FAQs
For the first three quarters of 2019, the operating results of the Company maintained steady growth. The operating revenues were RMB282,826 million, of which the service revenues were RMB271,484 million, representing an increase of 2.5% over the same period of last year. EBITDA was RMB91,973 million, representing an increase of 13.8% over the same period of last year. EBITDA margin (EBITDA divided by service revenues) was 33.9%. The profit attributable to equity holders of the Company was RMB18,389 million, representing a decrease of 3.4% over the same period of last year. If excluding the one-off gain from China Tower’s listing in the third quarter of 2018, the profit attributable to equity holders of the Company increased by 2.5% over the same period of last year.
For the first three quarters of 2019, the Company actively capitalised on the opportunities arising from the upgrade of information consumption and adhered to new development principles. With customer-oriented focus coupled with reinforcement of value-driven approach and deepened reform and innovation, the Company persistently promoted high-quality scale development. As of the end of September, the number of mobile subscribers reached 330 million, representing a net addition of 27.43 million, of which the number of 4G users reached 275 million, representing a net addition of 32.94 million.
For the first three quarters of 2019, the handset data traffic increased by 84.5% over the same period of last year. The monthly average DOU per 4G user reached 7.6GB and maintained rapid growth while the reduction of the average mobile service revenue per user per month (ARPU) was narrowed compared with that of the first half of this year.
As of the end of September 2019, wireline broadband subscribers reached approximately 153 million, representing a net addition of 6.87 million. The decline of the broadband access revenue slightly slowed down compared with that of the first half of this year. Smart Family products service portfolio was gradually built, which formed a continuous driving force of the broadband blended ARPU (i.e. the sum of monthly average revenues from Smart Family and broadband access divided by the number of average broadband subscribers).
The Company proactively expanded and consolidated the resource endowment edges offered by cloud-network integration, further explored and fostered new informatisation demand within the household, government and enterprise markets. We continued to enrich our Smart Family applications portfolio, and facilitated the rapid development of DICT (the converged smart application service integrating three technologies, namely communications technology, information technology and cloud & Big Data technology) and Internet of Things (IoT) by leveraging cloud-network integration and IoT-cloud integration as the driving force. We also explored the organic integration of informatisation solutions with new technologies such as edge computing and network slicing. In the first half of the year, the number of e-Surfing HD (IPTV) subscribers reached 111 million, and the number of smart gateway and family cloud subscribers reached 61.80 million and 32.15 million respectively. DICT and IoT businesses together contributed 3.0 percentage points within service revenues growth, with revenues from IDC and cloud services increasing by 11.0% and 93.2% respectively compared to the same period last year. Revenue from IoT increased by 52.0% compared to the same period last year. Revenue from Internet Finance increased by 112.2% compared to the same period last year, while the gross merchandise value grew by 40.4% over the same period last year.
Taking shareholder returns into consideration, alongside the Company's profitability, cash flow level and capital requirement for future development, the Board of Directors has decided to recommend at the forthcoming shareholders' meeting that a final dividend equivalent to HK$0.125 per share for the year 2018 be declared, representing an 8.7% increase over the year 2017. Going forward, the Company will continue to create shareholder value, while fully balancing the cash flow required for the long-term development of the Company with returns to shareholders.
For 2019, total full-year CAPEX budget including 5G investment is RMB78.0 billion, remaining unchanged from the guidance given at the beginning of the year. In the first half of 2019, CAPEX was RMB35.0 billion, representing an increase of 6.3% over the same period last year.
The Company continued to conduct targeted coverage and dynamic capacity expansion of its 4G network, with the number of 4G base stations reaching 1.52 million, supporting the full commercialisation of VoLTE service and safeguarding the user experience for large data traffic customers. To further consolidate the quality advantages of broadband access, the Company deployed on-demand Gigabit fibre broadband in over 180 cities. The Company also extensively built up its comprehensive edges in "Omnipresent network for IoT" based on its mobile, NB-IoT, fibre networks and cloud. The Company promoted the "Cloudification" (the comprehensive upgrade of service and network to cloud in terms of infrastructure, products service capabilities and sales mode, with a focus on cloud computing) of its network infrastructure and accelerated the construction of a new generation cloud-based network that is simple, agile, efficiently-centralised, open and secure. The Company carried out targeted construction based on demand in certain key areas. The number of IDC cabinets reached over 340,000 units, maintaining an industry-leading position in terms of scale. The Company also built a high-quality Optical Transport Network (OTN) for government and enterprise customers to satisfy corporate customers' demand for cloud network products with high quality, excellent reliability and low latency. The number of e-Surfing Cloud resource pool exceeded 100 nationwide. The Company's market share of IaaS public cloud currently ranks 7th in the world, rendering us the only telecommunications operator ranked among the top 10 globally.
In June 2019, commercial licenses for operating 5G digital cellular mobile business were officially granted, marking the commencement of the highly anticipated new 5G era, and bringing forth a historic opportunity for the vibrant development of digital economy. In line with market-driven and customer-oriented principles, the Company will speed up its planning and preparation in all aspects ahead of 5G scale commercialisation, accelerate the pace of 5G scale commercialisation proactively and pragmatically. We plan to deploy 40,000 5G base stations in around 50 cities by the end of 2019. Total full-year CAPEX budget including 5G investment is RMB78.0 billion, remaining unchanged from the guidance given at the beginning of the year.

Insisting on the open and cooperative principles featuring capacity sharing, value co-creation and mutual wins of industry peers, the Company is accelerating its planning for 5G on all fronts to proactively grab opportunities brought by 5G industry.

In areas of technology R&D, we have actively built up our core capabilities of 5G, and promoted innovative convergence of 5G with technologies such as cloud computing and AI. We sped up the establishment of edge computing platform and network slicing management platform, banded together with our industry partners to jointly release 5G "Super Uplink" solutions and rolled out all-cloud and all-fibre based 5G cloud network solutions for enterprise customers. The Company also continued to promote co-building and co-sharing, low-cost indoor coverage as well as the innovation of core technologies such as AI enabled 5G, striving to elevate the Company's position in the 5G industry chain.

In the area of application innovation, the Company has carried out extensive cooperation and innovation, and accelerated the proliferation and launch of informatisation solutions with 5G features for individual lifestyle, families and communities, as well as government and enterprise customers. For the individual consumer market, we have developed personal applications such as cloud gaming and cloud VR. We explored innovative service models based on membership and module combinations of "communication + privilege + applications", with the hope to build differentiated market competitiveness and open up room for value growth. For the family market, we sped up the expansion of Smart Family applications of "5G + Gigabit broadband + Cloud", and collaboratively developed innovative products that are exclusive for 5G or Gigabit broadband such as 8K panoramic video, 4K giant screen theatre, and cloud VR games. This will enable us to occupy a commanding height ahead of others within the Smart Family market. For government and enterprise customers, we continued to explore the integration of DICT and IoT with the capabilities offered by 5G, edge computing and AI, to build our synergistic edges of 5G, cloud-network integration, as well as cloud-edge computing. The Company spared no efforts in building its differentiated edges with "5G + IoT + fibre network + Cloud", to cater the new informatisation demands in the digital transformation of various industries with the brand-new 5G cloud network solutions. The Company has already signed contracts with more than 400 enterprise customers to carry out collaborative innovation of 5G+ industrial applications, covering industries that encompassed transportation, environmental services, medical service, live broadcast, education, and tourism, among others, thereby greatly enhancing the breadth of 5G use cases.

In the area of network construction, the Company persisted in standalone (SA) network as the direction and attained a number of industry-leading achievements such as 4G and 5G interoperability, interoperability of equipment from different vendors, and interoperability of SA chipsets with various vendors under the SA network architecture. Taking into consideration the maturity of technologies, the industry chain and application scenarios as well as the market competition, the Company will launch standalone/non-standalone (SA/NSA) hybrid networks in about 50 cities at the initial stage, following a market- and customer-oriented approach. Continuous coverage with scale in the urban areas of certain key cities will be achieved. The Company will promote the value chain maturity of SA and strive to begin SA network upgrade in 2020, and offer its 5G differentiated network capabilities such as SA-based edge computing and network slicing. At the same time, the Company will proactively explore and promote co-building and co-sharing of 5G network infrastructure resources to reduce the cost of network construction, operation and maintenance, while jointly promoting the industry's prosperity and sharing the fruits of its development with domestic and foreign partners.
In the second half of 2019, the Company will strengthen corporate capabilities, persist in the customer-oriented principle, seize 5G opportunity and the trend of integrated smart informatisation services, maintain the robust development momentum in the first half, speed up value-focused scale development, and strive to achieve healthy growth in service revenue and net profit.

Last updated on 11 November 2019