Core Viewpoint - The upcoming adjustment of the Hang Seng Index on September 5 will include China Telecom, JD Logistics, and Pop Mart, increasing the number of constituent stocks from 85 to 88, which is expected to attract passive fund inflows and lead to significant trading volume and price volatility for these stocks [2][3]. Group 1: Index Adjustments - The inclusion of China Telecom, JD Logistics, and Pop Mart in the Hang Seng Index is anticipated to draw passive investment, resulting in increased trading activity and price fluctuations for these stocks [2][3]. - Pop Mart will also be added to the Hang Seng China Enterprises Index, while other stocks like Crown City Watch and Jewelry and Sipai Health will be removed from the index [2]. - The Hang Seng Composite Index will see an increase in constituent stocks from 502 to 504, with the inclusion of China Foods and Heng Rui Pharmaceutical [2]. Group 2: Market Impact - Historical trends indicate that active funds often position themselves ahead of index announcements, leading to noticeable volatility in related stocks prior to the effective date [3]. - Passive funds typically adjust their holdings on the last trading day before the effective date, which may result in a surge in trading volume and price movements, particularly for small-cap stocks [3]. - The adjustment is expected to enhance market confidence in the relevant sectors and stocks, as the Hong Kong market is viewed as a "global value trap" with low valuations providing a good margin of safety for investors [3]. Group 3: Fund Inflows - Goldman Sachs estimates that consumer retail, software and services, and automotive stocks will see the most passive fund inflows, ranging from $300 million to $780 million [4]. - Specific stocks like Horizon Robotics, Pop Mart, BYD, Meituan, Xiaomi, and Alibaba are projected to receive significant net buying, estimated between $185 million to $610 million [4]. Group 4: Company Profiles - China Telecom is a leading player in the telecommunications industry, focusing on 5G construction and cloud computing, reflecting the importance of traditional industry leaders in the index [5]. - JD Logistics represents the new economy logistics sector, highlighting the index's focus on high-growth and core supply chain enterprises [5]. - Pop Mart, as a representative of the trendy toy culture, has seen significant growth in market capitalization and liquidity since its listing, becoming a key player in the new consumption sector [5]. - BYD is a global leader in electric vehicle manufacturing, with a diverse business portfolio that includes passenger cars, commercial vehicles, batteries, semiconductors, and mobile components, exemplifying technological innovation and the green energy transition [5]. - Meituan is a leading e-commerce platform in China, covering a wide range of services and representing the platform and digital economy through innovative business models [5].

Core Viewpoint - The inclusion of China Telecom in the Hang Seng Index starting September 8, 2025, is expected to enhance the company's reputation, investor confidence, and stock liquidity, with an estimated passive fund inflow of approximately $160 million [1]. Group 1: Company Transformation and Performance - China Telecom is transitioning from a traditional telecom operator to a service-oriented, technology-driven, and secure enterprise, achieving steady operational performance and high-quality development [2]. - The company is embracing artificial intelligence and has upgraded its strategy from "cloud transformation" to "intelligent cloud transformation," focusing on building an intelligent cloud system and integrating AI applications across various sectors [2]. - In the first half of 2025, China Telecom's service revenue grew by 1.2% year-on-year, while net profit increased by 5.5%, with significant growth in key products such as Tianyi Cloud, which generated revenue of 57.3 billion yuan, and intelligent services, which reached 6.3 billion yuan, marking a year-on-year growth of 89.4% [2]. Group 2: Market Value Management - China Telecom is actively enhancing its market value management, which complements its high-quality development, by engaging with investors and maintaining a high dividend payout ratio of 72% for the mid-2025 period [3]. - The company has received numerous accolades for its performance, including being recognized as "Asia's Most Admired Companies" for 14 consecutive years and winning awards for corporate social responsibility and information disclosure [3].

Core Viewpoint - Recent changes in mobile recharge platforms have eliminated small denomination options like 10 yuan and 20 yuan, raising the minimum recharge amount to 50 yuan or even 100 yuan, which restricts consumer flexibility and autonomy in managing their communication expenses [1][3][8] Group 1: Consumer Impact - The increase in minimum recharge amounts disregards the basic rights and diverse needs of Chinese consumers, particularly affecting students and elderly users who typically require lower amounts for their communication needs [3][10] - Users who previously managed their expenses with small recharges now face a financial burden, as they are forced to pay larger sums upfront, which limits their financial flexibility [3][11] Group 2: Responsibility and Accountability - Payment platforms and telecom operators are deflecting responsibility for the new recharge limits, with each party blaming the other for the changes, indicating a lack of accountability in addressing consumer concerns [8][10] - Despite the technical capability to allow for custom recharge amounts, operators and platforms are unwilling to provide these options, suggesting a prioritization of profit over consumer rights [9][10] Group 3: Legal and Regulatory Considerations - The practice of setting high minimum recharge amounts may violate consumer protection laws, as it limits consumer choice and could be seen as a form of forced consumption [10][11] - Regulatory bodies are urged to investigate the situation thoroughly and take appropriate actions to ensure consumer rights are upheld, emphasizing the importance of consumer autonomy in the digital age [11]

Group 1 - The Hang Seng Index Company will implement its quarterly review results on September 5, increasing the number of constituent stocks from 85 to 88, with China Telecom, JD Logistics, and Pop Mart being newly included [1] - The inclusion of these stocks is expected to attract passive fund inflows, leading to significant increases in trading volume and price volatility for the newly added stocks [1][2] - Pop Mart will also be included in the Hang Seng China Enterprises Index, while stocks like China Foods and Hengrui Medicine will be added to the Hang Seng Composite Index, increasing its constituent stocks from 502 to 504 [1] Group 2 - The adjustment of the index is likely to influence the liquidity and stock price performance of the related stocks due to the actions of passive funds tracking the indices [2] - Historical data suggests that active funds may position themselves ahead of the announcement, leading to noticeable volatility in the related stocks before the implementation date [2] - The Hong Kong stock market is viewed as a "global value trap," providing good safety margins and investment opportunities due to low valuations, with continued inflows from southbound funds indicating recognition of investment value [2] Group 3 - Goldman Sachs estimates that the market capitalization of the Hang Seng Index, the Hang Seng China Enterprises Index, and the Hang Seng Technology Index will rise to approximately 2.09 trillion, 1.42 trillion, and 480 billion USD, reflecting increases of 1.6%, 1.1%, and 9% respectively [3] - The forecasted price-to-earnings ratios for these indices are expected to increase slightly, with earnings growth predictions adjusted accordingly [3] - Consumer retail, software and services, and automotive sectors are anticipated to see the most passive fund inflows, with specific stocks like Pop Mart and BYD expected to receive significant net buying [3] Group 4 - China Telecom is a leading player in the telecommunications industry, focusing on 5G construction and cloud computing, indicating the importance of traditional industry leaders in the index [4] - JD Logistics represents the new economy logistics sector, highlighting the index's focus on high-growth and core supply chain enterprises [4] - Pop Mart, as a representative of the trendy toy culture, has seen significant increases in market capitalization and liquidity since its listing, becoming an important representative of the new consumption sector [4]

Core Insights - Xi'an is leveraging digital economy and new information infrastructure to drive new industrialization, showcasing a blend of ancient culture and modern technology [2][15] - The integration of 5G technology in various sectors, including tourism, education, manufacturing, and agriculture, is enhancing operational efficiency and user experience [3][8][10][13] Group 1: Digital Infrastructure and Tourism - The implementation of a multi-frequency, three-layer 4G/5G network in the 大唐不夜城 (Datang Ever Bright City) ensures seamless connectivity for high visitor volumes, with peak download speeds exceeding 4.2 Gbps [5][6] - The network infrastructure includes 96 5G base stations and 139 4G base stations, designed to maintain the aesthetic of the historical site while maximizing network capacity [5][6] Group 2: Education and Research - The collaboration between Xi'an Jiaotong University and China Mobile at the Digital Government Research Institute has produced 106 academic achievements and 19 digital government projects, enhancing cross-disciplinary innovation [6][7] - The integration of 5G technology in educational settings allows for real-time data analysis and remote control of equipment, significantly reducing latency to below 20 milliseconds [8][9] Group 3: Smart Manufacturing - The 法士特 (Fasite) high-tech factory utilizes 5G and industrial PON technology to achieve a fivefold increase in output per acre, with a workforce reduced from 700-800 to just 150 [10][12] - The factory's digital solutions have led to a 30% reduction in equipment failure rates and a 45% increase in AGV scheduling efficiency, demonstrating the impact of digital transformation on manufacturing [10][12] Group 4: Agricultural Innovation - The establishment of a live-streaming research institute by Shaanxi Unicom has trained over 45,000 new farmers, generating sales exceeding 3.2 billion yuan through digital platforms [13][14] - The use of AI and XR technologies in agriculture is facilitating the digital transformation of traditional farming practices, enhancing market access for local products [14][15] Group 5: Overall Impact - The integration of 5G, industrial internet, and AI technologies across various sectors in Xi'an illustrates a successful model of new industrialization, merging traditional practices with modern advancements [15] - Xi'an's experience serves as a blueprint for other cities, demonstrating how digital empowerment can drive economic growth and innovation in the new industrial era [15]

Summary of Key Points Core Viewpoint - Southbound funds have become significant participants in the Hong Kong stock market, holding a total of 4,667.93 million shares, which accounts for 18.61% of the total share capital of the eligible stocks under the Stock Connect mechanism [1]. Group 1: Southbound Fund Holdings - The total market value of shares held by southbound funds is HKD 57,702.46 billion, representing 14.19% of the total market capitalization of the eligible stocks [1]. - Among the eligible stocks, 228 stocks have a southbound fund holding ratio exceeding 20%, while 138 stocks have a holding ratio between 10% and 20% [1]. - The stock with the highest southbound fund holding ratio is China Telecom, with 10,237.20 million shares held, accounting for 73.76% of its issued shares [2]. Group 2: Industry Distribution - Southbound fund holdings exceeding 20% are primarily concentrated in the healthcare, financial, and industrial sectors, with 48, 34, and 32 stocks respectively [2]. - A total of 122 AH concept stocks are among those with southbound fund holdings over 20%, making up 53.51% of that group [1]. Group 3: Notable Stocks - Other notable stocks with high southbound fund holdings include: - Green Power Environmental (69.33% holding ratio) [2] - Kaisa New Energy (67.85% holding ratio) [2] - China Shenhua (67.67% holding ratio) [2] - The healthcare sector features prominently, with stocks like Baiyun Mountain (60.67% holding ratio) and Fosun Pharma (59.98% holding ratio) also showing significant southbound fund interest [2][3].

Group 1 - The top three companies by Hong Kong Stock Connect holding ratios are China Telecom (00728) at 73.76%, Green Power Environmental (01330) at 69.33%, and Kaisa New Energy (01108) at 67.85% [1] - The largest increases in holding amounts over the last five trading days were seen in Alibaba-W (09988) with an increase of 95.87 billion, Tencent Holdings (00700) with 26.66 billion, and Ping An Insurance (02318) with 18.48 billion [1] - The largest decreases in holding amounts over the last five trading days were recorded for the Tracker Fund of Hong Kong (02800) with a decrease of 80.42 billion, Hang Seng China Enterprises (02828) with 51.29 billion, and Xiaomi Group-W (01810) with 30.32 billion [1] Group 2 - The latest holding ratio rankings for Hong Kong Stock Connect show that China Telecom has 10.237 billion shares, Green Power Environmental has 280 million shares, and Kaisa New Energy has 170 million shares [1] - The top ten companies with the largest increases in holdings over the last five trading days include Kangfang Biologics (09926) with an increase of 13.30 billion and Horizon Robotics-W (09660) with 12.83 billion [1] - The top ten companies with the largest decreases in holdings include Pop Mart (09992) with a decrease of 17.26 billion and China Hongqiao (01378) with 7.84 billion [3]

Group 1 - The core viewpoint of the articles indicates that insurance capital (险资) is increasingly favoring bank stocks, with significant holdings in various sectors, particularly banking, transportation, and telecommunications [1][3][5]. - As of the end of Q2 2025, insurance capital held a total of 730 stocks, with a combined holding of 61.919 billion shares valued at 628.985 billion yuan, showing an increase in both quantity and market value compared to Q1 [3][5]. - Among the top ten heavy holdings of insurance capital, six are bank stocks, including Minsheng Bank, Pudong Development Bank, and Zhejiang Bank, highlighting a strong preference for the banking sector [3][4]. Group 2 - Insurance capital is expected to continue optimizing its equity investment structure, focusing on high-dividend stocks and new productive forces in the upcoming quarters [2][8]. - In Q2, insurance capital increased its holdings in several key stocks, including CITIC Bank, Beijing-Shanghai High-Speed Railway, and China Telecom, with significant increases in share quantities [6][7]. - The insurance sector is actively seeking investment opportunities in high-dividend and innovative sectors, with a focus on technology innovation, advanced manufacturing, and new consumption [8].

[Important Notice](index=3&type=section&id=%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA) The company upgraded its strategy to 'Cloud-Digital Transformation and Intelligent Empowerment,' embracing AI, and resolved to distribute an interim dividend, while also highlighting significant operational risks - The company's strategy upgraded to 'Cloud-Digital Transformation and Intelligent Empowerment,' fully embracing artificial intelligence and continuously promoting high-quality development[4](index=4&type=chunk) 2025 First Half Interim Dividend Distribution Plan | Indicator | Value | | :--- | :--- | | Profit Attributable to Shareholders | RMB 23.02 billion | | Dividend Payout Ratio | 72% | | Total Dividend | RMB 16.58 billion | | Dividend Per Share (Tax Inclusive) | RMB 0.1812 | | Dividend Per Share (HKD, Tax Inclusive) | HKD 0.199264 | | Total Share Capital | 91,507,138,699 shares | - The report highlights risks related to adapting to economic and policy environments, technological innovation, network and data security, emerging businesses in strategic and future industries, and international operations[8](index=8&type=chunk) [Section 1: Definitions](index=4&type=section&id=%E7%AC%AC%E4%B8%80%E7%AF%80%20%E9%87%8B%E7%BE%A9) This section defines common terms used in the report, including 4G, 5G, AIDC, ARPU, AI, A-shares, Board of Directors, China Telecom, Cloud, Computing Power, EFLOPS, FTTR, H-shares, IDC, MaaS, PON, PQC, QKD, Quantum Secure Call and Message, Guodun Quantum, RDO, Reporting Period, and HKEX - The report defines several key technical and business terms, such as AIDC (Intelligent Computing Data Center), ARPU (Average Revenue Per User), EFLOPS (Exa Floating-point Operations Per Second), MaaS (Model as a Service), PQC (Post-Quantum Cryptography), and QKD (Quantum Key Distribution)[10](index=10&type=chunk)[11](index=11&type=chunk) [Section 2: Company Profile](index=6&type=section&id=%E7%AC%AC%E4%BA%8C%E7%AF%80%20%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B) This section provides basic information about China Telecom Corporation Limited, including its Chinese and English names, legal representative, contact details, registered and office addresses, website, and listing information for A-shares and H-shares Company Basic Information | Indicator | Content | | :--- | :--- | | Chinese Name | 中國電信股份有限公司 | | Legal Representative | Ke Ruiwen | | Registered and Office Address | No. 31 Jinrong Street, Xicheng District, Beijing | | Company Website | www.chinatelecom-h.com | Stock Overview | Stock Type | Listing Exchange | Stock Abbreviation | Stock Code | | :--- | :--- | :--- | :--- | | A-shares | Shanghai Stock Exchange | China Telecom | 601728 | | H-shares | The Stock Exchange of Hong Kong Limited | China Telecom | 00728 | [Section 3: Management Discussion and Analysis](index=7&type=section&id=%E7%AC%AC%E4%B8%89%E7%AF%80%20%E7%AE%A1%E7%90%86%E5%B1%A4%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) This section details the company's operational status, industry trends, strategic transformation, core competitiveness, financial performance, and potential risks during the reporting period, highlighting its embrace of AI and strategic upgrades [I. Overview of the Company's Industry and Main Business During the Reporting Period](index=7&type=section&id=%E4%B8%80%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E6%89%80%E5%B1%AC%E8%A1%8C%E4%B8%9A%E5%8F%8A%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E6%83%85%E5%86%B5%E8%AF%B4%E6%98%8E) In the first half of 2025, the telecommunications industry experienced stable growth, with new infrastructure construction progressing and user scale expanding, while China Telecom achieved steady revenue growth by focusing on customer-centric innovation in basic and industrial digitalization businesses - In the first half of 2025, the telecommunications industry's cumulative telecom business revenue reached **RMB 905.5 billion**, a year-on-year increase of **1%**[16](index=16&type=chunk) 2025 First Half Telecommunications Industry Infrastructure and User Scale | Indicator | Value | | :--- | :--- | | Total 5G Base Stations | 4.549 million units | | Internet Broadband Access Ports | 1.234 billion units | | Total Optical Cable Line Length | 73.77 million kilometers | | Total Mobile Phone Subscribers | 1.81 billion subscribers | | 5G Subscribers | 1.118 billion subscribers | | Fixed Broadband Access Subscribers | 684 million subscribers | - The company's strategy focuses on basic business innovations such as **"5G-A upgrade," "FTTR upgrade," "direct-to-satellite services," and "quantum secure calls and messages,"** while accelerating the development of AI phones, AI mid-screens, and AI cameras[17](index=17&type=chunk) 2025 First Half Key Operating Data | Indicator | Value (RMB) | Year-on-Year Growth | | :--- | :--- | :--- | | Operating Revenue | 271.5 billion | 1.3% | | Service Revenue | 249.1 billion | 1.2% | | Mobile Communication Service Revenue | 106.6 billion | 1.3% | | Fixed-line and Smart Family Service Revenue | 64.1 billion | 0.2% | | Industrial Digitalization Business Revenue | 74.9 billion | - | | Mobile User ARPU | 46.0 | - | | Broadband Integrated ARPU | 48.3 | - | [II. Chairman's Report](index=8&type=section&id=%E4%BA%8C%E3%80%81%E8%91%A3%E4%BA%8B%E9%95%B7%E6%8A%A5%E5%91%8A%E6%9B%B8) The Chairman's report emphasizes AI as a core driver of the new technological revolution, detailing the company's strategic upgrade to 'Cloud-Digital Transformation and Intelligent Empowerment' and its progress in overall performance, intelligent cloud, technological innovation, digital infrastructure, green security, reform, and social responsibility [1. Overall Performance](index=9&type=section&id=1.%20%E7%B8%BD%E9%AB%94%E6%A5%AD%E7%B8%BE) In the first half of 2025, the company achieved steady growth in operating and service revenue, with good increases in EBITDA and net profit, while strategic emerging businesses, especially cloud, intelligence, security, and quantum, developed rapidly, and interim dividends grew by **8.4%** 2025 First Half Key Financial Indicators | Indicator | Value (RMB) | Year-on-Year Growth | | :--- | :--- | :--- | | Operating Revenue | 271.5 billion | 1.3% | | Service Revenue | 249.1 billion | 1.2% | | EBITDA | 80.6 billion | 4.9% | | Net Profit | 23.0 billion | 5.5% | | Basic Earnings Per Share | 0.25 | - | | Capital Expenditure | 34.2 billion | - | | Free Cash Flow | 13.1 billion | 13.9% | 2025 First Half Key Business Revenue and User Data | Business Type | Revenue (RMB) | Year-on-Year Growth | | :--- | :--- | :--- | | Mobile Communication Service Revenue | 106.6 billion | 1.3% | | Fixed-line and Smart Family Service Revenue | 64.1 billion | 0.2% | | Industrial Digitalization Revenue | 74.9 billion | - | | AIDC Revenue | - | 7.4% | | Tianyi Cloud Revenue | 57.3 billion | - | | Intelligent Revenue | 6.3 billion | 89.4% | | Security Revenue | 9.1 billion | 18.2% | | Video Network Revenue | - | 46.2% | | Satellite Revenue | - | 20.5% | | Quantum Revenue | - | 171.1% | | Mobile Subscribers | 433 million subscribers | - | | Broadband Subscribers | 199 million subscribers | - | | Mobile User ARPU | 46.0 | - | | Broadband Integrated ARPU | 48.3 | - | - The Board decided to continue distributing an interim dividend in 2025, with a cash payout representing **72%** of the profit attributable to shareholders for the first half, amounting to **RMB 0.1812 per share** (tax inclusive), a year-on-year increase of **8.4%**[24](index=24&type=chunk) [2. Seizing Opportunities for Strategic Initiative and Solid Progress in High-Quality Development](index=9&type=section&id=2.%20%E6%90%B6%E6%8A%93%E6%A9%9F%E9%81%87%E8%B4%8F%E5%BE%97%E6%88%B0%E7%95%A5%E4%B8%BB%E5%8B%95%EF%BC%8C%E6%8E%A8%E5%8B%95%E4%BC%81%E6%A5%AD%E9%AB%98%E8%B3%AA%E9%87%8F%E7%99%BC%E5%B1%95%E9%82%81%E5%87%BA%E5%A0%85%E5%AF%A6%E6%AD%A5%E4%BC%90) The company fully embraced AI, upgrading its strategy to 'Cloud-Digital Transformation and Intelligent Empowerment,' achieving significant progress in intelligent cloud, technological innovation, digital infrastructure, green security, and reform, with breakthroughs in AI applications, quantum technology, computing power, green energy, and security [2.1 Building an Intelligent Cloud System and Deeply Advancing the "AI+" Initiative](index=9&type=section&id=2.1%20%E6%A7%8B%E5%BB%BA%E5%AE%8C%E6%88%90%E6%99%BA%E8%83%BD%E9%9B%B2%E9%AB%94%E7%B3%BB%EF%BC%8C%E6%B7%B1%E5%85%A5%E6%8E%A8%E9%80%B2%E3%80%8C%E4%BA%BA%E5%B7%A5%E6%99%BA%E8%83%BD%2B%E3%80%8D%E8%A1%8C%E5%8B%95) The company built an integrated intelligent cloud service system with "Xirang" at its core, advancing AI capabilities across IaaS, PaaS, DaaS, MaaS, and SaaS layers, with AI applications empowering government, enterprise, and individual customers, and quantum communication users exceeding **6 million** - The company built an integrated intelligent cloud system with "Xirang" as its core, providing "computing power + platform + data + model + application" intelligent cloud services[25](index=25&type=chunk) - Total self-owned and accessed computing power reached **77 EFLOPS**, offering heterogeneous computing services covering general, intelligent, super, and quantum computing[25](index=25&type=chunk) - Developed the full-modal, full-size, fully domestically produced Xingchen large model, integrating over **10 trillion tokens** of general large model corpus data and **14 industry datasets**, totaling over **350 TB**[25](index=25&type=chunk) - For government and enterprise customers, over **80 industry large models** and **30 intelligent agents** were developed, serving over **20,000 industry customers**, and establishing a state-owned enterprise "AI+" action demonstration base[26](index=26&type=chunk) - In customer operations, AI-driven precision marketing served approximately **60,000 frontline employees**, with monthly call volumes exceeding **20 million times**, and intelligent customer service accounting for **87.5%**[27](index=27&type=chunk) - Quantum communication user scale exceeded **6 million**, serving over **3,000 industry customers** in government, finance, and energy sectors[28](index=28&type=chunk) [2.2 Dedicated to Innovation and Accelerating the Construction of a Technology-Leading Enterprise](index=12&type=section&id=2.2%20%E7%9F%A2%E5%BF%97%E5%88%9B%E6%96%B0%E5%8F%91%E5%B1%95%EF%BC%8C%E5%8A%A0%E5%BF%AB%E5%BB%BA%E8%AE%BE%E7%A7%91%E6%8A%80%E9%A2%86%E5%86%9B%E4%BC%81%E4%B8%9A) The company continued to advance high-level technological self-reliance, achieving breakthroughs in AI, computing power, network, quantum, and security, with its self-developed Tianyi Cloud server OS passing national security assessments and leading the computing power interconnection market - Self-developed Tianyi Cloud server operating system passed national security and reliability assessments[29](index=29&type=chunk) - Innovatively proposed the Triless architecture, achieving multi-source computing power interconnection, maintaining its leading position in China's computing power interconnection and scheduling market, and remaining a leader in China's intelligent computing cloud service market[29](index=29&type=chunk) - Innovatively built the Intelligent Transmission Network (AI Flow) technology system, tackling three key technologies: generative intelligent transmission, family-based homologous models, and intelligent emergence based on connection and interaction[29](index=29&type=chunk) - Released the world's first distributed cryptographic system integrating QKD and PQC; pioneered cloud-network-device collaborative anti-DDoS technology in the industry, and launched the first domestic open-source large model basic security guardrail[29](index=29&type=chunk) - Research on a generative encoding image new framework based on diffusion models won the sole "Best Paper Award" at ICME 2025[29](index=29&type=chunk) [2.3 Leveraging Cloud-Network Integration Advantages to Accelerate Intelligent Upgrades of Digital Information Infrastructure](index=13&type=section&id=2.3%20%E5%8F%91%E6%8C%A5%E9%9B%B2%E7%B6%B2%E8%9E%8D%E5%90%88%E5%84%AA%E5%8B%A2%EF%BC%8C%E5%8A%A0%E5%BF%AB%E6%95%B8%E5%AD%97%E8%B3%87%E8%A8%8A%E5%9F%BA%E7%A4%8E%E8%A8%AD%E6%96%BD%E6%99%BA%E8%83%BD%E5%8C%96%E5%8D%87%E7%B4%9A) The company leverages its cloud-network integration advantages to accelerate the intelligent upgrade of digital information infrastructure, deploying computing power infrastructure ahead of demand, with self-owned intelligent computing power reaching **43 EFLOPS**, and expanding its gigabit optical network and 5G base stations - Self-owned intelligent computing power reached **43 EFLOPS**, and extensively integrated partner computing power[32](index=32&type=chunk) - Built a new generation AIDC with a central + edge tiered layout and triple elastic upgrades in space, cooling, and power supply, with data center racks exceeding **580,000 units**[32](index=32&type=chunk) - Activated the nation's first 400G quantum-secure OTN encrypted computing private line, promoting the renewal and upgrade of backbone optical cables and trial commercial use of hollow-core optical cables[32](index=32&type=chunk) - Gigabit optical network 10G PON ports exceeded **9.88 million units**, with urban gigabit residential coverage exceeding **96%**[32](index=32&type=chunk) - Total 5G mid- and high-frequency base stations reached **1.49 million units**, low-frequency base stations reached **880,000 units**, and 5G-A carrier aggregation (**100,000 stations**) and Redcap (**600,000 stations**) have been deployed at scale in over **300 cities**[32](index=32&type=chunk) [2.4 Green Empowerment, Security Escort, Promoting Green and Secure Economic and Social Development](index=14&type=section&id=2.4%20%E7%B6%A0%E8%89%B2%E8%B3%A6%E8%83%BD%EF%BC%8C%E5%AE%89%E5%85%A8%E8%AD%B7%E8%88%AA%EF%BC%8C%E5%8A%A9%E6%8E%A8%E7%B6%93%E6%BF%9F%E7%A4%BE%E6%9C%83%E7%B6%A0%E8%89%B2%E5%AE%89%E5%85%A8%E7%99%BC%E5%B1%95) The company actively practices green development, achieving double-digit reductions in carbon emissions per unit of telecom business, and enhances security through AI integration, developing the "Xingchen • Jianwei" security large model and strengthening anti-DDoS capabilities - Carbon emissions per unit of telecom business decreased by a **double-digit percentage**, ranking among the top central enterprises in "Central Enterprise Green Development Evaluation"[33](index=33&type=chunk) - AI energy saving covered over **5.96 million base station sectors** and **3,400 equipment rooms**, saving approximately **1.1 billion kWh** annually[33](index=33&type=chunk) - Green electricity application exceeded **1.4 billion kWh**, innovatively promoting coordinated development of computing power and electricity[33](index=33&type=chunk) - Built the security corpus "Qianmo Shuju" and continuously iterated the "Xingchen • Jianwei" security large model using general AI technology[34](index=34&type=chunk) - Cloud-based anti-DDoS scrubbing capability exceeded **18 Tbps**, maintaining leading protection capabilities and market share, with over **7,000 customers** for Cloud-based security managed services[34](index=34&type=chunk) - Constructed a large model basic security guardrail, strengthened AI security governance, and utilized QKD technology to ensure secure transmission of AI training data and cross-cluster data[34](index=34&type=chunk) [2.5 Further Comprehensive Deepening of Reform and Opening-Up, Improving Governance System and Capabilities](index=15&type=section&id=2.5%20%E9%80%B2%E4%B8%80%E6%AD%A5%E5%85%A8%E9%9D%A2%E6%B7%B1%E5%8C%96%E6%94%B9%E9%9D%A9%E9%96%8B%E6%94%BE%EF%BC%8C%E5%AE%8C%E5%96%84%E6%B2%BB%E7%90%86%E9%AB%94%E7%B3%BB%E6%8F%90%E5%8D%87%E6%B2%BB%E7%90%86%E8%83%BD%E5%8A%9B) The company comprehensively advanced state-owned enterprise reform, fostering high-quality development by strengthening talent cultivation, optimizing R&D organization, and enhancing open cooperation in technology, digital infrastructure, capital, and international business, including acquiring control of Guodun Quantum and expanding satellite services to Southeast Asia - Solidly advanced the "Mount Everest," "Kunlun," and "Five Sacred Mountains" plans, selecting **24 new chief experts** to improve the echelon of scientific and technological talent[35](index=35&type=chunk) - Established Artificial Intelligence Technology (Shanghai) Co., Ltd.; Cloud Company and Digital Intelligence Company consecutively recognized as benchmark enterprises in SASAC's "Science and Technology Reform Action" for three years[35](index=35&type=chunk) - Strengthened open cooperation in technology, collaborating with Shanghai AI Lab to deeply participate in the application of DeepLink ultra-large-scale cross-domain mixed training technology[36](index=36&type=chunk) - Strengthened open cooperation in capital, acquiring control of Guodun Quantum, comprehensively deploying in the three major fields of the quantum information industry[36](index=36&type=chunk) - Mobile direct-to-satellite services officially launched commercially in Laos, expanding services to Southeast Asian countries; released the Tianyi Video Network International Platform[37](index=37&type=chunk) [3. Actively Fulfilling Social Responsibilities and Gaining Widespread Recognition in the Capital Market](index=16&type=section&id=3.%20%E7%A9%8D%E6%A5%B5%E8%B9%A7%E8%A1%8C%E7%A4%BE%E6%9C%83%E8%B2%AC%E4%BB%BB%EF%BC%8C%E7%8D%B2%E5%BE%97%E8%B3%87%E6%9C%AC%E5%B8%82%E5%A0%B4%E5%BB%A3%E6%B3%9B%E8%AA%8D%E5%8F%AF) The company successfully completed major communication support tasks, actively promoted rural revitalization, provided inclusive services to over **8.6 million people**, and developed the "Yi'an Anti-Fraud" platform, while its high-level corporate governance and investor relations earned widespread recognition - Successfully completed communication support for major events such as the Harbin Asian Winter Games, Boao Forum for Asia, and the launch of Shenzhou-20 manned spacecraft[38](index=38&type=chunk) - "Aixin Yizhan" inclusive services were integrated into **80,000 urban and rural business halls**, organizing over **80,000 care activities** and serving over **8.6 million person-times**[38](index=38&type=chunk) - Won "Asia's Best Corporate Social Responsibility" award from Corporate Governance Asia for the **sixth consecutive year**; awarded "Investor Relations Management Shareholder Return Award" by Securities Times[39](index=39&type=chunk) - Achieved an **A-level** overall ESG rating from China Securities Index in 2025[39](index=39&type=chunk) [4. Seizing Momentum, Guiding Direction, and Promoting Enterprise Strategic Upgrades](index=17&type=section&id=4.%20%E4%B9%98%E5%8B%A2%E8%80%8C%E4%B8%8A%EF%BC%8C%E6%8A%8A%E6%8F%A1%E6%96%B9%E5%90%91%EF%BC%8C%E6%8E%A8%E5%8B%95%E4%BC%81%E6%A5%AD%E6%88%B0%E7%95%A5%E5%8D%87%E7%B4%9A) The company successfully implemented its 'Cloud-Digital Transformation' strategy, achieving steady performance growth and significant technological innovation, forming an "1+1+1+M+N" AI development layout, and is now upgrading its strategy to 'Cloud-Digital Transformation and Intelligent Empowerment' to build a world-class enterprise - The company comprehensively implemented the "Cloud-Digital Transformation" strategy, achieving steady growth in operating performance, with service revenue growth consistently higher than the industry average for many years[40](index=40&type=chunk) - Formed an "1+1+1+M+N" artificial intelligence development layout, with Tianyi Cloud fully taking shape as the national cloud framework[40](index=40&type=chunk) - The enterprise strategy upgraded to "Cloud-Digital Transformation and Intelligent Empowerment," strengthening the innovation-led integrated development of basic and industrial digitalization businesses[41](index=41&type=chunk)[43](index=43&type=chunk) - Adhered to a customer-centric approach, driven by reform and opening-up, with technological innovation as the core, cloud-network integration as the foundation, green security as the backdrop, a digital intelligence platform as the hub, and talent as the fundamental element[41](index=41&type=chunk) [III. Analysis of Core Competencies During the Reporting Period](index=19&type=section&id=%E4%B8%89%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E6%A0%B8%E5%BF%83%E7%AB%B6%E4%BA%89%E5%8A%9B%E5%88%86%E6%9E%90) The company's core competencies lie in the intelligent, secure, and green upgrade of its digital information infrastructure, significantly enhanced technological innovation, application-oriented product and service innovation, and continuously strengthened security governance capabilities, particularly in intelligent computing power, network, cloud, AI models, and quantum security - Accelerated the deployment of intelligent computing power, building a nationwide, hotspot-concentrated, technologically advanced, and fully scheduled intelligent computing capability, constructing super-node clusters in the Guangdong-Hong Kong-Macao Greater Bay Area[45](index=45&type=chunk) - Built China Telecom's primary technology "Xirang," comprehensively advancing AI-oriented technological innovation from underlying infrastructure to upper-layer applications[46](index=46&type=chunk) - In the field of artificial intelligence, innovatively constructed the Intelligent Transmission Network (AI Flow) technology system and continuously upgraded the full-modal, full-size, fully domestically produced Xingchen foundational large model[46](index=46&type=chunk) - Built an integrated intelligent cloud service of "computing power + platform + data + model + application," establishing over **80 industry large models** in sectors such as industry, emergency response, and transportation, serving over **20,000 customers**[47](index=47&type=chunk) - Strengthened AI security governance, building a large model protection system to ensure technical security, reliability, and controllability; Cloud-based anti-DDoS technology and quantum integration into cloud-network infrastructure enhanced security protection capabilities[48](index=48&type=chunk) [IV. Major Operating Performance During the Reporting Period](index=21&type=section&id=%E5%9B%9B%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E4%B8%BB%E8%A6%81%E7%B6%93%E7%87%9F%E6%83%85%E6%B3%81) In the first half of 2025, the company achieved steady growth in operating revenue and optimized service revenue structure, effectively controlled operating expenses, and improved profitability, maintaining robust free cash flow and a stable asset-liability structure 2025 First Half Operating Revenue Composition | Revenue Type | Amount (RMB billion) | Year-on-Year Growth | | :--- | :--- | :--- | | Total Operating Revenue | 271.469 | 1.3% | | Service Revenue | 249.112 | 1.2% | | Mobile Communication Service Revenue | 106.572 | 1.3% | | Fixed-line and Smart Family Service Revenue | 64.133 | 0.2% | | Industrial Digitalization Service Revenue | 74.853 | 1.5% | 2025 First Half Operating Expense Composition | Expense Type | Amount (RMB billion) | Year-on-Year Growth | | :--- | :--- | :--- | | Total Operating Expenses | 242.920 | 0.9% | | % of Operating Revenue | 89.5% | Decreased by 0.3 p.p. | | Depreciation and Amortization | 52.039 | 5.1% | | Network Operations and Support Costs | 78.288 | -2.3% | | Selling, General and Administrative Expenses | 32.783 | -0.9% | | Staff Costs | 50.438 | -0.3% (Increased by 2.8% after excluding fair value changes in share appreciation rights) | | Other Operating Expenses | 29.372 | 7.1% | 2025 First Half Profitability and Cash Flow | Indicator | Amount (RMB billion) | Year-on-Year Growth | | :--- | :--- | :--- | | Net Finance Costs | 0.294 | 17.3% | | Profit Attributable to Shareholders | 23.017 | 5.5% | | EBITDA | 80.588 | 4.9% | | Capital Expenditure | 34.235 | - | | Free Cash Flow | 13.072 | 13.9% | Asset and Liability Situation as of June 30, 2025 | Indicator | June 30, 2025 (RMB billion) | December 31, 2024 (RMB billion) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 887.224 | 866.625 | Increased by 2.4% | | Total Liabilities | 413.215 | 410.073 | Increased by 0.8% | | Asset-Liability Ratio | 46.6% | - | - | [V. Other Disclosures](index=23&type=section&id=%E4%BA%94%E3%80%81%E5%85%B6%E4%BB%96%E6%8A%AB%E9%9C%B2) This section discloses risks related to economic, policy, technological innovation, network and data security, emerging businesses, and international operations, confirms no purchases, sales, or redemptions of listed securities, and details the interim dividend distribution arrangements and tax treatment - The company faces risks related to adapting to economic and policy environments, technological innovation, network and data security, emerging businesses in strategic and future industries, and international operations[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[62](index=62&type=chunk) - The Board decided to continue distributing an interim dividend in 2025, amounting to **RMB 0.1812 per share** (tax inclusive), expected to be paid on or before September 30, 2025[67](index=67&type=chunk) - Dividends will be denominated and declared in RMB, paid in RMB to A-share shareholders and Stock Connect investors, and paid in HKD to H-share shareholders other than Stock Connect investors[68](index=68&type=chunk) - A **10%** enterprise income tax will be withheld for non-resident enterprise H-share shareholders; individual income tax will be withheld for individual H-share shareholders according to tax agreements, with rates ranging from **10% to 20%**[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) [Section 4: Corporate Governance, Environment and Society](index=29&type=section&id=%E7%AC%AC%E5%9B%9B%E7%AF%80%20%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86%E3%80%81%E7%92%B0%E5%A2%83%E5%92%8C%E7%A4%BE%E6%9C%83) This section reports on changes in directors, supervisors, and senior management, the profit distribution plan, employee incentive schemes, compliance with corporate governance codes, and social responsibility efforts in poverty alleviation and rural revitalization, demonstrating continuous optimization of governance and talent incentives [I. Changes in the Company's Directors, Supervisors, and Senior Management Since the Date of the 2024 Annual Report](index=29&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%A3%E4%BA%8B%E3%80%81%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E4%BA%BA%E5%93%A1%E8%87%AA2024%E5%B9%B4%E5%B9%B4%E5%A0%B1%E6%97%A5%E6%9C%9F%E4%B9%8B%E5%BE%8C%E7%9A%84%E8%AE%8A%E5%8B%95%E6%83%85%E5%86%B5) During the reporting period, Mr. Liu Guiqing was appointed President and Chief Operating Officer, Mr. Huang Zhiyong was appointed Executive Vice President, and Mr. Lü Yongzhong became a Non-Executive Director, with corresponding adjustments to Board committees - Mr. Liu Guiqing was appointed President and Chief Operating Officer, no longer concurrently serving as Executive Vice President[75](index=75&type=chunk) - Mr. Huang Zhiyong was appointed Executive Vice President and concurrently served as General Counsel of China Telecom Group Co., Ltd[75](index=75&type=chunk)[76](index=76&type=chunk) - Mr. Lü Yongzhong was appointed Non-Executive Director, and Mr. Chen Shengguang ceased to hold this position[75](index=75&type=chunk) [II. Profit Distribution or Capital Reserve Conversion Plan](index=30&type=section&id=%E4%BA%8C%E3%80%81%E5%88%A9%E6%BD%A4%E5%88%86%E9%85%8D%E6%88%96%E8%B3%87%E6%9C%AC%E5%85%AC%E7%A9%8D%E9%87%91%E8%BD%89%E5%A2%9E%E9%A0%90%E6%A1%88) The Board resolved to distribute a dividend of **RMB 0.1812 per share** (tax inclusive) to all shareholders, totaling **RMB 16.58 billion**, representing **72%** of the **RMB 23.02 billion** profit attributable to shareholders for the first half of 2025, as authorized by the 2024 Annual General Meeting Semi-Annual Profit Distribution Plan | Indicator | Value | | :--- | :--- | | Distribution or Conversion | Yes | | Dividend Per 10 Shares (RMB, Tax Inclusive) | 1.812 | - The Board decided to distribute a dividend to all shareholders based on **72%** of the profit attributable to shareholders for the first half of 2025, which was **RMB 23.02 billion**, totaling **RMB 16.58 billion**[79](index=79&type=chunk) [III. Company Share Incentive Plan, Employee Stock Ownership Plan, or Other Employee Incentive Measures and Their Impact](index=31&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E8%82%A1%E6%AC%8A%E6%BF%80%E5%8B%B5%E8%A8%88%E5%8A%83%E3%80%81%E5%93%A1%E5%B7%A5%E6%8C%81%E8%82%A1%E8%A8%88%E5%8A%83%E6%88%96%E5%85%B6%E4%BB%96%E5%93%A1%E5%B7%A5%E6%BF%80%E5%8B%B5%E6%8E%AA%E6%96%BD%E7%9A%84%E6%83%85%E5%86%B5%E5%8F%8A%E5%85%B6%E5%BD%B1%E9%9F%BF) The company implemented a second phase of share appreciation rights incentive plan in 2021 for core employees, with the Board confirming the achievement of exercise conditions for the first and second vesting periods in October 2024, and benefits distributed based on contribution, potential, and performance - The company implemented the second phase of its share appreciation rights incentive plan in 2021, targeting core employees[80](index=80&type=chunk) - In October 2024, the Board confirmed that the exercise conditions for the first and second vesting periods of the 2021 share appreciation rights had been met[80](index=80&type=chunk) - The distribution principles for share appreciation rights are "based on contribution," "based on potential," and "earned by performance," closely linked to company and individual performance[80](index=80&type=chunk) [IV. Compliance with Corporate Governance Code](index=31&type=section&id=%E5%9B%9B%E3%80%81%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%88%99) The company prioritizes corporate governance, continuously improving internal control systems and information disclosure, and, except for the Chairman and CEO roles being held by the same person to enhance decision-making efficiency, has complied with the Corporate Governance Code - The roles of Chairman and Chief Executive Officer are held by the same person, an arrangement believed to enhance decision-making and execution efficiency[81](index=81&type=chunk) - Except for the aforementioned situation, the company has complied with the code provisions set out in Appendix C1 of the Listing Rules, "Corporate Governance Code," during the reporting period[81](index=81&type=chunk) [V. Specifics of Consolidating and Expanding Poverty Alleviation Achievements and Rural Revitalization Efforts](index=32&type=section&id=%E4%BA%94%E3%80%81%E5%B7%A9%E5%9B%BA%E6%8B%93%E5%B1%95%E8%84%AB%E8%B2%A7%E6%94%BB%E5%A0%85%E6%88%90%E6%9E%9C%E3%80%81%E9%84%89%E6%9D%91%E6%8C%AF%E8%88%88%E7%AD%89%E5%B7%A5%E4%BD%9C%E5%85%B7%E9%AB%94%E6%83%85%E5%86%B5) In the first half of 2025, the company focused on consolidating poverty alleviation achievements and promoting rural revitalization, directly purchasing and assisting in sales of agricultural products worth **RMB 442.77 million**, organizing **61,081 talent training sessions**, and serving over **100 million villagers** through digital rural construction, earning top evaluations for targeted assistance for seven consecutive years - Directly purchased and assisted in sales of agricultural and sideline products totaling **RMB 442.77 million**[82](index=82&type=chunk) - Organized various talent training sessions for **61,081 person-times**[82](index=82&type=chunk) - Promoted digital rural construction, serving over **100 million villagers**[82](index=82&type=chunk) - Received the highest evaluation for targeted assistance from central government units for **seven consecutive years**, consistently ranking among the top ten central enterprises[82](index=82&type=chunk) [Section 5: Significant Matters](index=33&type=section&id=%E7%AC%AC%E4%BA%94%E7%AF%80%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A0%85) This section details the company's and its related parties' fulfillment of commitments, including share lock-up, avoiding competition, and regulating related-party transactions, all strictly adhered to, and reports on significant guarantees to subsidiaries, totaling **RMB 71.7349 million**, all non-financing and without overdue status [I. Fulfillment of Commitments](index=33&type=section&id=%E4%B8%80%E3%80%81%E6%89%BF%E8%AB%BE%E4%BA%8B%E9%A0%85%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) All commitments made by the company's actual controller, shareholders, related parties, and the company itself, including share lock-up, shareholding intentions, competition avoidance, related-party transaction regulation, property title defect resolution, trademark authorization, anti-dilution measures, prospectus truthfulness, and shareholder information disclosure, have been strictly fulfilled - The 57,377,053,317 initial public offering restricted shares held by controlling shareholder China Telecom Group Co., Ltd. became unrestricted and listed for trading on February 20, 2025, after the lock-up period expired[84](index=84&type=chunk)[97](index=97&type=chunk) - All commitments, including share lock-up, avoidance of horizontal competition, and regulation of related-party transactions, have been strictly fulfilled[83](index=83&type=chunk)[85](index=85&type=chunk) [II. Material Contracts and Their Performance](index=35&type=section&id=%E4%BA%8C%E3%80%81%E9%87%8D%E5%A4%A7%E5%90%88%E5%90%8C%E5%8F%8A%E5%85%B6%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) This section primarily discloses the company's guarantees to its subsidiaries, with a total guarantee amount of **RMB 71.7349 million** at the end of the reporting period, representing **0.0151%** of the company's net assets, all being non-financing guarantees provided by its financial and international subsidiaries to wholly-owned subsidiaries, with no overdue guarantees Company External Guarantees (As of June 30, 2025) | Indicator | Amount (RMB) | | :--- | :--- | | Total Guarantees to Subsidiaries During Reporting Period | 13,960,779.20 | | Total Guarantee Balance to Subsidiaries at End of Reporting Period (B) | 71,734,868.09 | | Total Guarantees (A+B) | 71,734,868.09 | | Total Guarantees as % of Company's Net Assets | 0.0151 | - The company's external guarantees are all non-financing guarantees provided by its subsidiaries, China Telecom Group Finance Co., Ltd. and China Telecom Global Limited, to the company's wholly-owned subsidiaries[88](index=88&type=chunk) - As of the end of the reporting period, the total outstanding external guarantees by the company and its subsidiaries amounted to **RMB 71.7349 million**, all for wholly-owned subsidiaries, with no overdue guarantees[92](index=92&type=chunk) [Section 6: Share Changes and Shareholder Information](index=38&type=section&id=%E7%AC%AC%E5%85%AD%E7%AF%80%20%E8%82%A1%E4%BB%BD%E8%AE%8A%E5%8B%95%E5%8F%8A%E8%82%A1%E6%9D%B1%E6%83%85%E5%86%B5) This section details the company's share capital changes, primarily the expiration of the lock-up period for the controlling shareholder's initial public offering restricted shares on February 20, 2025, resulting in zero restricted shares and an increase in unrestricted tradable shares, and also discloses the total number of shareholders and the top ten shareholders at the end of the reporting period [I. Share Capital Changes](index=38&type=section&id=%E4%B8%80%E3%80%81%E8%82%A1%E6%9C%AC%E8%AE%8A%E5%8B%95%E6%83%85%E5%86%B5) During the reporting period, the 57,377,053,317 initial public offering restricted shares held by controlling shareholder China Telecom Group Co., Ltd. became unrestricted and listed for trading on February 20, 2025, resulting in a change from **62.70%** restricted shares to **0%**, and unrestricted tradable shares from **37.30%** to **100%**, while the total number of shares remained unchanged Table of Share Changes (Units: Shares) | Share Type | Quantity Before Change | % Before Change | Change in Quantity | Quantity After Change | % After Change | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 57,377,053,317 | 62.70 | -57,377,053,317 | 0 | 0.00 | | II. Unrestricted Tradable Shares | 34,130,085,382 | 37.30 | +57,377,053,317 | 91,507,138,699 | 100.00 | | III. Total Shares | 91,507,138,699 | 100.00 | 0 | 91,507,138,699 | 100.00 | - The 57,377,053,317 initial public offering restricted shares held by controlling shareholder China Telecom Group Co., Ltd. became unrestricted and listed for trading on February 20, 2025, after the lock-up period expired[97](index=97&type=chunk) [II. Shareholder Information](index=39&type=section&id=%E4%BA%8C%E3%80%81%E8%82%A1%E6%9D%B1%E6%83%85%E5%86%B5) As of the end of the reporting period, the company had **222,841** common shareholders, with China Telecom Group Co., Ltd. being the largest shareholder, holding **63.90%** of shares, and this section lists the top ten shareholders and top ten unrestricted tradable share shareholders Total Number of Common Shareholders at End of Reporting Period | Indicator | Quantity (Households) | | :--- | :--- | | Total Common Shareholders | 222,841 | Top Ten Shareholders' Shareholding as of End of Reporting Period | Shareholder Name | Shares Held at Period End (Shares) | % | Shareholder Nature | | :--- | :--- | :--- | :--- | | China Telecom Group Co., Ltd. | 58,476,519,174 | 63.90 | State-owned Legal Person | | HKSCC Nominees Limited | 13,848,878,611 | 15.13 | Overseas Legal Person | | Guangdong Guang Sheng Holdings Group Co., Ltd. | 4,794,082,653 | 5.24 | State-owned Legal Person | | Zhejiang Provincial Finance Development Co., Ltd. | 2,137,473,626 | 2.34 | State-owned Legal Person | | China Life Insurance Co., Ltd. - Traditional - Ordinary Insurance Products - 005L - CT001 Shanghai | 1,096,730,505 | 1.20 | Unknown | - State Grid Yingda International Holdings Group Co., Ltd., as a strategic investor, had its newly allotted shares unlocked on August 22, 2022[106](index=106&type=chunk) [Section 7: Interim Financial Information](index=41&type=section&id=%E7%AC%AC%E4%B8%83%E7%AF%80%20%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99) This section includes KPMG's review report on the condensed consolidated interim financial information, unaudited condensed consolidated statements of financial position, comprehensive income, changes in equity, and cash flows, along with detailed notes on business, basis of preparation, accounting policies, segment reporting, property, plant and equipment, interests in associates and joint ventures, receivables, cash and cash equivalents, loans, payables, operating revenue, operating expenses, finance costs, income tax, dividends, earnings per share, capital commitments, fair value measurement of financial instruments, related party transactions, post-employment benefit plans, and subsequent events [Review Report on Interim Financial Information](index=42&type=section&id=%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99%E7%9A%84%E5%AF%A9%E9%96%B1%E5%A0%B1%E5%91%8A) KPMG reviewed China Telecom Corporation Limited's condensed consolidated interim financial information for the six months ended June 30, 2025, concluding that they found no matters leading them to believe the interim financial information was not prepared in all material respects in accordance with International Accounting Standard 34 - KPMG reviewed the interim financial information and found no material matters inconsistent with International Accounting Standard 34[110](index=110&type=chunk) - The scope of review is substantially less than that of an audit, and therefore no audit opinion is expressed[109](index=109&type=chunk) [Condensed Consolidated Statement of Financial Position](index=43&type=section&id=%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) As of June 30, 2025, the company's total assets were **RMB 887.224 billion**, a **2.4%** increase from the end of 2024, with total liabilities at **RMB 413.215 billion** and equity attributable to shareholders at **RMB 466.871 billion** Key Data from Condensed Consolidated Statement of Financial Position (As of June 30, 2025, RMB million) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total Non-current Assets | 662,230 | 678,500 | -2.4% | | Total Current Assets | 224,994 | 188,125 | +19.6% | | **Total Assets** | **887,224** | **866,625** | **+2.4%** | | **Liabilities** | | | | | Total Current Liabilities | 330,152 | 325,377 | +1.5% | | Total Non-current Liabilities | 83,063 | 84,696 | -1.9% | | **Total Liabilities** | **413,215** | **410,073** | **+0.8%** | | **Equity** | | | | | Total Equity Attributable to Shareholders | 466,871 | 452,390 | +3.2% | | Non-controlling Interests | 7,138 | 4,162 | +71.5% | | **Total Equity** | **474,009** | **456,552** | **+3.8%** | - As of June 30, 2025, the Group's total current liabilities exceeded total current assets by approximately **RMB 105.158 billion**, but management believes there are sufficient funds to meet operational needs[126](index=126&type=chunk) [Condensed Consolidated Statement of Comprehensive Income](index=45&type=section&id=%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) For the six months ended June 30, 2025, the company's operating revenue was **RMB 271.469 billion**, a **1.3%** year-on-year increase, with profit attributable to shareholders reaching **RMB 23.017 billion**, up **5.5%**, and basic earnings per share at **RMB 0.25** Key Data from Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30, 2025, RMB million) | Indicator | 2025 | 2024 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 271,469 | 268,011 | +1.3% | | Total Operating Expenses | (242,920) | (240,751) | +0.9% | | Operating Profit | 28,549 | 27,260 | +4.7% | | Net Finance Costs | (294) | (250) | +17.6% | | Profit Before Tax | 29,595 | 28,239 | +4.8% | | Income Tax | (6,576) | (6,273) | +4.8% | | Profit for the Period | 23,019 | 21,966 | +4.8% | | Profit Attributable to Shareholders | 23,017 | 21,812 | +5.5% | | Basic Earnings Per Share (RMB) | 0.25 | 0.24 | +4.2% | [Condensed Consolidated Statement of Changes in Equity](index=47&type=section&id=%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) For the six months ended June 30, 2025, total equity attributable to shareholders was **RMB 466.871 billion**, with profit for the period at **RMB 23.017 billion**, total comprehensive income at **RMB 23.012 billion**, and dividends distributed totaling **RMB 8.483 billion** Key Data from Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30, 2025, RMB million) | Indicator | Balance as of January 1, 2025 | Profit for the Period | Total Comprehensive Income for the Period | Dividends | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Equity Attributable to Shareholders | 452,390 | 23,017 | 23,012 | (8,483) | 466,871 | | Non-controlling Interests | 4,162 | 2 | 2 | 0 | 7,138 | | Total Equity | 456,552 | 23,019 | 23,014 | (8,483) | 474,009 | - Acquisition of subsidiaries resulted in an increase in non-controlling interests of **RMB 2.811 billion**[116](index=116&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=48&type=section&id=%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) For the six months ended June 30, 2025, net cash generated from operating activities was **RMB 47.307 billion**, net cash used in investing activities was **RMB 61.149 billion**, and net cash used in financing activities was **RMB 15.386 billion**, resulting in a net decrease in cash and cash equivalents of **RMB 29.228 billion** Key Data from Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, 2025, RMB million) | Cash Flow Type | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 47,307 | 58,700 | | Net Cash Used in Investing Activities | (61,149) | (50,103) | | Net Cash Used in Financing Activities | (15,386) | (14,583) | | Net Decrease in Cash and Cash Equivalents | (29,228) | (5,986) | | Cash and Cash Equivalents as of June 30 | 52,959 | 75,072 | - Net cash used in investing activities significantly increased, primarily due to cash paid for investments rising from **RMB 109 million** in 2024 to **RMB 55.575 billion** in 2025[118](index=118&type=chunk) - In the reconciliation of net cash generated from operating activities to profit before tax, depreciation and amortization amounted to **RMB 52.039 billion**[119](index=119&type=chunk) [Notes to the Unaudited Condensed Consolidated Interim Financial Information](index=51&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99%E9%99%84%E8%A8%BB) This section provides detailed notes to the condensed consolidated interim financial information, covering business, basis of preparation (including Guodun Quantum consolidation), accounting policies, segment reporting, property, plant and equipment, interests in associates and joint ventures (China Tower), other assets, trade and other receivables, cash and cash equivalents, loans, payables, operating revenue, operating expenses, net finance costs, income tax, dividends, earnings per share, capital commitments, fair value measurement of financial instruments, related party transactions, post-employment benefit plans, and subsequent events - The Group obtained control of Guodun Quantum and consolidated it into its financial statements, recognizing goodwill of **RMB 991 million** related to the acquisition[124](index=124&type=chunk) - For the six months ended June 30, 2025, the Group's additions to property, plant and equipment and construction in progress totaled **RMB 33.615 billion**[130](index=130&type=chunk) - As of June 30, 2025, the fair value of the Group's investment in China Tower was **RMB 36.925 billion**, which was **9.9%** lower than its carrying amount[132](index=132&type=chunk) Net Trade and Other Receivables (RMB million) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Third Parties | 79,166 | 49,726 | | China Telecom Group | 5,133 | 2,556 | | China Tower | 50 | 46 | | Other China Telecom Operators | 1,767 | 1,259 | | Total | 86,116 | 53,587 | | Less: Provision for Credit Losses | (15,981) | (10,720) | | Net Amount | 70,135 | 42,867 | Breakdown of Operating Revenue (For the six months ended June 30, 2025, RMB million) | Revenue Type | 2025 | 2024 | | :--- | :--- | :--- | | Service Revenue | 249,112 | 246,235 | | Mobile Communication Service Revenue | 106,572 | 105,217 | | Fixed-line and Smart Family Service Revenue | 64,133 | 63,993 | | Industrial Digitalization Service Revenue | 74,853 | 73,750 | | Other Service Revenue | 3,554 | 3,275 | | Revenue from Sales of Goods and Others | 22,357 | 21,776 | | Total Operating Revenue | 271,469 | 268,011 | - As of June 30, 2025, the Group's capital commitments (contracted but not yet executed) totaled **RMB 19.510 billion**[156](index=156&type=chunk) - Subsequent to the reporting period, the Board resolved on August 14, 2025, to declare an interim dividend of **RMB 0.1812 per share** (tax inclusive) for the six months ended June 30, 2025, totaling approximately **RMB 16.581 billion**[175](index=175&type=chunk)

Core Insights - China Telecom's digital revenue has shown a positive growth of 1.6% in the first seven months of the year, reaching over 90 billion yuan [3][5] - The digital revenue for the first half of the year was reported at 74.9 billion yuan, with AIDC revenue growing by 7.4% [3][4] - Previous years saw double-digit growth rates, with 19.7% in 2022 and 19.4% in 2023, but growth has slowed to a projected 5.5% for 2024 [6] Revenue Performance - In the first three months of the year, digital revenue experienced a decline of approximately 2%, and a 1% decline in the first five months [4] - The turnaround to positive growth in the first seven months is considered a significant achievement for China Telecom [5] Future Projections - China Telecom aims for an 8% growth in digital revenue by 2025, but the current growth of 1.6% indicates a substantial gap to meet this target [6] Contributions from Provincial Companies - Eleven provincial companies contributed positively to the digital revenue growth, with the top five being Tianjin, Jiangxi, Tibet, Henan, and Guangxi [7] - Twenty provincial companies achieved positive growth, with the leading five being Ningxia, Qinghai, Shanxi, Tianjin, and Hunan [7][8] Overall Assessment - The improvement in digital revenue growth and the positive contributions from provincial companies are seen as encouraging signs for China Telecom [9]