Latest Developments

In the first half of 2019, we recorded operating revenue of RMB389.4 billion, which represented a decrease of 0.6% compared with the same period last year. Of this, revenue from telecommunications services accounted for RMB351.4 billion, down by 1.3% year-on-year. We posted EBITDA of RMB151.1 billion, up by 3.6% compared with the first half of 2018. This represented an EBITDA margin of 38.8%, or an increase of 1.6 percentage points year-on-year. Profit attributable to equity shareholders reached RMB56.1 billion or RMB2.74 per share. Despite a year-on-year decline of 14.6%, our profitability still remained at a leading level among top-tier global telecommunications operators.

For the personal mobile market, we have extended great efforts to craft a premium network and our 4G business achieved favourable growth. 4G customers numbered 734 million with 4G penetration rate increasing to 78.5%. Of which, the number of VoLTE customers reached 450 million. We have also maintained an industry-leading mobile ARPU of RMB52.2. We collaborated with a number of well-known Internet companies to capitalise on the opportunities presented by large data traffic volume and developed products combining traffic, content and applications to boost data traffic growth. In the first half of the year, handset data DOU reached 6.2GB, representing a year-on-year growth of 140.9%.

For the household market, we placed a steadfast focus on enhancing network speed, quality and value and crafting a premium brand. Our efforts bore fruit and this business line delivered robust growth momentum. Household broadband customers totalled 162 million following a net addition of 15.02 million. We continued to encourage our customers to upgrade to mid-to-high bandwidth products and as a result, 79.9% of our customers have subscribed to products with bandwidth of 100M or above, an increase of 12.9 percentage points from 2018 year-end. We have also enriched household content applications with penetration rate of set-top box Mobaihe reaching 68.7%. Household broadband blended ARPU grew by 0.6% to RMB35.0.

For the corporate market, to extend our foothold in the blue-ocean informatisation market, we have devised plans to further strengthen our corporate products and operations with a special focus on key products and operating system. As a result, we have obtained a steadily increasing market share. The number of corporate customers has increased by 18.1% year-on-year to 7.92 million. As to our key products, revenue from dedicated lines grew by 20.4% to RMB11.2 billion. IDC revenue grew by 75.2% to RMB6.3 billion.

As to the emerging business, we have promoted innovative operations, focused on quality experience and fostered business scalability. The average monthly active customers of MIGU Video grew by 40%. The customer base of ring videos has increased by 128% from 2018 year-end and that of “and-Home fixed service” has increased by 99% year-on-year. Mobaihe revenue grew by 59.7% and ICT revenue grew by 149.8%. In addition, 12 industry applications have generated respective annualised revenues of over RMB100 million.

We continued to follow the principle of making targeted investments. We have optimised our investment structure, strictly controlled the scale of our investments and continuously enhanced our investment efficiency. These actions helped us maintain our network advantage. In the first half of 2019, actual CAPEX amounted to RMB85.2 billion. Considering factors such as the issuance of 5G operating permit, the maturity of the 5G technology and market demands, for 2019 full year, our overall CAPEX including 5G will not exceed RMB166 billion, and will be lower than that of 2018.

In accordance with the guidance delivered to the market in early 2019, the dividend payout ratio for the first half of 2019 was 49%, equivalent to an interim dividend of HK$1.527 per share. The Company attaches great importance to shareholder returns, and will strive to maintain a stable dividend per share for the full year, after giving due consideration to its performance in 2019.

We will make progress on the basis of stable development, and continue to drive the implementation of our strategy for high-quality development that surrounds our business transformation and upgrade, while giving impetus to reform and innovation. We will build on our strong foundation of economies of scale and the implementation of our convergence, integration and digitisation strategies, placing a special emphasis on value generation. We will build synergetic and efficient operations, strengthen our capabilities, promote collaboration and infuse vitality across the organisation. We will fully implement the “5G+” plan, coordinating this with the “four growth engines”, in order to scale up our connections, strengthen connection applications and provide premium connection services to build a world-class corporation. We will march towards our goal of becoming a major force in building “a cyberpower, a digital China and a smart society”, in addition to creating new value for our shareholders.

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