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Although the Company has redoubled its efforts to promote the cancellation of domestic long-distance and roaming fees which has, to a certain extent, posed a negative impact on revenue growth, revenue from the Company’s telecommunications services still managed to maintain relatively favourable growth momentum during the first three quarters of 2016. Revenue from telecommunications services grew by 5.4% year-on-year to RMB481.2 billion. The Company’s sales of terminals fell, mainly because the handset sales market has become more market-driven and sales from open channels have increased. Revenue from the sales of products went down by 3.5% year-on-year to RMB61.5 billion. Operating revenue amounted to RMB542.7 billion, representing an increase of 4.3% over the same period last year. EBITDA stood at RMB200.4 billion, up by 1.3% compared to the same period last year. Profit attributable to equity shareholders was RMB88.1 billion, up by 3.1% compared to the same period last year. Margin of profit attributable to equity shareholders was 16.2%, and profitability continued to be maintained at a sound level.

Buoyed by its continued efforts to consolidate its 4G leading position and accelerate the migration of customers to the 4G network, the Company saw favourable development in its mobile business for the first three quarters of 2016. As at the end of the period, the total number of mobile customers was 844 million, representing a net increase of 17.42 million for the period. ARPU of mobile customers increased by 1.7% year-on-year to RMB60.0. Of the mobile customers, the number of 4G customers was 481 million, representing a net increase of 168 million. Driven by the robust development of 4G business, data traffic continued to grow rapidly with handset data traffic increasing by 131% over the same period last year. At the same time, as a measure to cancel domestic long-distance and roaming fees, the Company has, on its own initiative, speeded up the promotion of the migration to flat rate packages in a move to adjust tariffs in a balanced and orderly manner, facilitate business transformation and expedite the mitigation of revenue risks, notwithstanding certain impact on its mobile business as manifested by decelerated growth.

The Company continued with its endeavours to steadily develop its wireline broadband business using a high-end approach, with a focus on boosting network speed and targeted development. These efforts bore fruit with wireline broadband products and services progressively achieving relatively notable improvements. As at the end of the period, the total number of wireline broadband customers was 74.24 million, representing a net increase of 19.21 million for the period. ARPU basically remained stable at RMB33.0 as the Company’s operations across China are at different stages of development. For provinces where the Company has established a foothold in the wireline broadband business at an early stage, the Company has seen an increase in the proportion of broadband customers using high bandwidth and a rise in ARPU. For provinces where the Company is a late comer in this line of business, the Company first needs to strengthen its market position by expanding its customer base and building its brand.

The company is at a critical stage of transformation of its development, maintaining a reasonable scale of investment is, therefore, essential. Full-year CAPEX for 2016 is estimated at RMB186.2 billion, a drop of 4.8% from 2015. In the first half of 2016, our CAPEX stood at RMB83.0 billion, including RMB46.2 billion for the 4G network, RMB10.5 billion for wireline broadband, and RMB18.1 billion for transmission network excluding access part. CAPEX was mainly spent on optimizing the 4G network, promoting the construction of transmission networks and building strategic infrastructure.

 

In the first half of 2016, we added over 200,000 4G base stations, bringing the total number to 1.32 million. Our 4G network has now been expanded to cover more indoor areas in a larger number of places. We expect the number of 4G base stations will exceed 1.4 million by the end of 2016.

We have entered into a leasing agreement with China Tower. Tower leasing fee in the first half of 2016 amounted to RMB15.1 billion, which was slightly lower than self-operated cost and hence creating no substantial impact on our net profit. Full-year tower leasing fee for 2016 is estimated at around RMB32 billion. As at the end of June 2016, the number of leased towers has reached 0.99 million, and the overall sharing ratio stood at 30%. We expect the number of leased towers will reach 1.08 million by the end of 2016. Tower leasing fee will, in the long term, decline following the increase in tower sharing ratio. As the major shareholder of China Tower, we expect to benefit from its future earnings and upside potentials.

The Company endeavours to continuously create value for investors. For the financial year ended 31 December 2015, the Board recommended payment of a final dividend of HK$1.196 per share. Together with the interim dividend paid earlier, aggregate dividend payment was HK$2.721 per share for the full financial year of 2015.

In the second half of the year, we will continue to place a focus on innovation in all aspects of our operations, as well as a business transformation towards value creation. We will remain committed to achieving stable growth and strengthening our market position to ensure that we maintain our market leadership. While we will strive to sustain our favourable growth momentum, we will forge ahead with plans to lay solid foundations for our long term development. This is achieved by our twofold business strategy which focuses on both business consolidation and future growth. In terms of business consolidation, we will be further consolidating our 4G advantages and increasing the penetration of 4G customers. To enhance value for household customers, we will continue to develop our wireline broadband business using a high-end approach. We will challenge ourselves to obtain one-third of the market share in the ICT business through expansion of our corporate customer base. In terms of future growth, we will take a longer-term perspective, working meticulously on our digital services and increasing its revenue by understanding the important role that this business line will play in the future.

General Questions

The Company was listed on the New York Stock Exchange in the form of ADS on 22 October 1997 and on the Stock Exchange of Hong Kong in the form of ordinary shares on 23 October 1997.

Our fiscal year is from 1 January to 31 December of each calendar year.

Our shares are traded on the Stock Exchange of Hong Kong with the stock symbol of 941 and our ADS are traded on the New York Stock Exchange with the stock symbol of CHL respectively.

As at 31 December 2016, the number of issued shares of the Company was 20,475,482,897.

An ADS is a negotiable U.S. certificate representing ownership of shares in a non-U.S. corporate. ADRs are quoted and traded in U.S. dollars in the U.S. market. Also, the dividends are paid to investors in U.S. dollars. ADRs are designed to facilitate the purchase, holding and sale of non-U.S. securities for investors, and to provide a corporate finance vehicle for non-U.S. corporate.

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