Digital boom powers China Telecom revenue, earnings

China Telecom has ridden China's digital transformation boom to another robust profit. The second largest Chinese operator has posted 6.3% higher full-year earnings on the back of a 9.5% rise in revenue to 418.4 billion Chinese yuan (US$60.8 billion). Its cloud business was once again the prime growth engine, more than doubling sales to 58 billion yuan and helping the industry digitalization unit to expand by 20%. With CNY118 billion in revenue, the industry unit is now the same scale as the broadband business, accounting for nearly a quarter of the total.

The huge demand for cloud and digital will continue, the company expects. Chairman and CEO Ke Ruiwen told an earnings call Wednesday he expected the cloud business would grow to CNY100 billion in the coming year. China Telecom's cloud is the world's largest among telcos and ranks in the top-three in China’s public cloud IaaS and IaaS-PaaS markets.

Figure 1: Soaring cloud revenues gave a boost to China Telecom's 2022 earnings.
(Source: Newscom / Alamy Stock Photo)

In contrast to the soaring cloud and digital business, China Telecom's legacy mobile and broadband units posted modest gains.

Mobile service revenue was CNY191 billion, up just 3.7%, despite the growth in 5G subscribers to two-thirds of the customer base. Mobile ARPU at December 31 was CNY45.2, just 0.4% higher over the previous year, while the blended broadband-smart home ARPU was CNY46.3, a rise of just 0.9%.

Digital capex to grow 40%

Capex last year was up 6.7% to CNY92.5 billion, slightly below the CNY93 billion budgeted, the company said. Opex increased 9.6%, with network opex up 10.7%.

Ke said the digital industry would be a big focus in capex this year, with an expected 40% hike in spending, mostly on expanding its computing infrastructure. In its filing China Telecom said it had seized the opportunities brought by the demand from industry for network-based, digital and smart services.

The company stated it had created a model for industry digitalization that combined cloud, network and industry application platforms. Emerging businesses, including integrated cloud, Big Data, AI, digital platforms, and security, had become new drivers for its digital industry portfolio, it said.

China Telecom's stock Wednesday closed 1.69% higher in Hong Kong and 1.21% in Shanghai.

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— Robert Clark, Contributing Editor, special to Light Reading