Cloud, digitalization and industrial 5G have powered China Telecom to a 25% hike in full-year earnings.

The number two Chinese telco reported a 25% hike in income to 26.0 billion yuan (US$4.1 billion) on 12% higher revenue of 439.6 billion yuan.

Total enterprise revenue rose 19% to 99 billion yuan and now accounts for 23% of total revenue.

The uptick in enterprise was led by the cloud business, which doubled to 27.9 billion yuan ($4.4 billion), including multiple contracts worth more than 100 million yuan, while data center sales reached 31.6 billion yuan, up 13%.

Figure 1: Blue skies: The company is set to boost investment in cloud and digitalization in 2022 by more than 40%.
(Source: Newscom/Alamy Stock Photo)

5G played a role too, with the operator rolling out more than 1,200 customized 5G projects last year in verticals including industry, smart cities, smart mining, medical care and ports.

Now that its 5G rollout has peaked, China Telecom is bulking up its cloud, data center and enterprise capabilities.

It is set to boost its investment in cloud and digitalization this year by more than 40% to 32 billion yuan, or 30% of the total capex.

It is also weighing a possible spinoff and listing of its new subsidiary, China Telecom Cloud Technology Co, which now holds its cloud computing resources.

Strength in numbers

Chairman and CEO Ke Ruiwen said the company had signed a framework agreement with four other state-owned groups – electronics giants China Electronics Technology Group and China Electronics Corp (CEC), and investment firms China Chengtong and China Reform – to increase the registered capital of the new unit.

"The company will actively explore the possibility of spin-off and listing of Tianyi Cloud under the conditions of compliance with regulatory rules," Ke told an earnings event on Thursday. The operator revealed 5G capex declined 3% last year to 38 billion yuan and is budgeted to fall to 34 billion yuan in 2022.

It has already deployed 690,000 5G basestations built with partner China Unicom, with the aim of reaching 900,000 by year-end. It said it aimed to "deepen" its network co-building and co-sharing initiatives.

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The mobile business grew 4.9%, with mobile ARPU up 2% to 45 yuan and 5G package subs now accounting for just over half of all mobile subscribers.

Wireline and smart home revenue rose 4.1% and broadband subs totaled just under 170 million.

Looking ahead, the company listed "cloudification and digital transformation" as priorities and said it hoped to speed up construction of its national computing network and the national 'east-west' data center network.

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— Robert Clark, contributing editor, special to Light Reading