Smart towers and DAS lift China Tower earnings

A growth surge from China Tower's emerging segments has helped make up for its flat core business.

China's mobile masts firm, which owns and operates basestation sites on behalf of the state-owned telcos, has reported an 11% rise in full-year earnings to 9.75 billion Chinese yuan (US$1.35 billion). Total revenue improved just 2% to RMB94 billion ($13.1 billion), with revenue in its main tower business contracting by 3% to RMB75.0 billion ($10.4 billion).

But the infrastructure monopoly is making headway in three smaller segments, with smart towers up 28% to RMB7.3 billion ($1 billion), DAS growing 23% to RMB7.1 billion ($986 million), and energy sales advancing 32% to RMB4.2 billion ($583 million).

The smart towers unit mostly provides monitoring and surveillance for government agencies, such as environmental protection, water resources and transport.

The company says it has now upgraded 217,000 mobile towers – around 10% of the total – into 'digital towers' to serve more than 40 government verticals. It said it was supplying "scenario-based solutions" for farmland protection, preventing straw-burning, and fishing law enforcement, among other use cases.

The DAS business last year expanded total coverage area by 37% and had increased high-speed rail coverage by 20%, China Tower said.

Capex up 21%

The company said it had built 586,000 5G basestations in 2023, of which more than 95% had involved the sharing of existing resources. But the total tower population had declined over the year to 2.046 million, down 9,000 from the end of 2022.

Underpinning the business expansion was a 21% hike in capex to RMB31.7 billion ($4.4 billion), with the extra spending spread across all segments.

Investment in new tower construction, which accounts for more than half the capex budget, was up 16%, but the biggest increment was in site replacement and improvement, which soared 41% as the company sought to extend asset lifecycles and ensure battery backup.

It tipped an extra 16% into smart tower and energy capex to support new industry products and platform upgrades.

China Tower did not give any guidance on 2024 capex.

Its 2023 numbers show its progress in diversification. In the past five years its core tower business has declined from 96% of total revenue to 80%, with DAS growing from 2.5% to 7.6% and smart towers from 1.8% to 7.7%.

China Tower's Hong Kong stock closed down 3.2% Tuesday.