In the first quarter of 2023, operating revenues were RMB130,588 million, representing an increase of 9.2% over the same period of last year, of which service revenues were RMB118,478 million, representing an increase of 7.7% over the same period of last year. The profit attributable to equity holders of the Company was RMB7,984 million, representing an increase of 10.5% over the same period of last year. Basic earnings per share was RMB0.09; EBITDA was RMB33,874 million, representing an increase of 4.7% over the same period of last year. EBITDA margin (calculated based on EBITDA divided by service revenues) was 28.6%.

The Company continued to strengthen its 5G network coverage, optimise network quality, enhance 5G user experience and enrich 5G applications and privilege portfolio to promote mobile subscriber growth and value stabilisation. In the first quarter of 2023, revenues from mobile communications services amounted to RMB50,591 million, representing an increase of 3.2% over the same period of last year. The total number of mobile subscribers reached 399 million with a net addition of 7.52 million. The number of 5G package subscribers reached 283 million with a net addition of 15.25 million, while the penetration rate reached 71.0%. The mobile ARPU amounted to RMB45.8.

The Company and China Unicom further promoted 4G/5G co-building and co-sharing. The cumulative number of 5G base stations co-built and co-shared by the two parties exceeded one million while the number of co-shared 4G stations exceeding 1.1 million. The co-building and co-sharing achieved remarkable results. The cumulative investment savings in network construction for both parties amounted to over RMB270 billion, while the annualised savings of operating costs exceeded RMB30 billion, contributing key technologies in co-building and co-sharing as well as operation and management experiences to the global communications industry. By end 2023, the number of 5G base stations in use will reach 1.22 million.

Leveraging the convergence of “5G + Gigabit Broadband + Gigabit WiFi”, as well as the incorporation of new digital elements such as cloud and AI, the Company promoted the expansion and upgrade of broadband subscriber applications and services and empowered Smart Family, Smart Communities and Digital Villages with rich digital solutions to create a digital life with intelligent, sharing and integrated development. In the first quarter of 2023, revenues from wireline and Smart Family services reached RMB31,136 million, representing an increase of 5.0% over the same period of last year. The number of wireline broadband subscribers reached 184 million. Revenue from Smart Family increased by 15.9% year-on-year, driving the broadband blended ARPU to reach RMB47.5. The value contribution from Smart Family continued to improve.

The Company seized the opportunity of deep integration of digital technology and real economy, continuously improved its computing power, and provided integrated intelligent information services to meet the industry customer needs with the driving force from cloud-, AI-, security- and platform-integrated initiatives. The Company gave full play to the competitiveness of China Telecom Cloud, continuously created the “5G + industry applications” benchmark project and promoted the rapid development of the second growth curve. In the first quarter of 2023, the Company’s Industrial Digitalisation service revenues reached RMB34,971 million, representing a year-on-year increase of 18.9%.

China Telecom Cloud has entered into a stage of 4.0 with full commercialisation after more than ten years of development. The market share of China Telecom Cloud continued to increase, becoming the world’s largest carrier cloud and China’s largest hybrid cloud. It has grown to rank among the top-three in China’s public cloud IaaS market and public cloud IaaS+PaaS market, while maintaining its No.1 position in the dedicated cloud market in terms of market share. The Company supported the digital transformation of the national economy and society, achieving remarkable results in scale expansion in key areas of national economy and people’s livelihood. In 2022, revenue from China Telecom Cloud reached RMB57.9 billion, representing an increase of 107.5% year-on-year.

The Company attaches great importance to shareholder returns and strives to enhance its profitability and cash flow generation capabilities, 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 a final dividend of 2022 of RMB0.076 per share (pre-tax) shall be declared. Together with the 2022 interim dividend of RMB0.120 per share (pre-tax) which has been distributed, the full year dividend of 2022 amounts to RMB0.196 per share (pre-tax), and the aggregate amount of the full year dividend represents 65% of the profit attributable to equity holders of the Company for the year. Within the three years following the Company’s 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, continuously creating more value to all shareholders.

The Company’s CAPEX in 2022 was RMB92.5 billion, slightly lower than the budgeted RMB93 billion. CAPEX in 2023 will focus on future development with further optimised structure. Industrial Digitalisation CAPEX will increase by 40%, of which CAPEX on computing power and IDC are RMB19.5 billion and RMB9.5 billion respectively.

The Company comprehensively advanced the overall planning and coordinated deployment of various digital elements such as “cloud, network, data, intelligence and security”. The Company also accelerated the transformation and upgrades of networks as well as 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, as well as secure and controllable. The Company further optimised the “2 + 4 + 31 + X + O” layout of its computing power and built proprietary multiple availability zones (AZs) capabilities of China Telecom Cloud 4.0 in central nodes of regions of Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macau Greater Bay Area and Chengdu-Chongqing. The number of cities covered by “One-City-One-Pool” exceeded 240, while the number of edge computing power nodes surpassing 800, providing customers with highly-efficient and efficiently-centralised distributed cloud service with ultra-low latency. In 2022, the newly added computing power of China Telecom Cloud was 1.7 EFLOPS, with its total computing power reaching 3.8 EFLOPS, representing an increase of 81% year-on-year. The Company built the four-level AI computing power comprising of “entire network-region-edge-terminal” with nationwide coverage. The Company also built an efficiently-centralised core platform for AI capabilities, achieving unified channeling of AI computing power, algorithms and data while aggregating more than 5,000 algorithms and over 100 scene-based solutions. The Company proactively responded to the national strategy of “East-to-West Computing Resource Transfer” and stepped up deployment with a focus on 8 hub nodes. The Company currently owns more than 700 IDC sites and over 3,000 edge DC, and the number of IDC cabinets amounted to 513,000 with a utilisation rate of over 70%. The Company has the greatest number and the most extensive distribution of IDC resources in China. Surrounding national datacentres, the Company built interconnection networks for datacentres with large bandwidth, high reliability, wide coverage and multiple layers. The latency between AZs was below 1ms. The Company built the largest Gigabit fibre network in scale, with the number of 10G PON ports exceeding 6.30 million, covering over 250 million family users in the Company’s service region. The Company achieved interconnection between the mobile network and the satellite network and realised multiple functions for one single card. The Company continued to give full play to its role in safeguarding network and information security, formed security infrastructure capabilities covering cloud, network, edge and terminal, and completed the construction of “Cloud Dam” platform with full network coverage. The Company’s security capability pools covered more than 150 cities. The Company’s new-generation cloud-network operating system was fully launched, realising the integrated management of cloud, network and security as well as the automatic activation of the whole business process for cloud-network integration. The Company fully promoted the green and low-carbon transformation of cloud-network infrastructure, and adopted measures such as customised high-performance servers to enhance computing efficiency. The Company also applied various new energy-saving technologies to enhance the energy efficiency of datacentres and telecommunications equipment rooms, and sped up the energy-saving application of AI technologies to mobile base stations and old equipment rooms, with a power saving of over 600 million kWh per year.

Adhering to “science and technology constitute a primary productive force”, the Company strove to develop a technology-oriented enterprise. The Company was credited with the honorary title of “Enterprise with Outstanding Contribution to Sci-tech Innovation” by the State-owned Assets Supervision and Administration Commission (SASAC). The Company fully completed the deployment of its R&D system for sci-tech innovation, RDO (fundamental research (R), applied technological research and development (D) and operational development (O)), and proactively explored a development path featuring productisation of technological capabilities and industrialisation of innovative achievements. The Company built a platform for high-level sci-tech innovation, strengthened the fundamental support for R&D, and proactively forged the source of original cloud computing technologies while undertaking the construction of innovation platforms such as cloud-network infrastructure. The Company established joint sci-tech research institutions with key laboratories, renowned universities and sci-tech research institutes for cutting-edge technologies such as 6G and next-generation network. The Company further strove for core technologies breakthroughs, with significant enhancement of capabilities in R&D of cloud-network technologies. The Company’s achieved breakthroughs in key technologies of cloud computing such as software and hardware integration, operating system as well as database. The Company’s computing power channeling of cloud storage and etc. has reached an advanced level within the industry. The computing power distribution network platform of China Telecom Cloud 4.0, “XiRang”, was successfully selected as one of the “2022 Top 10 Super Projects of Central Enterprises”. The Company also built China’s largest quantum metropolitan network, the “Hefei Quantum Metropolitan Network”. The Company further strengthened the industrialisation of application achievements, realising the application of AI large-scale models under a number of scenes such as digital life and smart manufacturing. The Company also rolled out scale commercialisation of products such as Security Brain, Cloud Computer and CDN. Domestic invention patents and PCT patent applications were 1.4 times and 2 times, respectively, of the same period of last year. The Company achieved scale expansion and quality enhancement of its tech talents, with the introduction of leading talents in areas of cloud computing, AI and Big Data, among others. The number of chief experts being newly recruited or renewed exceeded 10. The Company also innovated its talent development mechanism and introduced a chief technician system, along with honouring awards for tech talents and the promotion of special talent pool systems, altogether creating a conducive ecology for innovation.

The Company proactively fulfilled its social responsibilities, successfully completed communications assurance tasks for important scenes and spared no effort to establish network “lifelines” during times of natural disasters. The Company also proactively promoted green cloud-network construction and operation. In 2022, through co-building and co-sharing and various energy saving measures, the Company reduced its greenhouse gas emissions by more than 13 million tons, while greenhouse gas emissions per unit of information flow decreased by 20.6% year-on-year. It built the country’s first “zero-carbon datacentre” in Qinghai. The Company served rural revitalisation, promoted universal service and bridged the digital divide. The Company also proactively participated in social welfare, and provided informatised products for Covid-19 Epidemic (“Epidemic”) prevention such as e-Surfing Cloud Broadcasting, Cloud Conference, Cloud Computer, Cloud SaaS applications and Display of Caller Name Card, among others. The Company leveraged digital means to support sci-tech based Epidemic prevention and assisted small and medium-sized enterprises (SMEs) to overcome challenges. The Company strengthened employee care and promoted the mutual development of both employees and the Company.

Insisting on high-standard corporate governance while adhering to excellent, prudent and effective corporate governance principles, the Company continued to optimise its corporate governance system, standardise its corporate operations, strengthen its internal control system and implement refined governance and disclosure measures. In addition to the compliance and efficient operation of its Shareholders Meeting, Board of Directors and Supervisory Committee, the Company fully achieved the establishment of Board of Directors on various levels of its subsidiaries where appropriate. The Company further realised lean management and stable operation. The Company continued to optimise its internal control and comprehensive risk management to effectively ensure stable operation of the Company. The level of its corporate governance continued to strengthen to effectively protect the best and long-term interests of its shareholders.

The building of Digital China is an important driver for the advancement of Chinese modernisation in the digital era. The Company will firmly seize the valuable strategic development opportunities, proactively fulfill its responsibility in building Digital China and insist on seeking progress while maintaining stability. With high-quality development as the theme, digital transformation as the main line, reform, opening and innovation as the driving force, the Company will comprehensively and deeply implement the Cloudification and Digital Transformation strategy while further striving for breakthroughs in key core technologies of digitalisation. The Company will create the supply of digital products with a focus on customer demands, and strive to build a digital service platform that is open and co-shared. The Company will also speed up the construction of the digital information infrastructure, stimulate the potential of data elements and proactively promote reforms of organisations and mechanisms that are adaptable to digital transformation. The Company will tangibly enhance its core competitiveness and accelerate the building of a world-class enterprise.