5G, enterprise services fuel growth at China’s telco trio

• China’s three main telcos are still growing at an eye-watering pace
• China Mobile, China Telecom and China Unicom all reported strong results for 2022
• Increased 5G adoption and use of digital services by enterprises were the main drivers of sales and earnings growth

All three major mobile operators in China reported gains in operating revenue and earnings in 2022 despite widespread macroeconomic headwinds, with China Mobile, China Telecom and China Unicom all reporting significant increases in 5G subscription numbers and business services uptake.

Recently released financial results for 2022 for the three operators present an overall trend of domestic customers increasingly embracing 5G services, while enterprises, especially those in manufacturing, accelerated their digital transformation efforts through the adoption of new services and enhanced connectivity options.

China Mobile

The largest Chinese operator, China Mobile, recorded a 10.5% year-on-year rise in operating revenue to ¥937.3bn ($136.2bn), while earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at ¥329bn ($47.9bn), an increase of 5.8% year on year. 

Its total mobile customer base rose 1.9% to 975 million, marking a “three-year high net addition of 18.11 million customers”. Subscribers to its 5G packages increased by 58.7% to 614 million, of which 327 million were actually connected to its 5G network (up 58.3% from 207 million in 2021).

The operator also highlighted “the rapid expansion of 5G applications, mobile cloud, digital content, smart home and other businesses” as the main driving forces behind a 30% year-on-year growth in what it refers to as “digital transformation revenue” to ¥207.6bn ($30.1bn).

In its business segment, China Mobile recorded “rapid growth” of 22.6% to ¥168.2bn ($24.5bn) in revenue, with its corporate customer base rising by 4.37 million to 23.20 million. It also noted that the “dual engine of cloud and 5G yielded new outcomes,” with its revenues from mobile cloud services increasing by 108% to ¥50.3bn ($7.3bn), boosted by the convergence of cloud platforms with networks, big data, intelligence and edge computing.

The operator also claimed to be a “5G industry leader” with multiple commercial projects across various sectors, including smart mining, smart factors, smart hospitals and autonomous driving.

There was a slight decline in its capital expenditure (capex), which came in at ¥185.2bn ($26.9bn), accounting for 22.8% of its telecom services revenue: That is a high level of so-called capital intensity (the ratio of revenues invested in the network), but it was 1.6 percentage points lower than in 2021, which “showed an improving return on assets and investment,” according to the operator. 

China Mobile’s chairman, Yang Jie, noted that the company has managed to “seize the valuable opportunities emerging from the flourishing digital economy” despite hurdles stemming from the “complex and changing macro-environment”.

China Telecom

The second-largest operator in China booked a 9.5% year-on-year increase in operating revenue to ¥481.4bn ($69.9bn). The performance was driven by a nearly 20% growth in annual revenue from industrial digitalisation services to ¥117.7bn ($17.1bn). This was largely thanks to emerging services, such as network security, big data and artificial intelligence (AI). 

Its EBITDA in 2022 rose 5.2% year on year to ¥130bn ($18.9bn). The company also explained it had “proactively seized the current opportunities brought by the demands from various industries in the economy and society for network-based, digitalised and smart integrated information services and created a model for industrial digitalisation development,” which integrates cloud network capability foundation and industry application platforms to provide digital solutions for “numerous walks of life”. 

The telco also noted it had made strides in its cloud business, claiming that it is now “the world’s largest carrier cloud and China’s largest hybrid cloud,” with revenue up 107.5% year on year to ¥57.9bn ($8.4bn).

In 2022, the Chinese operator added 80.1 million 5G package subscribers, reaching a total of almost 268 million (or 68.5% of its total mobile user base), but it did not stipulate how many of those 5G package subscribers were actually connected to its 5G network.

China Telecom’s overall mobile subscriber base stood at 391.1 million at the end of 2022, of which 18.8 million were new additions.

China Unicom

The third-largest operator in China also reported improved performance last year. Its operating revenue of ¥354.9bn ($51.6bn), up 8.3% year on year, is the highest growth rate it has recorded in the past nine years. While EBITDA increased by 3% to ¥99bn ($14.4bn).

Its Industry Internet business revenue achieved an annual growth of more than 20% for the first time, reaching ¥70.4bn ($10.2bn), up 28.6% year on year.

It also claimed to be “the first operator with internet of things (IoT) connections exceeding human connections”, with its IoT connections standing at approximately 390 million, while mobile connections were around 320 million. The penetration rate of 5G package subscribers reached 66%, totalling 212.7 million by the end of 2022 (but it did not reveal how many of those 5G subscribers are actually using 5G services).

China Unicom has built more than 16,000 “large-scale 5G application projects on a cumulative basis, which were replicated among 52 major categories of the national economy and built more than 1,600 fully 5G-connected factories” by the end of 2022.

“Today, China Unicom is accelerating its transformation from a traditional pipeline operator to a digital technology leader, and has achieved transformation and upgrade in four dimensions – connectivity scale and structure, core functions, service and empowerment level, and development philosophies – breaking the three major valuation limits of traditional operators, namely connectivity pipes, vicious competition and lack of innovation,” said Liu Liehong, chair of China Unicom.

In addition to these figures, data from the Chinese Ministry of Industry and Information Technology, cited by China Daily, revealed that China had more than 2.3 million 5G base stations at the end of 2022, representing 60% of the global total, while the number of 5G subscribers actually using 5G services totalled 561 million, about one-third of the country’s total mobile connections (and, it would seem, more than half of the world’s 5G users…). 

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV