In the first quarter of 2022, the Company seized the important strategic opportunities emerged from the rapid development of the digital economy, fully implemented the “Cloudification and Digital Transformation” strategy, took a customer-oriented approach to expand integrated intelligent information products and services, increased technological innovation, and empowered the construction of digital information infrastructure. Meanwhile, the Company efficiently assisted the effective implementation of the “East-to-West Computing Resource Transfer” project, accelerated digital transformation, established industrial and capital ecologies featuring open cooperation, comprehensively deepened the reforms and innovation of systems and mechanisms, adhered to green and low-carbon development, and strengthened network and information security capabilities. As a result, the Company’s operating performance continued to improve with new achievements in high-quality development.

In the first quarter of 2022, operating revenues were RMB119,629 million, representing an increase of 11.9% over the same period of last year, of which service revenues were RMB110,024 million, representing an increase of 9.9% over the same period of last year. The profit attributable to equity holders of the Company was RMB7,223 million, representing an increase of 12.1% over the same period of last year. Basic earnings per share was RMB0.08. EBITDA was RMB32,361 million, representing an increase of 4.2% over the same period of last year. EBITDA margin (calculated based on EBITDA divided by service revenues) was 29.4%.
The Company insisted on the individual informatisation upgrade led by 5G, continued to improve 5G network coverage and quality, enriched 5G applications and privilege portfolio, promoted the upgrade of services from connection-based integration to informatisation and scenario-based integration, and facilitated the upgrade of individuals’ demands for emerging information consumption, effectively driving the continuous enhancement in the scale and value of mobile subscribers. In the first quarter of 2022, revenues from mobile communications services amounted to RMB49,014 million, representing an increase of 5.0% over the same period of last year. The total number of mobile subscribers reached approximately 380 million with a net addition of 7.11 million. The number of 5G package subscribers reached approximately 211 million with a net addition of 22.95 million, while the penetration rate reached 55.5%. The mobile ARPU amounted to RMB45.1.
The Company deepened the network co-building and co-sharing with China Unicom, with the number of 5G base stations in use reaching 690,000, while 5G network coverage being extended to all cities and counties across the country as well as some developed townships. The Company also continued the expansion of its 4G network consolidation and resource sharing and further enhanced its network quality and resource utilisation rate. The Company has already co-built and co-shared 1.35 million 4/5G BTS, 15,000 km of trunk optical cable and 750,000 km of local optical cable in total with China Unicom. The aggregate savings of network investment exceeded RMB210 billion while the savings of network operating costs reached RMB20 billion per year.

In 2022, 5G network coverage will be further increased in terms of depth and breadth, and 5G CAPEX is budgeted at RMB34 billion, with over 990,000 5G BTS in use by year-end. The Company will actively promote inter-operator network roaming and co-build and co-share among various operators.
Focusing on the scenario-based needs of home smart upgrade, community smart management and rural digital governance, the Company deepened the integration and upgrade of products, and comprehensively promoted digital solutions such as whole-home intelligence, smart communities and digital villages, so as to create a shared intelligent and new digital life to achieve multi-scenario integration and mutual promotion as well as connected development. In the first quarter of 2022, the Company’s wireline and Smart Family service revenues reached RMB29,645 million, representing an increase of 4.9% over the same period of last year. The number of wireline broadband subscribers reached 173 million, and the Smart Family revenue increased by 22.5% year-on-year, driving the broadband blended ARPU to reach RMB46.7. The value contribution from Smart Family continued to improve.
The Company vigorously promoted the integrated development of the digital economy and the real economy, gave full play to the market competitiveness of e-Surfing Cloud, propelled “the cloud migration, the use of data and intelligence injection” for customers, enriched and innovated the business model of 5G customised network, and created scenario-based integrated intelligent solutions. It actively empowered the transformation and upgrading of traditional industries, leveraged the leading edges of forward-looking resource deployment, accelerated the construction of computing network, and built intelligent integrated digital information infrastructure. In the first quarter of 2022, the Company’s Industrial Digitalisation service experienced an accelerated growth, with revenue reaching RMB29,414 million, representing a year-on-year increase of 23.2%.
As the digital economy thrives, industrial transformation and upgrades, as well as digital life of individuals and households triggered booming demand for cloud migration. e-Surfing Cloud achieved significant results in market expansion thanks to its overall edges in cloud-network integration, as well as independence and controllability, local service and security and reliability. In 2021, e-Surfing Cloud achieved breakthroughs in core technologies and was fully upgraded to a distributed cloud infrastructure, operating system and product capabilities. Products and solutions of edge clouds were enriched, while computing power was extended to edge nodes to meet the emerging use case demands such as data residency and ultra-low latency. This further strengthened its market competitiveness, allowing it to win several cloud and CDN service orders worth more than RMB100 million in fields of government administration, public utility, Internet and industrial manufacturing. The Company developed secure and reliable cloud storage service of e-Surfing Cloud Drive and introduced a number of leading application and content service providers as partners to meet the increasingly diversified demands stemming from the digital life of individuals and households. In 2021, revenue from e-Surfing Cloud doubled, reaching RMB27.9 billion, securing a solid position in the front rank within the industry while maintaining its leading position in the public cloud market of government administration. The Company strengthened the development of data centres at scale and in an efficiently-centralised manner. Revenue from IDC reached RMB31.6 billion, with its market share continuing to rank first in the industry.
The Company attaches great importance to shareholder returns and strives to enhance its profitability and cash flow generation capability while effectively controlling capital expenditure. Taking the Company’s profitability into full consideration, alongside cash flow levels and capital needs for its future development, the Board of Directors has decided to recommend at the Annual General Meeting that the profit to be distributed in cash for the year 2021 shall be 60% of the profit attributable to equity holders of the Company for the year, i.e., RMB0.170 per share. At the same time, an interim dividend will be declared and paid starting from year 2022. 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.
The Company’s CAPEX in 2021 was RMB86.7 billion. Of which, the 5G CAPEX for the year was RMB38 billion. In 2022, the Company’s CAPEX is budgeted at RMB93 bullion. Of which, 5G CAPEX is budgeted at RMB34 billion, a decrease of 10.5% yoy.

In 2022, 5G is still the focus of the Company’s investment, and its investment volume and proportion decreased yoy thanks to co-build and co-share. Investment volume on the rapidly developing Industrial Digitalisation increased 62% yoy, and it is the only area with increased investment. In which, CAPEX on IDC will be RMB6.5 billion with 45,000 new cabinets to be added, while that on cloud resources will be RMB14 billion with 160,000 cloud servers to be added. In 2021, the Company’s CAPEX was 21.5% of service revenues, a decrease of 1.2p.p. Looking forward, the Company will strive to further decrease the CAPEX-to-service revenues ratio.
The Company firmly seized opportunities arising from the development of the digital economy, propelled the precise construction of its cloud-network based on user experience and business scenes, and strived to build the new information infrastructure featuring high-speed and ubiquitous, aerial-ground in one, cloud-network integrated, intelligent and agile, green and low-carbon as well as secure and controllable. In 2021, the number of 5G base stations in use reached 690,000, while 5G network coverage being extended to all cities and counties across the country as well as some developed townships. The Company also continued the expansion of its 4G network consolidation and resource sharing and further enhanced its network quality and resource utilisation rate. The Company sped up the construction of its fibre network, strengthened Gigabit’s leading role and the popularity of 300Mbps, and continued to enhance the capabilities in fibre network. The Company promoted IoT at high, medium and low speeds collaboratively and launched Tiantong IoT, offering its customers with intelligent integrated information services featuring “space and ground unification, satellites and network integration, and Internet of Everything”. With the integration of its capabilities in cloud, network, AI and others, the Company built an e-Surfing Internet of Video Things platform with a “1+31+X” framework, creating standardised visual capabilities that cover 31 provinces.

Pivoting on the nation’s “east-to-west computing resource transfer” project and the deployment of an integrated big data centre, the Company deployed data centres, DCI network, computing power and e-Surfing Cloud on all fronts and carried out forward-looking deployment of computing power network. The Company had more than 700 IDC sites, while the number of cabinets serving customers reached 470,000 units, nearly 80% of which were deployed in the four key regions, namely Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macau Greater Bay Area and Chengdu-Chongqing, forming a resource layout of “2+4+31+X+O”, which is highly consistent with the layout of an integrated national big data centre. The Company built an industry-leading high-speed Internet network connecting data centres. Its CN2-DCI and the government and enterprise OTN cover all eight hub nodes and data centres in major cities nationwide. The bandwidth of its backbone network exceeded 300Tbps. The Company built an artery of multi-channel optical cable network covering four regions, six axles and eight hubs which reached a total length of 320,000 kilometres. The Company grasped the explosive growth momentum of computing power demands, deployed layer-based computing power nationwide, continuously uplift the scale of its computing power in “2+4 hub nodes” and 31 provinces. The Company continued to strengthen the near-field edge computing power as well as computing power at customer sites, with the total computing power reaching 2.1 EFLOPS. E-Surfing Cloud has been upgraded to a distributed cloud, achieving breakthroughs in key core technologies. The Company launched a series of edge cloud products such as ACS, ECX and iStack, accelerated proprietary research of full-stack technologies, and rolled out the independent and self-controlled new generation cloud platform of e-Surfing Cloud, namely CloudOS4.0. The Company also launched an independent and self-controlled e-Surfing Cloud operating system, namely CtyunOS, as well as the distributed database TeleDB. The Company teamed up with ecological cooperation partners in technology, application, service and channel to create full-stack products and services.
The Company leveraged sci-tech innovations to power its development, continued to strengthen its sci-tech innovation capabilities and took substantial steps towards becoming a sci-tech company. The Company fully completed its deployment of sci-tech innovation and R&D system of RDO and is facilitating the penetration of key core technologies such as network, AI, security and quantum into fundamental research of applications, technological R&D of applications and operation-based development. The Company pushed forward the independence and self-control of core technologies, achieving breakthroughs in the innovation of technologies such as e-Surfing Cloud 4.0, 5G edge network, new generation cloud-network operating system, VoLTE quantum-encrypted calls, AI energy saving for base stations and sites, while fully deploying its proprietary platform of 5G Colour Ringback Tone with Video. The Company also expedited the commercialisation of technological research findings, with 33 projects being fully transformed and implemented. More than 80 small and micro innovations achieved sharing and replication through the shared platform model. The Company led or jointly led the completion of 46 international standards throughout the year. The numbers of domestic invention patents and PCT applications increased by 2 times and 8 times respectively, further enhancing the Company’s sci-tech influence. The Company widely carried out cooperative innovation among industry, academia, R&D institutes and customers. The Company carried out research and innovative cooperation of key technologies with universities, scientific research institutes and other institutions. The sci-tech team building of the Company further strengthened while sci-tech talents were being cultivated and recruited across all fronts.
In 2022, entering the new stage of its development, the Company will implement the new development principles completely, accurately and comprehensively, while proactively serving and integrating into the new development pattern. The Company will firmly seize the current important strategic opportunities, implement the “Cloudification and Digital Transformation” strategy on all fronts, strengthen its R&D and challenge-confronting efforts in key core areas. The Company will also optimise its R&D mechanism, strengthen its R&D talent team and increase its investment in sci-tech research resources. The Company will also create a customer-oriented operating system, proactively explore and plan for the metaverse and strive to create an intelligent and shared new digital life. The Company will deepen network co-building and co-sharing, reinforce its edges in holistic network connectivity covering “land, sea, air and space”, and fully realise its leading advantages of forward-looking resource deployment. The Company will spare no efforts to promote the national project of “east-to-west computing resource transfer”, speed up the construction of computing network, build intelligent integrated digital information infrastructure, and empower the transformation and upgrades of traditional industries. The Company will also extend its green and low-carbon principles throughout its whole production process and workflow to enhance the green operation capability and empower the green development of the economy and society. The Company will also establish a highly efficient and secure operating system and reinforce the digital security barrier. The Company will deepen its system and mechanism reforms, stimulate employee’s vitality to pursue innovation, and push forward the enhancement of quality and efficiency as well as innovative development of the Company. The Company will also deepen the deployment of capital market ecology, expedite the shift of development and growth approach and share the results of its high-quality development with shareholders.

Last updated on 3 May 2022

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