China Telecom is about to put pedal to metal in its 5G buildout, with plans for a fivefold boost in capex this year.
The operator, which has clocked up 10.73 million 5G subscribers, expects to spend 45.3 billion yuan ($6.4 billion) on 5G in 2020 – up from a thrifty RMB9.3 billion ($1.3 billion) last year.
In its 2019 full-year results presentation, China Telecom said last year 5G comprised just 12% of its total capex of RMB77.6 billion ($11 billion). This year it is boosting total capital spending to RMB85 billion ($12 billion), of which 5G will account for 53%.
"The company will push forward 5G network construction on all fronts," said Chairman and CEO Ke Ruiwen.
The company says it has already seen an uptick in ARPU from its 5G customers of around 10%, to RMB91.9 ($13). Each subscriber is consuming 13.2GB of data each month.
It says it is aiming for a "5G-scale breakthrough" this year, targeting an additional 60–80 million subscribers.
It built 40,000 5G basestations and co-shared another 20,000 with China Unicom in 2019, covering 50 cities under a network-sharing arrangement.
As with rivals China Mobile and China Unicom, China Telecom's 2019 numbers show some modest gains against a backdrop of zero growth. (See China Mobile reports 15.4M 5G customers and China Unicom boosts earnings but sales remain flat.)
Ke said the company had "capitalized firmly on the invaluable opportunities arising from the digital transformation of the economy and society, as well as 5G commercialization."
It posted a 3.3% fall in net profit to RMB20.5 billion ($2.9 billion) on flat operating revenues of RM375.73 billion ($53.2 billion).
Service revenue improved 2%, including a 4.7% bump in mobile services, but the wireline business shrank by 0.4%. The information and application services segment, which includes cloud, data center and IoT, grew 5% and now accounts for 23% of operating revenues.
Earnings before interest, tax, depreciation and amortization were up 12.5% and the EBITDA margin was 3.1 points higher at 32.8%.
The company also achieved positive net cash flow of RMB4.1 billion ($580 million), compared with a loss of RMB2.9 billion ($410 million) in 2018.
China Telecom's stock closed 2.59% lower in Hong Kong on Tuesday.
— Robert Clark, contributing editor, special to Light Reading