In the first half of 2022, operating revenues of the Company amounted to RMB242.3 billion, representing an increase of 10.5% year-on-year. Of which, service revenues amounted to RMB221.4 billion, representing an increase of 8.8% year-on-year, remaining above the industry’s average growth rate. EBITDA amounted to RMB69.8 billion, representing an increase of 5.3% over the same period last year. EBITDA margin (calculated based on EBITDA divided by service revenues) was 31.6%. The net profit was RMB18.3 billion, representing an increase of 3.1% over the same period last year. Excluding the one-off after-tax gain from the disposals of its subsidiaries (the one-off after-tax gain from the disposals of E-surfing Pay Co., Ltd and China Telecom Leasing Corporation Limited was approximately RMB1,416 million) last year, the year-on-year growth rate was 12.0%. The basic earnings per share were RMB0.20. Free cash flow reached RMB14.5 billion.
The Company further enhanced 5G network coverage, promoted network access and usage for 5G subscribers with precision and optimised the experience of applications such as cloud VR/AR, cloud games, ultra HD and etc. The Company created innovative applications such as 5G Messaging, 5G New Calls, Quantum-encrypted Calls and etc., with an aim to further expand products and services under 5G scenes and promote the upgrade of individual’s digital consumption demands as well as drive the continuous enhancement of subscriber scale and value. In the first half of the year, the Company’s mobile communications service revenues amounted to RMB99.0 billion, representing an increase of 6.0% over the same period last year, maintaining healthy growth. The total number of mobile subscribers reached 384 million, with a net addition of 11.79 million, achieving steady growth of subscriber market share. The number of 5G package subscribers reached 232 million with a penetration rate of 60.3%, remaining at an industry-leading level. Mobile ARPU amounted to RMB46.0, maintaining its growth momentum.
The Company continued deepening the co-building and co-sharing of networks with China Unicom on all fronts. In the first half of the year, the number of co-built and co-shared 5G base stations increased by 180,000, with the number of 5G base stations in use reaching 870,000. The number of co-shared 4G base stations increased by 210,000, with accelerated promotion of “one single 4G network”. The cumulative investment savings for both parties amounted to RMB240 billion, while the annualised OPEX savings for the Company exceeded 20 billion.
Focusing on customers’ demands for digital life upgrades, the Company further promoted the speed upgrade of broadband subscribers and accelerated the expansion of Gigabit products at scale. The Company built a platform for digital life applications with wider connectivity, broader reach and higher level of intelligence, promoted the migration of applications from interconnection between single products to inter-convergency across ecosystems. Leveraging ultra HD, multi-camera, multi-angle and VR/AR to create new experience of contents, the Company further promoted the integration and mutual promotion as well as connected development among Smart Family, Smart Community and Digital Village, while continuously enriching the content of digital life and promoting steady growth in volume and revenue of family services. In the first half of the year, Wireline and Smart Family service revenues of the Company amounted to RMB59.9 billion, representing an increase of 4.4% year-on-year. Of which, broadband access revenue reached RMB40.8 billion, representing an increase of 7.1% year-on-year. The total number of wireline broadband subscribers reached 175 million, of which the number of Gigabit broadband subscribers reached 20.68 million, with its penetration rate increasing to 11.8%, achieving an industry-leading level. The value contribution from Smart Family services continued to increase. Broadband blended ARPU reached RMB47.2, maintaining healthy growth.
The Company proactively seized the current opportunities brought by the demands from various industries in the economy and society for network-based, digitalised, and smart integrated information services. Leveraging resources in whole process and whole network as well as the edges in clientele accumulation, service localisation and etc., while also leveraging its abundant use cases and massive data, the Company focused on the dual driving engines of its projects and products, created edges from differentiation and convergence and proactively empowered the transformation and upgrades of traditional industries to support the “the cloud migration, the use of data and intelligence injection” for numerous walks of life. In the first half of the year, revenue from Industrial Digitalisation reached RMB58.9 billion, representing a year-on-year growth of 19.0% on a comparable basis (revenue for Industrial Digitalisation in the first half of 2021 has excluded the Internet Finance revenue before the disposal of E-surfing Pay Co., Ltd).

The development of the Company’s 5G 2B services maintained good momentum. The three customised network modes, namely “Wide-area”, “Adjacent”, and “Wingspan”, fully exerted the features of 5G including massive connectivity, high speed, low latency and data security. Focusing on the demands such as flexible production, HD video backhaul transmission and remote control of equipment, the Company created 5G industry use cases such as 5G+industrial vision, 5G+remote equipment control, and 5G+smart factory logistics to effectively empower the digital and intelligent transformation and upgrades of industries such as Industrial Internet, Internet of Vehicles (IoV), and smart healthcare. Fully leveraging the industry-leading benchmarking effects, the Company accelerated the expansion and replication of its projects. In the first half of the year, the number of the newly contracted customised network projects exceeded 1,300, with revenue from the newly contracted projects increasing by more than 80% year-on-year. The cumulative number of 5G industry commercial projects reached approximately 9,000.
Adhering to the cooperation philosophy of “Broadest Scope, Best Service, Best Value, Farthest Growth”, the Company conducted ecological cooperation to further promote the vigorous development of cloud technologies and industry to form a new digital foundation featuring cloud-network integration for the development of the digital economy. Insisting on the leading role of sci-tech innovation, the Company’s efforts in tackling core cloud computing technologies constantly achieved new results, equipping itself with full stack cloud capabilities that are independent and controllable, secure and reliable, open to cooperation and industry-leading. The Company has become the source of original technologies for cloud computing. Focusing on cloud migration needs of different customer groups, the Company provides public, private and hybrid cloud services that are polymorphic, high-performance, inclusive and convenient for government, enterprises and the general public. The Company achieved remarkable results in market expansion and continued to lead in the government administration public cloud market. In the first half of the year, revenue from e-Surfing Cloud reached RMB28.1 billion with the year-on-year growth rate reaching 100.8%. In line with the demands from the “East-to-West Computing Resource Transfer” project, the Company accelerated the building of new hub capabilities. In the first half of the year, the development of IDC further enhanced with its revenue amounting to RMB17.9 billion, representing an increase of 11.1% year-on-year. As the fifth fundamental network of the Company, e-Surfing Internet of Video Things pushed forward the construction of digital cloud-network ecology of videos. The aggregate number of connected devices reached 30 million, with rapid launch of diversified use cases such as “Kitchen Monitoring” etc.
The Company attaches great importance to shareholder returns and strives to enhance its profitability and cash flow generation capability while effectively controlling capital expenditure. The Board of Directors has resolved to declare an interim dividend for the first time in 2022, and the profit distributed in cash will be 60% of the profit attributable to equity holders of the Company in the first half of 2022, i.e., RMB0.120 per share. This successfully fulfilled the commitment to introduce interim dividends made by the Company during A-Share offering. The Board of Directors will take into full consideration the Company’s profitability, alongside cash flow levels and capital needs for its future development, and will make recommendations at the shareholders’ meeting after comprehensively reviewing the annual dividend distribution proposal for 2022, furthering its efforts to create more value for shareholders.

Within three years after A-share offering and listing, the profit to be distributed in cash for each year will gradually increase to 70% or above of the profit attributable to equity holders of the Company for that year. The Company will share the results of its development with wider shareholders and continue to create more value.
In the first half of 2022, focusing on the future growth areas, the Company further optimised its investment structure, with its CAPEX reaching 41.7 billion. Of which, the proportion of investment in Industrial Ditigalisation increased by 9.3 percentage points and was the only area with an increase in proportion. CAPEX budget for 2022 remains unchanged at 93 billion.
In line with the national layout of integrated Big Data centres, the Company continued to optimise the “2+4+31+X+O” computing power layout in accordance with the regional economic development and natural resources conditions. Through the establishment of a layer-based computing power service system coordinating cloud, edge and terminals, the Company created an integrated and innovative computing power infrastructure. The Company carried out network reconstitution around computing power centres and promoted the change of traffic flow from the dominant “north-south” direction to “north-south + east-west” directions. The Company also continued optimising its three-dimensional, wide-coverage, and high-performance network deployment with holistic coverage of land, sea, air and space. The Company pushed forward integrated and intelligent channelling of cloud-network and realised cloud-led network resource allocation and cloud-led network channelling. The Company currently owns more than 700 IDC sites and the number of IDC cabinets amounted to 487,000 with a utilisation rate of 72%. The Company has the greatest number and the most extensive distribution of IDC resources in China. In the first half of the year, the number of newly built e-Surfing Cloud servers reached 81,000, with the scale of computing power reaching 3.1EFLOPS while “One-City-One-Pool of Cloud Resources” cumulatively covered more than 160 cities.
The Company took the promotion of sci-tech innovation as the strategic guide for its high-quality development. The Company constantly scaled up sci-tech innovation, boosted its sci-tech capabilities, and made solid strides towards becoming a sci-tech company. The Company was awarded the title of “Enterprises with Outstanding Contribution to Sci-tech Innovation” by State-owned Assets Supervision and Administration Commission of the State Council (SASAC). The Company promoted the independence and self-control of core technologies, strengthened its leadership in forefront technologies of cloud computing and the innovation of original technologies, as well as completed and released the commercial version of CloudOS4.0. The Company made major breakthroughs in proprietary development of customised servers and databases. The Company’s proprietary Quantum-encrypted Calls product was launched nationwide, alongside the roll-out of its first proprietary smart cloud camera. The Company also accelerated the conversion of its sci-tech achievements, with the number of proprietary achievements reaching 74 and its capabilities in proprietary development significantly strengthening. In the first half of the year, the percentage of proprietary IT systems and service platforms increased by 8.9 percentage points over the same period last year. The number of new patents was 1,128, representing an increase of 145% year-on-year. Cooperation and innovation among industry, academia, research and development (R&D) institutes and customers entered a substantive stage with more than 40 cooperation projects being initiated in the fields of fundamental research and application research with leading universities and scientific research institutes.
The Company will continue to seize on new stages of its development and implement its new development principles completely, accurately and comprehensively, while proactively serving and integrating into the new development pattern. The Company will continue to promote its high-quality development and fully implement its “Cloudification and Digital Transformation” strategy. Through the integration of cloud, AI, security and greenness, the Company will speed up the digitalised, scene-based and convergent upgrade of products and accelerate the nurturing and development of strategic emerging services such as cloud, security, AI and Big Data. The Company will insist on leading its corporate development with sci-tech innovation, enhance its capabilities in corporate value creation and sustainable development and proactively implement social responsibilities. The Company will also fully motivate and stimulate the enthusiasm, initiative and creativity of all employees and expedite the building of a world-class enterprise.

Last updated on 5 Sep 2022

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