Financial Performance - The company's operating revenue for 2024 reached RMB 529.4 billion, a year-on-year increase of 3.1%, with service revenue at RMB 482 billion, up 3.7%[6] - EBITDA for the year was RMB 140.8 billion, reflecting a growth of 2.9%, while net profit increased by 8.4% to RMB 33 billion, resulting in a basic earnings per share of RMB 0.36[3] - The net profit attributable to shareholders was RMB 33.012 billion, reflecting an 8.4% increase from 2023[47] - Operating revenue for the year ended December 31, 2024, was RMB 529,417 million, an increase of 3.4% from RMB 513,551 million in 2023[89] - Operating profit rose to RMB 39,803 million, up 7.2% from RMB 37,128 million in the previous year[89] - Net profit for the year was RMB 32,975 million, representing a 8.5% increase compared to RMB 30,428 million in 2023[89] - The proposed final dividend for the year ended December 31, 2024, is RMB 0.0927 per share, totaling approximately RMB 84.83 billion[113] Revenue Breakdown - Mobile communication service revenue amounted to RMB 202.5 billion, a 3.5% increase year-on-year, with mobile value-added and application revenue growing by 16.1%[8] - The company reported a significant increase in smart home business revenue, which rose by 16.8% to RMB 125.7 billion, contributing to a total fixed-line and smart home service revenue of RMB 125.7 billion, up 2.1%[8] - The digital industry revenue reached RMB 146.6 billion, a 5.5% increase, with Tianyi Cloud revenue growing by 17.1% to RMB 113.9 billion[8] - Industrial digital service revenue was RMB 146.588 billion, marking a 5.5% increase and comprising 27.7% of total revenue[56] Expenses and Costs - Operating expenses totaled RMB 489.614 billion, an increase of 2.8%, with expenses accounting for 92.5% of operating revenue[59] - The company's labor costs reached RMB 98.279 billion in 2024, up 5.9% year-on-year, constituting 18.6% of operating revenue[68] - Sales, general, and administrative expenses were RMB 66.663 billion in 2024, a decrease of 0.2% from 2023, accounting for 12.6% of operating revenue[65] - Depreciation and amortization expenses were RMB 101.044 billion, up 1.3%, representing 19.1% of operating revenue[63] Investments and R&D - R&D expenses grew by 11.3% year-on-year, with a talent pool consisting of 5 leading figures, 1,000 chief/senior experts, and 10,000 technical experts[17] - The company has launched over 50 industry-specific large models, serving more than 10,000 industry clients in various sectors[24] - The company plans to complete the acquisition of shares in GuoDun Quantum Technology Co., Ltd. with an investment of RMB 1.775 billion, which has been approved by relevant authorities[124] Market Expansion and Strategy - The company is actively expanding into overseas markets, with Southeast Asia and the Middle East becoming important growth areas[14] - The company aims to gradually increase the cash profit distribution to over 75% of the profit attributable to shareholders within three years starting from 2024[9] - The company is focusing on building a differentiated competitive advantage through its "AI+" ecosystem alliance, promoting rapid development of strategic emerging businesses[32] Technology and Innovation - The company is focusing on AI-driven product and service innovations, including the launch of AI-enabled smartphones and smart home devices, to enhance customer experience and meet new digital consumption demands[12] - The company achieved significant breakthroughs in cloud computing software, including operating systems and databases[16] - The company has created the world's first distributed quantum key distribution system, enhancing security capabilities[17] Corporate Governance and Compliance - The company has maintained compliance with corporate governance codes and standards throughout 2024, ensuring effective internal controls and risk management[128] - The board of directors includes key executives such as the Chairman and CEO, as well as several executive vice presidents and independent non-executive directors, indicating a strong leadership structure[136] Environmental Commitment - The carbon emissions per unit of telecom business volume have decreased by 19.2% year-on-year, demonstrating commitment to green development[37]

Financial Performance - Operating revenue for the first three quarters of 2024 reached RMB 394.718 billion, a year-on-year increase of 2.7%, with service revenue at RMB 362.886 billion, up 3.8%[2][6] - EBITDA for the first three quarters of 2024 was RMB 111.023 billion, a year-on-year increase of 5.1%, with an EBITDA margin of 30.6%[2][6] - Net profit attributable to shareholders for the first three quarters of 2024 was RMB 29.299 billion, a year-on-year increase of 8.1%[2][6] - Operating income for the first nine months of 2024 was RMB 394.718 billion, compared to RMB 384.254 billion in the same period last year[11] - Net profit for the period reached RMB 29.340 billion, up from RMB 27.143 billion in 2023[11] - Pre-tax profit increased to RMB 37,712 million in the first 9 months of 2024, up from RMB 35,014 million in the same period of 2023[15] - Basic earnings per share (EPS) for the first nine months of 2024 were RMB 0.32, compared to RMB 0.30 in the same period last year[12] Mobile and Fixed-Line Services - Mobile service revenue for the first three quarters of 2024 reached RMB 156.823 billion, a year-on-year increase of 3.2%, with mobile users increasing by 14.9 million to 422.67 million[7] - 5G package users increased by 26.4 million to 345.06 million, with a penetration rate of 81.6%[7] - Fixed-line and smart home service revenue for the first three quarters of 2024 reached RMB 95.624 billion, a year-on-year increase of 2.9%, with broadband users reaching 196.26 million[7] Industrial Digitalization - Industrial digitalization revenue for the first three quarters of 2024 reached RMB 105.549 billion, a year-on-year increase of 5.8%[7] Assets and Liabilities - Total assets as of September 30, 2024, were RMB 865.468 billion, a year-on-year increase of 3.5%[4] - Equity attributable to shareholders as of September 30, 2024, was RMB 448.451 billion, a year-on-year increase of 1.2%[4] - Total assets as of September 30, 2024, amounted to RMB 865.468 billion, with non-current assets totaling RMB 669.486 billion and current assets at RMB 195.982 billion[9][10] - Total liabilities stood at RMB 412.714 billion, with current liabilities at RMB 331.081 billion and non-current liabilities at RMB 81.633 billion[10] Operating Expenses and Costs - Operating expenses for the first three quarters of 2024 reached RMB 358.334 billion, a 2.3% increase year-over-year, with network operation and support costs rising to RMB 118.457 billion, up 3.5%[8] - Labor costs increased to RMB 75.438 billion, a 2.3% growth compared to the same period last year, driven by increased investment in tech and innovative talent[8] - Depreciation and amortization expenses rose to RMB 74,639 million in the first 9 months of 2024, compared to RMB 71,811 million in the same period of 2023[15] Cash Flow and Capital Expenditure - Operating cash flow decreased to RMB 97,316 million in the first 9 months of 2024, down from RMB 112,330 million in the same period of 2023[13] - Capital expenditure was RMB 58,238 million in the first 9 months of 2024, slightly lower than RMB 60,564 million in the same period of 2023[13] - Net cash used in investing activities increased to RMB 68,913 million in the first 9 months of 2024, up from RMB 61,612 million in the same period of 2023[13] - Net cash used in financing activities decreased to RMB 36,080 million in the first 9 months of 2024, down from RMB 40,791 million in the same period of 2023[13] - Cash and cash equivalents decreased to RMB 73,338 million as of September 30, 2024, compared to RMB 82,445 million at the end of the same period in 2023[13] Financial Costs and Receivables - Net financial costs decreased by 12.2% to RMB 518 million, primarily due to reduced interest expenses on lease liabilities[8] - Accounts receivable increased by RMB 33,302 million in the first 9 months of 2024, compared to an increase of RMB 32,166 million in the same period of 2023[15] - Contract liabilities decreased by RMB 7,395 million in the first 9 months of 2024[15] Cautionary Note - The company's financial data is unaudited and investors should exercise caution when relying on these figures[16]

Financial Performance - The company reported a profit attributable to shareholders of RMB 21.81 billion for the first half of 2024, with a proposed dividend distribution of RMB 15.29 billion, translating to a dividend of RMB 0.1671 per share[3]. - In the first half of 2024, the company's operating revenue reached RMB 268 billion, a year-on-year increase of 2.8%, with service revenue at RMB 246.2 billion, growing by 4.3%[11]. - EBITDA for the first half of 2024 was RMB 76.8 billion, reflecting a year-on-year growth of 4.7%, while net profit increased by 8.2% to RMB 21.8 billion[21]. - The number of mobile users increased by 9.08 million, bringing the total to 417 million, with an ARPU of RMB 46.3[21]. - The company's industry digitalization revenue reached RMB 73.7 billion, a year-on-year increase of 7.2%, accounting for 30.0% of service revenue, up 0.8 percentage points[21]. - The company plans to distribute an interim dividend of RMB 0.1671 per share, a 16.7% increase year-on-year, with a goal to raise cash distributions to over 75% of profits within three years[21]. Subscriber and User Growth - The total number of subscribers reached 391 million, with a year-on-year increase of 5.2%[3]. - The number of 5G mobile users reached 927 million, with a penetration rate increase of 14.3 percentage points year-on-year[11]. - The broadband user base grew by 3.19 million to 193 million, with a comprehensive ARPU of RMB 48.3, while smart home business revenue rose 14.4% to RMB 10.7 billion[21]. Research and Development - Investment in research and development increased by 12% year-on-year, emphasizing the company's commitment to innovation and technology advancement[3]. - R&D expenses increased by 12.5% year-on-year, with the number of researchers growing by 15.3% to over 10,000[15]. - The company achieved a 40.4% year-on-year growth in self-developed technology results, with self-developed IT systems and business platforms accounting for 50.4%, an increase of 9.5 percentage points[25]. Technological Advancements - The company is focusing on enhancing its digital infrastructure, with over 1.31 million 5G base stations deployed, achieving continuous coverage in towns and above[13]. - The company has established a leading AI computing infrastructure with a computing power of 21 EFLOPS, supporting various AI application needs[13]. - The company aims to enhance its service offerings through the integration of artificial intelligence and big data technologies[3]. - The company launched the world's first satellite direct connection service for vehicles, enhancing its product offerings for individual users[14]. Strategic Initiatives - The company is exploring strategic partnerships for market expansion, particularly in the Internet of Things (IoT) and cloud computing sectors[3]. - The company aims to accelerate the development of strategic emerging businesses, focusing on cloud computing, big data, and AI, among others[10]. - The company has established over 110 digital platforms to support digital transformation in key industries such as government, education, and finance[15]. Environmental and Social Responsibility - The company has actively engaged in environmental protection and pollution prevention through digital technology, enhancing ecological monitoring capabilities in Hainan[58]. - The company has achieved a double-digit reduction in carbon emissions per unit of telecom business volume in the first half of 2024[59]. - The company is expanding its green energy initiatives, including participation in green electricity acquisition and the establishment of distributed energy systems[59]. Corporate Governance and Compliance - The company has maintained compliance with corporate governance codes and has strengthened internal control systems to protect shareholder interests[57]. - The company ensures compliance with legal regulations regarding the procedures for convening and conducting shareholders' meetings[54]. - The company has been recognized as an outstanding enterprise in technological innovation by the State-owned Assets Supervision and Administration Commission[15]. Market Risks and Challenges - The company has identified potential risks related to economic and policy environments, as well as cybersecurity threats, which could impact future performance[3]. - International business expansion faces increased uncertainty due to changing policies in host countries, and the company aims to improve its overseas compliance management and risk assessment[41]. - The company faces uncertainties in emerging business risks related to digital services and competition in areas like large models and intelligent computing cloud[40].

Investment Rating - The report maintains a "Buy" rating for China Telecom with a target price of HKD 6.0, indicating a potential upside of 31% from the current price of HKD 4.6 [2][3]. Core Insights - China Telecom's service revenue growth exceeded expectations, achieving RMB 268 billion in revenue for H1 2024, a year-on-year increase of 2.8%, with service revenue at RMB 246.2 billion, up 4.3% year-on-year [2]. - The company emphasizes shareholder returns, maintaining a dividend payout ratio of 70%, with plans to increase this to over 75% within three years [2]. - The mobile ARPU (Average Revenue Per User) showed steady growth, reaching RMB 46.3, a slight increase of 0.2% year-on-year, while broadband ARPU was RMB 48.3, also up 0.2% year-on-year [2]. - The company is focusing on digital transformation, with digital revenue accounting for 30% of service revenue, and cloud services revenue growing by 20.4% year-on-year [2]. - Capital expenditures are projected to be around RMB 96 billion for the year, with a capital expenditure to revenue ratio expected to remain below 20% [2]. Summary by Sections Financial Performance - For H1 2024, EBITDA was RMB 76.8 billion, reflecting a year-on-year increase of 4.7%, and net profit reached RMB 21.8 billion, up 8.2% year-on-year [2]. - The company forecasts revenue growth rates of 4.4%, 4.2%, and 3.9% for 2024, 2025, and 2026 respectively, with net profit growth rates of 9.0%, 8.8%, and 8.2% for the same years [3]. Market Position - China Telecom continues to lead in mobile and broadband ARPU growth compared to industry peers, indicating a strong competitive position [2]. - The company is actively expanding its 5G network, with over 1.31 million 5G base stations built, ensuring coverage in towns and above nationwide [2]. Future Outlook - The report expresses optimism about China Telecom's role in national digital infrastructure development and its potential for future growth, particularly in cloud computing and AI applications [2].

Financial Performance - The company's operating revenue for the first half of 2024 was RMB 268 billion, a year-on-year increase of 2.8%, with service revenue reaching RMB 246.2 billion, up 4.3%[2] - EBITDA for the period was RMB 76.8 billion, reflecting a year-on-year growth of 4.7%, while net profit was RMB 21.8 billion, an increase of 8.2%, resulting in basic earnings per share of RMB 0.24[4] - The company reported a net increase of 9.08 million mobile users, bringing the total to 417 million, with mobile ARPU at RMB 46.3[5] - The board decided to continue paying an interim dividend for 2024, distributing over 70% of the company's net profit attributable to shareholders, equating to RMB 0.1671 per share, a 16.7% increase year-on-year[2] - The company reported a basic and diluted earnings per share of RMB 0.24 for the six months ended June 30, 2024, compared to RMB 0.22 in the same period of 2023[27] - The net profit attributable to shareholders for the six months ended June 30, 2024, was RMB 21,812 million, compared to RMB 20,153 million in 2023, reflecting an increase of approximately 8.2%[27] Revenue Breakdown - Mobile communication service revenue reached RMB 105.2 billion, growing 3.6% year-on-year, with mobile value-added and application revenue at RMB 18.1 billion, up 17.1%[5] - Fixed-line and smart home service revenue amounted to RMB 64 billion, a year-on-year increase of 3.2%, with smart home business revenue at RMB 10.7 billion, growing 14.4%[5] - Industry digitalization revenue reached RMB 73.7 billion, a year-on-year increase of 7.2%, accounting for 30.0% of service revenue, up 0.8 percentage points[5] - Tianyi Cloud revenue was RMB 55.2 billion, reflecting a significant year-on-year growth of 20.4%[5] Capital Expenditure and Cash Flow - Capital expenditure for the first half of 2024 was RMB 47.2 billion, with free cash flow amounting to RMB 15.5 billion[4] - The company aims to gradually increase the cash distribution of profits to over 75% of the net profit attributable to shareholders within three years starting from 2024[5] Research and Development - The company achieved a 12.5% year-on-year increase in R&D expenses, focusing on key technological advancements in networking, cloud integration, AI, and quantum security[8] - The R&D personnel increased by 15.3% compared to the end of last year, surpassing 10,000 specialists in key technology areas[8] - The company reported a 40.4% year-on-year growth in self-developed technology achievements, with self-developed IT systems and business platforms accounting for 50.4% of total systems[9] Technological Advancements - The company launched the first global satellite service for direct vehicle connectivity, enhancing its product offerings in the automotive sector[6] - The company is advancing its 5G NICES Pro+ integrated product system, significantly reducing network construction and operational costs for industrial clients[6] - The company has completed the first industry-wide verification of a distributed lossless computing network over 100 kilometers, showcasing its technological leadership[9] - The company is actively promoting smart city development through over 110 digital platform capabilities, enhancing governance in various sectors[7] Corporate Governance and Recognition - The company has been recognized for its corporate governance, receiving accolades such as "Asia's Most Admired Company" for 14 consecutive years and being rated as the "Best Telecom Company in Asia" by Institutional Investor[21] - The company has been recognized with an A-level rating for three consecutive years in the State-owned Assets Supervision and Administration Commission's evaluation of key reform tasks[11] Social Responsibility and Sustainability - The company has enhanced its social responsibility by providing communication support for significant events and utilizing satellite communication and drones for disaster relief during natural disasters[20] - The company is committed to green low-carbon development, with a target to maintain a double-digit reduction in carbon emissions from telecom business volume in the first half of 2024[19] - The company has established 12 new national green data centers, the highest in the industry, and has accelerated the green transformation of traditional communication buildings[19] Future Plans and Strategic Initiatives - The company plans to continue expanding its digital services, with a focus on cloud services and digital platforms, to drive future revenue growth[33] - The company is focusing on cloud computing, artificial intelligence, and big data as part of its strategy to drive innovation and transformation in the telecommunications sector[22] - The company aims to strengthen its core technology capabilities and accelerate the application of technological achievements to enhance enterprise value[23] Dividend Distribution - The company plans to distribute an interim dividend of RMB 0.1671 per share, totaling approximately RMB 15,291 million for the six months ended June 30, 2024[47] - The interim dividend is expected to be paid on or before October 18, 2024, to shareholders listed on the H-share register as of September 10, 2024[52] - A 10% corporate income tax will be withheld for non-resident H-share shareholders when distributing the interim dividend[54] Financial Position - As of June 30, 2024, total assets amounted to RMB 870,991 million, an increase from RMB 835,814 million as of December 31, 2023, representing a growth of approximately 4.2%[28] - Total liabilities reached RMB 410,317 million, up from RMB 388,647 million, which is an increase of about 5.5%[29] - The company's net current liabilities improved to RMB (128,054) million from RMB (135,573) million, showing a reduction of approximately 5.6%[29]

Investment Rating - The report maintains a "Buy" rating for China Telecom (00728 HK) with a target price of HKD 5.00, corresponding to a price-to-earnings ratio of 12.7x/11.7x/10.8x for the years 2024-2026 [1]. Core Insights - China Telecom's service revenue and net profit for Q1 2024 were RMB 124.347 billion (up 5.0% year-on-year) and RMB 8.597 billion (up 7.7% year-on-year), respectively, aligning with market expectations [1]. - The company added 3.88 million mobile users and 2.06 million broadband users in Q1 2024, with mobile ARPU and broadband mixed ARPU increasing by 0.9% and 2.1% year-on-year, respectively [1]. - The report highlights a 10.6% year-on-year growth in industrial digitalization revenue due to ongoing investments in digitalization [1]. - Future dividends are expected to grow steadily, with a proposed increase in the payout ratio to over 75% over the next three years, leading to projected dividend yields of 6.5%, 7.2%, and 8.0% for 2024, 2025, and 2026, respectively [1]. Summary by Sections Financial Performance - Q1 2024 service revenue: RMB 124.347 billion (5.0% YoY growth) [1] - Q1 2024 net profit: RMB 8.597 billion (7.7% YoY growth) [1] - New mobile users: 3.88 million; new broadband users: 2.06 million [1] - Mobile ARPU growth: 0.9% YoY; broadband mixed ARPU growth: 2.1% YoY [1] Dividend Outlook - Proposed increase in payout ratio to over 75% starting in 2024 [1] - Projected dividend yields: 6.5% (2024), 7.2% (2025), 8.0% (2026) [1]

Dividend Policy and Distribution - The company's 2023 annual dividend is RMB 0.2332 per share (including tax), totaling approximately RMB 21.339 billion, exceeding 70% of the net profit attributable to shareholders for the year[5] - The company plans to increase cash dividends to over 75% of the net profit attributable to shareholders from 2024 onwards for the next three years[5] - The company's total share capital at the end of 2023 is 91,507,138,699 shares, with a proposed final dividend of RMB 0.090 per share (including tax), totaling approximately RMB 8.236 billion[5] - The company's mid-year dividend for 2023 was RMB 0.1432 per share (including tax)[5] - Total dividends for 2023 were RMB 0.2332 per share, a 19.0% increase year-on-year, exceeding 70% of the company's net profit[17] - The dividend payout ratio for 2023 is 70.1% of the net profit attributable to shareholders[193] - The company's total cash dividend for 2023, including interim and final dividends, amounts to RMB 21.34 billion[193] - The final dividend for 2023 is expected to be paid on or before July 26, 2024, after approval at the 2023 annual general meeting[100] Financial Performance - Total operating revenue reached RMB 513.6 billion, a year-on-year increase of 6.7%, with service revenue at RMB 465 billion, up 6.9%[17] - Net profit increased by 10.3% to RMB 30.4 billion, with basic earnings per share at RMB 0.33[17] - Capital expenditure was RMB 98.8 billion, and free cash flow reached RMB 13 billion[17] - The company's operating income for 2023 was RMB 5,135.51 billion, a year-on-year increase of 6.9%[62] - The company's net profit attributable to shareholders was RMB 304.46 billion, a year-on-year increase of 10.3%[62] - The company's EBITDA was RMB 1,368.30 billion, a year-on-year increase of 5.0%, with an EBITDA margin of 29.4%[62] - Operating revenue in 2023 reached RMB 513.551 billion, a 6.7% increase compared to 2022[64][66] - Service revenue in 2023 was RMB 464.965 billion, up 6.9% year-over-year, with mobile communication service revenue at RMB 195.66 billion, a 2.4% increase[64][66][67] - Industrial digitalization service revenue grew significantly by 17.9% to RMB 138.89 billion in 2023[66][67] - Fixed-line and smart home service revenue increased by 3.8% to RMB 123.063 billion in 2023[66][68] - Other service revenue declined by 3.4% to RMB 7.352 billion in 2023[66][69] - Operating expenses in 2023 totaled RMB 476.423 billion, a 6.3% increase compared to 2022, accounting for 92.8% of operating revenue[70][71] - Depreciation and amortization expenses rose by 2.9% to RMB 99.702 billion in 2023[71][72] - Network operation and support costs increased by 8.7% to RMB 160.411 billion in 2023[71][73] - Labor costs grew by 9.5% to RMB 92.805 billion in 2023, reflecting increased investment in tech and innovative talent[71][74] - Net profit attributable to shareholders increased by 10.3% to RMB 30.446 billion in 2023[78] - Capital expenditure for 2023 was RMB 98.838 billion, an increase of 6.8% compared to 2022, driven by investments in 5G network construction, cloud-network integration, and AI computing capabilities[79] - Net cash generated from operating activities in 2023 was RMB 137.508 billion, a year-on-year increase of 0.8%[80][81] - Total assets increased by 3.5% to RMB 835.814 billion at the end of 2023, while total liabilities increased by 4.7% to RMB 388.647 billion, resulting in a debt-to-asset ratio of 46.5%[82] - Total debt decreased by RMB 1.342 billion to RMB 91.42 billion at the end of 2023, with 97.3% of the debt denominated in RMB[84] - The company's actual tax rate in 2023 was 22.4%, lower than the statutory rate of 25.0%, due to tax incentives such as tax-exempt investment income from China Tower and R&D expense deductions[79] - Cash and cash equivalents at the end of 2023 were RMB 81.046 billion, with RMB cash and equivalents accounting for 93.6%[81] - The company's operating capital shortage decreased by RMB 5.092 billion to RMB 135.573 billion at the end of 2023, with unused credit lines of RMB 205.452 billion[83] Business Operations and Market Development - The company's main business includes fixed, mobile, and satellite communication services, as well as internet access and information services[2] - The company's A-shares and H-shares are listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange, respectively[2] - The company achieved breakthroughs in technological innovation and completed the layout of strategic emerging businesses, with digital information infrastructure continuously upgraded and new quality productivity rapidly forming[16] - The company actively served and integrated into the new development pattern, seizing market development opportunities in the process of promoting Chinese-style modernization[16] - The company implemented the cloud reform and digital transformation strategy comprehensively, leveraging the advantages of cloud-network integration[16] - The company focused on building a service-oriented, technology-oriented, and security-oriented enterprise, with continuous improvements in governance capabilities and levels[16] - The company's market development momentum grew rapidly, and enterprise reforms were pushed forward in depth[16] - Mobile communication service revenue grew by 2.4% to RMB 195.7 billion, with mobile user ARPU at RMB 45.4, up 0.4%[21] - Fixed-line and smart home service revenue increased by 3.8% to RMB 123.1 billion, with smart home business revenue up 12.8% to RMB 19 billion[21] - Mobile user base grew by 16.59 million, reaching 408 million, maintaining industry leadership for six consecutive years[21] - Broadband user base increased by 9.26 million, reaching 190 million, with broadband ARPU at RMB 47.6, up 2.8%[21] - The company's industrial digital business revenue reached RMB 138.9 billion, a year-on-year increase of 17.9%, accounting for 29.9% of service revenue, an increase of 2.8 percentage points compared to the previous year[23] - The number of enterprise customers increased by 11.3% year-on-year, and the number of new 5G industry application projects increased by 106.3%, with a cumulative total of over 31,000 projects[23] - The number of IoT terminal users exceeded 520 million, and the user scale of applications such as Smart Kitchen and Tianyi Emergency exceeded 77 million[23] - Tianyi Cloud revenue reached RMB 97.2 billion, a year-on-year increase of 67.9%, and international business revenue exceeded RMB 13.7 billion[23] - The company's cloud computer user development volume increased by more than 2 times year-on-year, maintaining a nearly 40% share in the Chinese DaaS market[25] - The company's big data API was called 4.6 billion times annually, a year-on-year increase of 45%, and it has formed over 50 "Star Ocean Big Data" products[26] - The company has launched 12 industry-specific large models and has empowered over 600 projects in scenarios such as grassroots governance and smart cities[26] - The company's cloud-based anti-DDoS service (Cloud Dike) maintains the top market share in China and is listed in Gartner's global top service provider selection list[26] - The company has completed the acquisition of QuantumCTek Co., Ltd., enhancing technological and application innovation breakthroughs in the quantum field[28] - The company has launched the world's first commercial service supporting consumer-grade 5G terminal direct satellite two-way voice and SMS, providing emergency and guaranteed communication for industries such as maritime, industrial, and rescue[29] - The company has developed over 110 digital platforms, empowering digital transformation in government, enterprise, education, healthcare, and finance sectors. These platforms have been deployed in more than 20 provinces and 220 cities, providing comprehensive applications such as one-stop government services and urban management[30] - The company's intelligent computing capacity increased by 8.1 EFLOPS in 2023, reaching a total of 11.0 EFLOPS, a growth of 279.3%. Additionally, the general computing capacity increased by 1.0 EFLOPS, reaching 4.1 EFLOPS, a growth of 32.3%[31] - The company and China Unicom have saved over RMB 340 billion in cumulative investment and over RMB 39 billion in annual operating costs through network co-construction and sharing. They have built over 220,000 new 5G base stations, with a total of over 1.21 million 5G base stations in operation[32] - The company has built 250,000 800MHz base stations capable of 4G/5G integrated services by January 2024, significantly improving network coverage and user experience in rural areas[33] - The company's online development ratio for basic business users increased by 11.5 percentage points year-on-year, and the proportion of AI customer service increased by 12.6 percentage points. AI-powered energy-saving measures in data centers and base stations saved approximately 800 million kWh annually[33] - The company has expanded its global cloud network broadband industry association (WBBA) to 77 member units, covering 32 countries across five continents, and released the WBBA Global Cloud Network Broadband Industry Development Report and the Global Cloud Network Development Index[34] - The company has established 53 overseas branches, serving global demand for communication, internet, cloud computing, and digital transformation[35] - The international transmission network backbone scale is nearly 115Tbps, with over 50% directed towards the "Belt and Road" regions[35] - The company has over 6,000 racks in nearly 30 overseas data centers[35] - The company added 15 new global CDN nodes for its Tianyi Cloud service in 2023[35] - The company reduced greenhouse gas emissions by over 13 million tons through energy-saving measures, with a 19.6% year-on-year decrease in greenhouse gas emissions per unit of telecom business volume[37] - The company used over 1.1 billion kWh of green electricity in 2023, a nearly threefold increase year-on-year[37] - The company signed over 3,000 projects for green and low-carbon products and solutions, serving industries such as government, industrial manufacturing, and construction[37] - The company's digital services have achieved a penetration rate of over 60% in administrative villages, contributing to rural digitalization[38] - The company was recognized as "Asia's Most Admired Company" for the 13th consecutive year in the 2023 Institutional Investor survey[39] - The company aims to deepen its cloud-network transformation, focusing on AI development and meeting digital demands across industries with "network + cloud + AI + applications"[40] - Telecom business revenue reached RMB 1.68 trillion, a year-on-year increase of 6.2%[41] - 5G mobile phone users reached 805 million, accounting for nearly half of total mobile phone users[41] - Fixed broadband access users reached 636 million, with 163 million users having access speeds of 1000Mbps or higher[41] - Mobile internet user access traffic reached 301.5 billion GB, a year-on-year increase of 15.2%[42] - Monthly average data usage per user (DOU) reached 16.85GB, a year-on-year increase of 10.9%[42] - 5G application cases exceeded 94,000, covering 71 out of 97 major national economic categories[42] - Cellular IoT terminal users reached 2.332 billion, accounting for nearly 60% of total mobile network terminal connections[41] - The company is accelerating the deployment of AI infrastructure and transitioning to an "AI+" strategy[41] - The company is actively promoting the integration of cloud, network, and intelligence, and building a full optical base for computing power networks[41] - The company is focusing on compliance with new laws and regulations, including the revised Company Law and the Generative AI Service Management Interim Measures[43][44] - Mobile user base reached 408 million, with a net increase of 16.59 million, maintaining industry leadership for six consecutive years[46] - Mobile user ARPU increased to RMB 45.4, up 0.4% year-over-year[46] - Broadband user base reached 190 million, with a net increase of 9.26 million[46] - Broadband comprehensive ARPU increased to RMB 47.6, up 2.8% year-over-year[46] - Industrial digitalization revenue reached RMB 138.9 billion, up 17.9% year-over-year, accounting for 29.9% of service revenue[46] - Tianyi Cloud revenue reached RMB 97.2 billion, up 67.9% year-over-year[46] - Number of 5G base stations exceeded 1.21 million, achieving continuous coverage in towns and above and effective coverage in developed villages[48] - Greenhouse gas emissions reduced by over 13 million tons through co-construction and sharing and energy-saving measures[49] - Green electricity usage exceeded 1.1 billion kWh, up nearly 3 times year-over-year[49] - AIoT platform users exceeded 520 million, with a year-over-year growth of 45% in API calls[51] - The company's operating revenue in 2023 reached RMB 513.6 billion, a year-on-year increase of 6.7%, with service revenue at RMB 465 billion, up 6.9% year-on-year[56] - Mobile communication service revenue in 2023 was RMB 195.7 billion, a year-on-year increase of 2.4%, with mobile value-added and application revenue at RMB 25.8 billion, up 12.4% year-on-year[56] - The company's mobile user base increased by 16.59 million, reaching 408 million users, with mobile user ARPU at RMB 45.4, a year-on-year increase of 0.4%[57] - Fixed-line and smart home service revenue in 2023 was RMB 123.1 billion, a year-on-year increase of 3.8%, with smart home business revenue at RMB 19 billion, up 12.8% year-on-year[57] - Broadband user base increased by 9.26 million, reaching 190 million users, with broadband comprehensive ARPU at RMB 47.6, a year-on-year increase of 2.8%[57] - The company's quantum computing cloud platform "Tianyan" achieved ultra-quantum fusion, and it was the first globally to enable consumer mobile phones to directly connect to satellites for two-way voice calls and SMS services[53] - The company's data security posture awareness system improved accuracy to 98%, and it built a full-scale user anti-fraud risk model, achieving daily risk assessment for 470 million users[55] - The company's distributed cloud operating system TeleCloudOS 4.0 won the first prize of the 2023 China Communications Society Science and Technology Award[53] - The company's cloud computing and intelligent computing capabilities continued to upgrade, with the self-developed cloud operating system TeleCloudOS 4.0 forming a technological leadership[57] - The company's industry-leading quantum secure communication metropolitan area network was established, and it introduced communication/bank blacklist data, enabling minute-level shutdown of newly inserted cards on involved terminals[55] - Tianti Cloud revenue reached RMB 97.2 billion, a year-on-year increase of 67.9%[58] - Tianti Cloud maintained its leading position in the domestic public cloud IaaS and IaaS+PaaS markets, with its market share continuing to rise[58] - The number of new 5G industry application projects increased by 106.3% year-on-year, with a cumulative total of over 31,000 projects[60] - The company's digital business revenue reached RMB 1,389 billion, a year-on-year increase of 17.9%, accounting for 29.9% of service revenue[60] - The company's operating income for 2023 was RMB 5,135.51 billion, a year-on-year increase of 6.9%[62] - The company's net profit attributable to shareholders was RMB 304.46 billion, a year-on-year increase of 10.3%[62] - The company's EBITDA was RMB 1,368.30 billion, a year-on-year increase of 5.0%, with an EBITDA margin of 29.4%[62] - The company's cloud computer user base grew by more than 2 times year-on-year, maintaining a nearly 40% share in the Chinese DaaS market[58] - The company launched the "Xingchen MaaS Platform," which has empowered over 600 projects in various industries[58] - The company's AI intelligent customer service accounted for a 12.6% year-on-year increase in service volume[63] - Operating revenue in 2023 reached RMB 513.551 billion, a 6.7% increase compared to 2022[64][66] - Service revenue in 2023 was RMB 464.965 billion, up 6.9% year-over-year, with mobile communication service revenue at RMB 195.66 billion, a 2.4% increase[64][66][67] - Industrial digitalization service revenue grew significantly by 17.9% to RMB 138.89 billion in 2023[66][67] - Fixed-line and smart home service revenue increased by 3.8% to RMB 123.063 billion in 2023[66][68] - Other service revenue declined by 3.4% to RMB 7.352 billion in 2023[66][69] - Operating expenses in 2023 totaled RMB 476.423 billion, a 6.3% increase compared to 2022, accounting for 92.8% of operating revenue[70][71] - Depreciation and amortization expenses rose by

Financial Performance - The company's operating revenue for Q1 2024 was RMB 135.493 billion, an increase of 3.8% year-on-year, with service revenue reaching RMB 124.347 billion, up 5.0%[1][2][4] - Net profit attributable to shareholders was RMB 8.597 billion, reflecting a growth of 7.7% compared to the same period last year, with basic earnings per share at RMB 0.09[2][4] - The company reported an EBITDA of RMB 35.1 billion, a 3.6% increase year-on-year, with an EBITDA margin of 28.2%[4] - Operating revenue for the three months ended March 31, 2024, was RMB 135,493 million, an increase from RMB 130,588 million in the same period of 2023, representing a growth of 3.1%[10] - Net profit for the period was RMB 8,628 million, compared to RMB 7,972 million in the previous year, reflecting a year-over-year increase of 8.2%[10] User Growth - The total number of mobile users reached 411.65 million, with a net increase of 3.88 million users in Q1 2024[3][4] - The number of 5G package users increased by 10.06 million to 329.2 million, achieving a penetration rate of 79.9%[3][4] - Fixed broadband users totaled 192.22 million, with a net increase of 2.06 million users, while the smart home service revenue grew by 10.4%[5] Revenue Segments - The company's digital industry revenue reached RMB 38.679 billion, marking a 10.6% year-on-year growth[5] Operating Expenses - Operating expenses for Q1 2024 were RMB 124.941 billion, an increase of 3.6% year-on-year, with network operation costs rising by 6.6%[5] - The company’s gross operating expenses for the quarter were RMB 124,941 million, compared to RMB 120,586 million in the same period last year, an increase of 3.7%[10] Assets and Liabilities - Total assets as of March 31, 2024, amounted to RMB 848,806 million, up from RMB 835,814 million at the end of 2023, indicating a growth of 1.2%[9] - Current liabilities totaled RMB 309,402 million, slightly increased from RMB 303,436 million in the previous quarter, showing a rise of 2.3%[8] - The company reported a total equity of RMB 455,646 million, an increase from RMB 447,167 million, representing a growth of 1.1%[9] Cash Flow - Cash and cash equivalents decreased to RMB 71,553 million from RMB 81,046 million, a decline of 11.5%[7] - The net cash generated from operating activities for the three months ended March 31, 2024, was RMB 20,317 million, a decrease of 28.2% from RMB 28,215 million in the same period of 2023[13] - The net cash used in investing activities was RMB (20,293) million, compared to RMB (15,943) million in the same period of 2023, indicating an increase in investment outflows[13] - The net cash used in financing activities was RMB (9,522) million, slightly improved from RMB (9,977) million in the same period of 2023[13] - The cash and cash equivalents as of March 31, 2024, amounted to RMB 71,553 million, down from RMB 74,642 million as of March 31, 2023[13] Depreciation and Interest - Depreciation and amortization for the three months ended March 31, 2024, was RMB 24,548 million, an increase from RMB 23,872 million in the same period of 2023[14] - The company reported a net interest expense of RMB 591 million for the three months ended March 31, 2024, down from RMB 696 million in the same period of 2023[14] Losses and Future Outlook - The company experienced a net loss of RMB 1,321 million from the disposal of long-term assets for the three months ended March 31, 2024, compared to RMB 543 million in the same period of 2023[14] - The company anticipates future growth strategies and operational plans, although these forward-looking statements are subject to risks and uncertainties[16] - The board of directors emphasizes caution for investors when relying on the financial and business data provided, as they are unaudited figures[15]

Investment Rating - The investment rating for China Telecom is "Buy" with a target price of 5.50 HKD [3]. Core Insights - China Telecom reported stable growth in 2023, with total revenue reaching 513.6 billion RMB, a year-on-year increase of 7%. The net profit attributable to shareholders was 30.4 billion RMB, up 10% year-on-year. The company also announced a dividend of 0.2332 RMB per share, achieving a payout ratio of 70%, with plans to increase this to 75% over the next three years [1][2]. Summary by Sections Financial Performance - In 2023, the telecom service revenue was 465 billion RMB, marking a 7% increase and maintaining growth for 11 consecutive years. Mobile communication service revenue reached 195.7 billion RMB, growing by 2%. The mobile user base expanded to 408 million, with a net addition of 16.59 million users, leading the industry for six years [1]. - The average revenue per user (ARPU) for 2023 was 45.4 RMB, a slight increase of 0.4%. Fixed-line and smart home revenue was 123.1 billion RMB, up 4%, with broadband users reaching 190 million and an ARPU of 47.6 RMB, increasing by 3% [1][2]. Digital Transformation - The company's cloud revenue from Tianyi Cloud reached 97.2 billion RMB, a significant increase of 68% year-on-year, with international business revenue exceeding 13.7 billion RMB. The company is enhancing its cloud services with integrated computing platforms, maintaining its leading position in public cloud infrastructure [1][2]. Capital Expenditure and Network Expansion - In 2023, China Telecom's total capital expenditure was 98.8 billion RMB, with 34.8 billion RMB allocated to mobile networks and 35.5 billion RMB to industrial digitalization. The company added 220,000 5G base stations, achieving continuous coverage in towns and effective coverage in developed administrative villages [2]. - The company anticipates a capital expenditure of 96 billion RMB in 2024, a 3% decrease from the previous year, with a focus on mobile network and digitalization investments [2]. Dividend Policy - The company achieved a dividend payout ratio of 70% in 2023, fulfilling its profit distribution commitment made during its A-share issuance. Plans are in place to increase the payout ratio to over 75% within three years, enhancing shareholder returns [2][3].

Investment Rating - The report maintains a "Buy" rating for China Telecom with a target price adjusted to HKD 5.2, reflecting a 27% upside potential from the current stock price of HKD 4.1 [2][3]. Core Views - China Telecom has entered a high-quality development phase focused on improving efficiency and returns, with service revenue expected to maintain good growth over the next three years. The reduction in capital expenditure is anticipated to enhance operating cash flow [2][3]. - The company emphasizes precise cost management and structural optimization, projecting profit growth to outpace revenue growth [2][3]. Summary by Sections Financial Performance - In 2023, China Telecom achieved revenue of CNY 513.6 billion (YoY +6.7%), with service revenue at CNY 465 billion (YoY +6.9%). EBITDA reached CNY 136.8 billion (YoY +5.0%), and net profit was CNY 30.4 billion (YoY +10.3%) [1][3]. - The company plans to increase its dividend payout ratio to over 75% over the next three years, with a dividend of CNY 0.23 per share in 2023 (YoY +19%) [1][3]. Business Segments - Mobile communication service revenue was CNY 195.7 billion (YoY +2.4%), with a mobile ARPU of CNY 45.4 (YoY +0.4%). The number of mobile users reached 408 million, with a net increase of 16.59 million users [1][3]. - The digital industry segment saw revenue of CNY 138.9 billion (YoY +17.9%), with Tianyi Cloud revenue at CNY 97.2 billion (YoY +67.9%), indicating rapid growth and a focus on upgrading to intelligent cloud services [1][3]. Future Outlook - The report anticipates that the capital expenditure for 2024 will be CNY 96 billion, accounting for less than 20% of service revenue, a decrease of 2.9% from the previous year [1][3]. - The company is expected to focus more on the quality of revenue growth in its cloud services, transitioning into a phase of high-quality development [1][2].