For the first quarter of 2020, the operating revenues of the Company were RMB94,793 million, of which the service revenues were RMB92,137 million, representing an increase of 0.7% over the same period of last year. The profit attributable to equity holders of the Company was RMB5,822 million, representing a decrease of 2.2% over the same period of last year. EBITDA was RMB30,161 million, representing a decrease of 0.3% over the same period of last year. EBITDA margin (calculated based on EBITDA divided by service revenues) was 32.7%.
For the first quarter of 2020, the Company firmly grasped the trend of digital transformation of the economy and society and actively promoted the commercialisation of 5G. As affected by the outbreak of the novel coronavirus (COVID-19) epidemic, the Company’s subscriber development declined. The Company took various measures to proactively respond and to maintain smooth and stable communications, endeavouring to mitigate the impacts of the epidemic. The Company accelerated the upgrade of 4G subscribers to 5G. The number of mobile subscribers was approximately 337 million, of which the number of 5G package subscribers was approximately 16.61 million with a net addition of 12.00 million. The handset data traffic increased by 37.4% over the same period of last year and continued to maintain rapid growth while the reduction of the average mobile service revenue per user per month (ARPU) was narrowed compared with that of last year.
In 2019, in order to efficiently build a 5G network and quickly develop its 5G service capabilities, the Company collaborated with China United Network Communications Corporation Limited (“China Unicom”) to leverage the mutually complementary advantages in network and spectrum resources and rolled out 5G network co-building and co-sharing, effectively saving costs on network construction, operation and maintenance while enhancing the market competitiveness of 5G network and business. By the end of 2019, the Company had built 40 thousand 5G base stations, and co-shared more than 20 thousand of China Unicom’s 5G base stations. The total number of 5G base stations in use exceeded 60 thousand, covering key areas of over 50 cities where 5G commercialization has commenced. Meanwhile, the Company accelerated the resources and technologies accumulation for 5G carrying network and core network. As a result, the Company’s network competitiveness was significantly enhanced.
The Company maintained its deep involvement in the evolution of global 5G standards. It took the lead in the formulation of various international 5G standards, and completed numerous patent applications and international standard publications. The Company also innovated standalone (SA) solutions, conducted SA networking trials together with multiple vendors, and led the breakthroughs in 4G/5G integration and other bottlenecks hindering SA commercialisation. The Company was designated by GSMA to lead the global 5G SA industry chain to formulate and publish “5G SA Deployment Guidelines” in a timely manner. The Company conducted proprietary research and development (“R&D”) of mobile edge computing (MEC) platform and management platform for network slicing, expedited the maturity of the SA industry chain. The Company carried out innovative R&D of a series of technologies for indoor coverage, while promoting low-cost solutions for indoor coverage. As a result, the Company’s ability to master 5G core technologies and capabilities continued to strengthen, while its status in the global 5G industry chain significantly elevated.
On 31 October 2019, the Company officially launched its 5G commercial services in 50 cities across the country, and created a membership-based innovative service model of “5G + Privileges + Applications” for individuals and 5G service combining “5G + Gigabit Broadband + Smart Family Applications” for households. Meanwhile, the Company also extensively explored the endowment of 5G into areas such as digital government, smart cities, industrial Internet and the like. The Company innovated integrated information service solutions by leveraging the ultra-large bandwidth, low latency, and massive connectivity features of 5G, as well as integrating new emerging technologies such as edge computing and industrial passive optical networks (PON). The Company has now rolled out 5G services for smart cities based on SA architecture in Shenzhen, while also setting benchmarks in a number of demonstrative industries, including industrial Internet, smart energy, smart ports, telemedicine, and distance education. This allowed us to accumulate a number of promising application scenarios for SA commercialisation.
For the first quarter of 2020, the Company continuously enriched the Smart Family product and service portfolio including e-Surfing HD, Whole-home Wi-Fi, Family Cloud and e-Surfing Webcam. The total number of wireline broadband subscribers was approximately 152 million and the revenues from Smart Family applications and services increased by 106.3% over the same period of last year, which continued to strengthen as a driving force of the broadband blended ARPU.
The Company proactively planned new household informatisation services. The five-in-one Smart Family product and service portfolio – combining Smart Broadband, Smart Home Platform, Smart Application, Smart Security and Smart Service – began to take shape. As Smart Family applications such as Whole-home Wi-Fi, e-Surfing Webcam and Family Cloud become more enriched, the value contribution of these services will be more prominent. The broadband blended ARPU was RMB42.6 in 2019.

The Company also accelerated the extensive integration of emerging technologies into application scenarios for government and enterprise. The Company continued to build up and unleash the unique advantages of cloud-network integration, and expanded the combination of basic network access with technologies such as cloud computing, Big Data and Internet of Things (“IoT”), to thoroughly identify the needs of customers in benchmarking industries and to assess the market potential. The Company’s “e-Surfing Cloud” ranked seventh in the world and first among global operators in IaaS public cloud by market share, and also ranked first in China’s hybrid cloud market. Our IDC business ranked overall first within the country. In 2019, revenue from cloud service reached RMB7.1 billion, representing an increase of 57.9% compared to last year, becoming the top growth driver within the DICT business. The number of IoT connected devices reached 157 million, with revenue increasing by 21.7% compared to last year. The Company’s DICT business is gradually becoming a new growth driver.
Taking shareholders’ returns into full consideration, alongside the Company’s profitability, cash flow level and capital requirement for its 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 2019 to be declared. 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.
In 2019, the Company continued to optimise network experience, deploying targeted coverage and dynamic capacity expansion for 4G network resulting in strengthening of the comprehensive competitive advantage of networks. Meanwhile, the Company steadily promoted the construction of 5G network to gear up the potential for the future development of 5G. Capital expenditure (“CAPEX”) in 2019 was approximately RMB77.6 billion, representing an increase of 3.5% from year 2018. Of which, CAPEX dedicated to 5G was approximately RMB9.3 billion, while investment excluding 5G declined for the fourth consecutive year. The CAPEX budget including 5G in 2020 is RMB85 billion, of which CAPEX budget dedicated to 5G is RMB45.3 billion, while CAPEX excluding 5G further declines significantly by 41.9% compared to 2019.
The Company continued to optimise the network user experience, and conducted targeted coverage and dynamic capacity expansion of its 4G network to support the scale development of 4G users and data traffic as well as the full commercialisation of its VoLTE business. The Company deployed 10G PON equipment, promoted the scale construction of gigabit networks in key cities, and reinforced broadband access edge. Meanwhile, to grasp the trend of increasing demand in migrating to cloud in integrated information services, the Company promoted “Cloudification” on all fronts, effectively consolidated IDC resources, optimised the deployment of cloud resource pools and advanced the transformation of existing telecommunications facilities into data centres. The Company also deployed edge computing and CDN in a collaborative way, accelerated the launch of cloud-network products such as high-quality optical transport networks (OTN), software-defined wide area networks (SD-WAN) and dedicated cloud-network for government and enterprise customers. China Telecom’s core competitiveness of unified cloud-network architecture based on “cloud-as-the-core and cloud-led network” is quickly becoming evident.
Led by customer perceptions, the Company enhanced the end-to-end service experience, established the reputation of its products for being secure and reliable, and built the competitive advantages of its services. By optimising its sales channels and broadening its customer reach, the Company explored sales models based on scene marketing. Forming teams of “Smart Family Engineers” and “Cloudification Enablement Experts”, the Company developed an advantage in professional talent for integrated information services. The Company built its operation capabilities in cloud-network integration, enhanced the activation and maintenance efficiency of its dedicated lines for government and enterprise customers. The Company also gradually rolled out self-help service for government and enterprise customers. Through the introduction of services powered by AI technologies and promoting “new media” customer service, the Company effectively lowered the service volume delivered by human while optimising the user experience. The service satisfaction of the Company continued to be industry leading, ranking first for both overall satisfaction and for mobile Internet access among public users. We also had the lowest customer complaint rate in the industry.
In 2020, the Company will continue to adhere to the new development principles, insist on customer and market-orientated approaches, and strive for innovation and development. The Company will push forward 5G network construction on all fronts, accelerate co-building and co-sharing, firmly promote cloud-network integration, deepen corporate reform and further cultivate intelligent operation. The Company will work with industry partners to create a better future, and continue to march towards becoming a leading integrated intelligent information services provider, while striving to create new value for shareholders and altogether enjoy the accomplishment of high-quality development.

Last updated on 07 May 2020