EBITDA divided by service revenues) was 30.9%, representing an increase of 0.2 percentage point from last year. Free cash flow has remarkably improved and reached RMB7.3 billion.
In 2017, the growth of subscriber scale of the Company has further accelerated. Mobile service revenues amounted to RMB153,776 million, representing an increase of 11.7% over last year. The net addition of mobile subscribers was 34.96 million, being doubled over last year. The total number of mobile subscribers reached 250 million, accounting for 17.6% market share which represented an increase of 1.4 percentage points from the end of last year. Of which the net addition of 4G users was 60.17 million, with a net addition of over 60 million for two consecutive years and reaching a total of 182 million. 4G users accounted for 73% of total mobile subscribers.
With increasing popularity of "multi-mode" handsets, sales volume of "multi-mode" handsets of the entire industry increased by more than 20% over last year, accounting for approximately 80% of total sales volume of handsets while the sales volume of "multi-mode" handsets of the Company exceeded 130 million, resulting in remarkable expansion in customers' growth potential. With comprehensive exploitation of the 4G network capabilities advantages, we launched unlimited usage package products to mid- to high-end users. We also closely co-operated with various well-known Internet enterprises and offered more than 30 Internet app dedicated card products to the youngsters group. The increase of subscribers of large data usage products for the year was approximately 60 million. In 2017, the mobile handset Internet access revenue was RMB90,865 million, representing an increase of 33.1% from year 2016. The aggregate handset Internet data traffic growth accelerated with an increase of 182% over last year and reached 3,597kTB, while 4G users DOU reached 2GB. Mobile ARPU was RMB55.1 in 2017, while 4G users ARPU was RMB65.5.
In 2017, wireline service revenues amounted to RMB177,268 million, representing an increase of 3.0% over last year, of which wireline broadband access revenue was RMB76,744 million, which was relatively stable as compared with that of year 2016. The net addition of wireline broadband subscribers was 10.41 million, achieving a new record high over the past 5 years and reaching a total of 134 million. Of which the proportion of wireline subscribers of Hundred-Mbps or above accounted for nearly 50% and being doubled. e-Surfing HD (IPTV) services continued to develop rapidly and the net addition of subscribers was 24.43 million, reaching a total of 85.76 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 19 April 2018