In the first half of 2023, the Company’s operating revenues amounted to RMB260.7 billion, representing an increase of 7.6% year-on-year. Of which, service revenues amounted to RMB236.0 billion, representing an increase of 6.6% year-on-year, remaining above the industry’s growth rate. EBITDA amounted to RMB73.3 billion, representing an increase of 5.0% over the same period of last year. Net profit amounted to RMB20.2 billion, representing an increase of 10.2% over the same period of last year, while the basic earnings per share were RMB0.22. Free cash flow reached RMB17.6 billion.
The Company further optimised its 5G network coverage. Focusing on demands for personal digital applications, the Company promoted AI intelligent upgrades of applications such as Colour Ringback Tone with Video, Communications Assistant and China Telecom Cloud Drive, to enhance user experience of 5G applications. In the first half of the year, the Company’s mobile communications service revenues maintained favourable growth, reaching RMB101.6 billion with an increase of 2.7% year-on-year. Of which, revenue from mobile value-added and applications reached RMB15.4 billion, representing an increase of 19.4% year-on-year. The penetration rate of 5G package subscribers reached 73.4%, with mobile ARPU reaching RMB46.2, representing an increase of 0.4% year-on-year.
The Company strengthened network co-building and co-sharing with China Unicom to continuously enhance the depth and breadth of its 5G coverage, while accelerated the consolidation of one single 4G mid-band network to jointly create 4G/5G networks with leading user experience, efficiency and technologies. Meanwhile, the Company carried out refined planning and precise construction of 5G mid-band network, maintaining industry comparability in terms of scale and coverage. In the first half of the year, the number of newly built co-built and co-shared 5G base stations was over 150,000, with the number of 5G base stations exceeding 1.15 million. 4G mid-band network basically achieved full co-sharing, with the number of 4G base stations exceeding 2 million, further enhancing network coverage and capacity.
The Company sped up the construction of Gigabit broadband. With a focus on demands for family digital applications, the Company promoted Gigabit applications and pushed forward the upgrade from Whole-home WiFi to FTTR to elevate user experience with high-speed connectivity and applications for households. The Company continued to enhance its digital life platform capabilities and strengthened the iterative development of products and applications. The Company integrated GBHC (Government, Business, Home and Customer) applications, offering scene-based applications such as community services, social public services and home security services. In the first half of the year, Wireline and Smart Family service revenues amounted to RMB62.0 billion, representing an increase of 3.6%year-on-year. Of which, revenue from Smart Family business reached RMB9.3 billion, representing an increase of 15.7% year-on-year. The penetration rate of Gigabit broadband reached 20.3%. Broadband blended ARPU reached RMB48.2, representing an increase of 2.1% year-on-year.
Adhering to the market-oriented principle, while focusing on customer demands and use cases, the Company proactively deployed strategic emerging industries. Driven by cloud-, AI-, security- and platform-integrated initiatives, the Company further enhanced its digital products and services capabilities, pushed forward the transformation of Industrial Digitalisation business from being project-based to become operation-based, and from being resource-driven to become capability-driven. Proactively leveraging its edges in cloud-network integration, customer resources and localised services, the Company increased the supply of digital products and services with high quality and high efficiency. The Company also leveraged ‘‘network + cloud computing + AI + applications’’ to promote the cloud migration, the use of data and intelligence injection for numerous walks of life, facilitating the in-depth integration of digital technologies with the real economy. Remarkable results have been achieved in the open cooperation of government and enterprise ecology. Focusing on key ecological areas such as applications, services and sales, the Company carried out deployment in 14 industries and over 120 fields. Through means such as driving force from strategic cooperation, planning of industry cooperation and the building of ecological platform, the Company systematically promoted the establishment of ecology, joined hands with partners to build the full-stack capabilities of industry digital platforms, consolidated the ecological chain of Industrial Digitalisation, and served the digital transformation of customers. In the first half of the year, Industrial Digitalisation business of the Company maintained its rapid growth trend, with its revenue reaching RMB68.8 billion, representing an increase of 16.7% year-on-year, accounting for 29.2% of service revenues, up by 2.6p.p..
The Company developed as the source of original cloud computing technologies with high quality, achieving new results in sci-tech R&D breakthroughs. China Telecom Cloud Technology Co., Ltd has been included as one of the ‘‘Establishing World-class Specialised and Sophisticated Demonstration Enterprises’’ by the State-owned Assets Supervision and Administration Commission (SASAC). Breakthroughs were made in key core technologies such as hyper-scale resource pool scheduling, multi-AZ and highly available platform, distributed high-performance storage system with low latency, as well as high-performance virtualised offloading with software-hardware collaboration. The Company continued to consolidate the cloud foundation featuring polymorphism, multi-chip architecture in one cloud and proprietary full-stack cloud to fully support the unified and highly-efficient operation and maintenance as well as smart operation under the multi-cloud environment, realising hybrid of multiple clouds and heterogeneous management. The platform for computing power delivery network, ‘‘Xirang’’, provided computing power scheduling services for Beijing Verification Platform for Computing Power Interconnection and Intercommunication, becoming the first cross-domain and cross-service-provider computing power scheduling platform. Fully leveraging its edges in cloud-network integration, the Company pushed forward the construction of four-level computing power, launching ‘‘Yunxiao’’, the first computing power platform from telcos that unifies cloud, intelligent computing and supercomputing, offering services featuring multi-type computing in one cloud comprising ‘‘intelligent computing + supercomputing + general computing’’. The Company led the industry in rolling out a unified computing power package comprising ‘‘fundamental computing power + computing power connectivity + computing algorithm model + computing power security’’, providing customers with computing power services and products featuring full range, standardisation, one-stop shopping and convenient delivery. The Company carried out commercial trial of its proprietary cloud-native analytical database, achieving industry-leading capabilities in storage-computing segregation, elastic expansion and failure recovery within seconds. With the original ‘‘Zhen Series’’ full-stack cloud terminal technologies of Cloud Computer, the Company achieved breakthroughs in transmission algorithm of congestion control for intelligent networks, with its market share of public cloud computer products exceeding 30%, ranking first in the industry. China Telecom Cloud maintained its top-3 ranking in the domestic public cloud IaaS and public cloud Iaas+PaaS markets as well as its No. 1 ranking in the government and administration public cloud infrastructure, while also remained as the No. 1 global telco cloud. In the first half of the year, revenue from China Telecom Cloud reached RMB45.9 billion, representing a year-on-year growth of 63.4%.
The Company firmly seized opportunities arising from breakthroughs in the development of AI technologies, strengthened AI capabilities with a focus on data and algorithms to empower digital applications. The Company further deepened its proprietary R&D of AI core technologies, establishing Xinghe AI algorithm platform foundation, with the number of its proprietary scene-based algorithms reaching 5,500. The Company also upgraded and rolled out its Xinghe General-purpose Visual Large Model 2.0 at ten-billion parameter grade, achieving the shift from intelligence in vertical fields to general intelligence and from urban governance to the empowerment of numerous walks of life. The Company also released TeleChat, a generative large language model, to strengthen key capabilities in audio and multi-mode large models. Based on general training, the Company collaborated with partners from upstream and downstream of the industrial chain to create customised large models for industry applications. The Company provided unified end-to-end AI services covering all fronts. Focusing on industries such as finance, culture and tourism, as well as education, the Company developed hundreds of scene-based integrated intelligent solutions, empowering the acceleration of digital transformation of the economy and society. The Company built a service platform for data elements named ‘‘Lingze’’ and pioneered in building and operating the benchmarking project of ‘‘data products supermarket’’ in Hainan to further unleash the value of data resources.
The Company attaches great importance to shareholder returns and strives to enhance its profitability and cash flow generation capabilities. The Board of Directors has resolved to continue declaring an interim dividend in 2023, and the profit distributed in cash will be 65% of the profit attributable to equity holders of the Company in the first half of the year, i.e., RMB0.1432 per share (pre-tax). The Company is dedicated to creating new value for shareholders continuously. As such, the Company will recommend at the Annual General Meeting that the profit distributed in cash for the year of 2023 should be increased to 70% or above of the profit attributable to the Company’s equity holders for the year, in accordance with the commitment made at the time of A Share issuance.
In the first half of 2023, the Company’s CAPEX was RMB41.6 billion, with increased investment in high-growth Industrial Digitalisation and further optimised structure. Investment in Industrial Digitalisation accounted for 28.4%, up by 4.1p.p. compared to the same period of last year, effectively boosting the development momentum of Industrial Digitalisation. The CAPEX budget of 2023 remains unchanged at RMB99.0 billion.
The Company deepened the overall planning and coordinated deployment of various digital elements including ‘‘cloud, network, data, intelligence and security’’ and expedited the construction of intelligent integrated digital information infrastructure that is high-speed and ubiquitous, aerial-ground in one, cloud-network integrated, intelligent and agile, green and low-carbon, and secure and controllable. The Company proactively participated in the national ‘‘East-to-West Computing Resources Transfer’’ project, accelerated the construction of computing power infrastructure and further optimised its ‘‘2+4+31+X+O’’ computing power layout. The Company expanded the construction of intelligent computing capabilities, and built public intelligent computing centres in provinces such as Inner Mongolia, Guizhou, and Ningxia, while also deployed reasoning pools across 31 provinces to meet the demands for reasoning from various AI applications. In the first half of the year, the Company added 1.8 EFLOPS of intelligent computing power, bringing the total to reach 4.7 EFLOPS, representing an increase of 62% year-on-year. Furthermore, the Company expanded its general computing power. The general computing power reached 3.7 EFLOPS, with an increase of 0.6 EFLOPS, representing an increase of 19% year-on-year. The Company carried out the construction of IDC by focusing on the hub nodes regions of the national integrated big data centre. The number of cabinets serving external customers reached 534,000. Of which, over 70% of new cabinets were deployed in hotspot areas. The Company built multi-AZ datacentre clusters in areas such as Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macau and Sichuan-Chongqing-Shaanxi. Centring around DC and cloud, the Company further optimised network architecture and reduced latency, and created a latency circle with 1/10/15 ms latency for the east-west direction and 1/5/20 ms latency for the south-north direction. This flexibly met demands for the interconnection and networking of datacentres from various businesses of 2Mbps–100Gbps granules. The Company also completed the construction of large-bandwidth and intelligent government and enterprise OTN networks with a nationwide coverage. The Company upgraded its all-fibre trunk network that covers ‘‘four regions, six axles, eight hubs and multiple channels’’. Focusing on key areas, the Company further expanded the coverage of 10G PON Gigabit fibre network. The Company promoted the automated and intelligent upgrades of networks. The proprietary new generation cloud-network operating system was launched and put in use, achieving activation and scheduling within minutes for customers’ cloud-network integrated and end-to-end businesses, further enhancing network operation capabilities and efficiency.
The Company regards sci-tech innovation as the primary driving force for corporate high-quality development and for embracing the tide of digital economy. Focusing on key areas such as cloud computing, AI, security, quantum, platform and network, the Company boosted its investment in research and development (R&D) of sci-tech innovation, with R&D expenses increasing by 27.2% year-on-year. The Company further strengthened its R&D talent team, with the number of R&D personnel increasing by 21.4%, compared with the end of last year. The Company strove for breakthroughs in key core technologies, accelerated the conversion of innovation achievements at scale and further strengthened its innovation capabilities and core competitiveness, taking solid steps towards becoming a technology-oriented enterprise with independent control of key core technologies as well as the top-tier national sci-tech innovation enterprises.
The Company proactively fulfilled its social responsibilities and further deepened the construction and operation of green cloud-network. In the first half of 2023, through co-building and co-sharing as well as various energy saving measures, the Company reduced its greenhouse gas emissions by more than 5 million tons, while the greenhouse gas emissions intensity decreased by more than 10% year-on-year. The Company, together with China Mobile and China Unicom, jointly published the ‘‘Liquid Cooling Technology White Paper by Telecom Operators’’ to further reduce the energy consumption intensity and carbon emissions intensity of datacentres, promoting the green transformation of the economy and society and supporting the accomplishment of carbon dioxide peaking and carbon neutrality targets. The Company effectively supported rural revitalisation, popularised digital services and narrowed the digital divide between urban and rural areas, achieving the highest rating for 5 consecutive years in the review and assessment of targeted support carried out by central units. The Company built nearly 60,000 ‘‘Caring Stations’’ to provide dozens of convenient public welfare services such as resting, drinking water, charging and Internet access, with the cumulative number of services reaching 15 million person-times. The Company also successfully completed communications assurance tasks for important scenes and restored network connection during times of emergency and natural disasters relief.
Insisting on high-standard corporate governance while adhering to excellent, prudent and effective corporate governance principles, the Company continued to optimise its corporate compliance management system and cultivate a culture of compliance continuously and extensively. The Company maintained the compliant and efficient operation of its Shareholders Meeting, Board of Directors and Supervisory Committee, and completed the selection and appointment of directors for the Eighth Session of the Board of Directors. The Company further optimised its internal control process to effectively prevent and resolve risks which ensured the Company’s stable operation and effectively protected the best and long-term interests of shareholders.
In face of the new situation and new opportunities, while based on the new development stage, the Company will implement the new development principles completely, accurately and comprehensively. It will proactively serve and integrate into the new development pattern, with a focus on the overall strategy while seizing development opportunities. The Company will firmly, fully and deeply implement its Cloudification and Digital Transformation strategy, intensify sci-tech innovation and enhance the output and conversion efficiency of innovation achievements. The Company will expedite the upgrades of digital information infrastructure, enhance its security service capabilities, and further strengthen value operation. The Company will optimise the deployment in strategic emerging industries, support and promote the establishment of the modern industry system, and deepen corporate reforms on all fronts. The Company will continuously enhance its corporate core competitiveness and core functions, and accelerate the building of a world-class enterprise.