Chinese telcos book double-digit rise in profit

China's state-owned operators once again have shown they're in a league of their own, with China Telecom and Unicom booking double-digit gains in first-half earnings.

Unicom, the smallest of the big three telcos, said it had hiked net income by 13.1%, to 12.4 billion Chinese yuan (US$1.7 billion) – its seventh year of double-digit growth.

Revenue was 8.8% higher, at RMB191.8 billion ($26.6 billion), with service revenue up 6.1%, and earnings increasing 4.1%, the company said in a stock exchange filing.

Demand for digital transformation services has become its most important growth driver, with its industry Internet unit boosting sales by 17% to RMB43 billion ($6 billion), now accounting for more than a quarter of service revenue.

The unit includes the cloud business, which grew 36%, to RMB25.5 billion ($3.5 billion), and is expected to top RMB50 billion ($6.9 billion) for the full year, and big data, which increased sales 54%, to RMB2.9 billion ($400 million), and IoT services, where revenue rose 24% to RMB5.4 billion ($750 million).

China Telecom handed down a similar set of results on Tuesday, with earnings 10.2% higher, at RMB20.2 billion ($2.8 billion), and revenue advancing 7.6%, to RMB260.7 billion ($36.2 billion).

Modest mobile gains

Like its smaller rival, it is being powered by growth in cloud and digital enterprise. The operator reported sales in its industrial digitalization business of RMB68.8 billion ($9.6 billion), up 17%, while the cloud division grew a spectacular 63%, to RMB45.9 billion ($6.4 billion).

The core mobile business reported more modest gains, with revenue rising 2.7%, aided by 19% growth in new value-added services, which now account for around 15% of the mobile business. Mobile ARPU is RMB46.2 ($6.44), just 0.4% higher than last year.

China Unicom did not break out its mobile segment numbers, but said it had increased mobile ARPU and that value-added revenue had grown by 90%.

On the enterprise side it said it now had more than 5,800 5G private network customers with a total value of RMB6.2 billion ($860 million).

Unicom said its business was facing "the profound changes and huge opportunities" of the integration of the digital and the real economies. It said it had broadened its business foundation and fostered innovative transformation, while its digital solutions had become more competitive.

China Telecom said it had accelerated its digital infrastructure buildout and would continue to implement its cloudification and digital transformation strategy.

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— Robert Clark, contributing editor, Light Reading