Big three report revenue growth for 9M 2020

22 Oct 2020

China’s three full service providers – China Mobile, China Telecom and China Unicom – have each published their financial results for the first nine months of 2020.

The market’s largest operator China Mobile reported operating revenues of CNY574.4 billion (USD86.3 billion) for the nine month period, an increase of 1.4% from CNY566.7 billion for 9M 2019. Turnover from telecommunications services was up 2.5% to CNY525.7 billion, although revenue from the sale of products and other sources was down by 9.2% year-on-year to CNY48.7 billion due primarily to the impact of the coronavirus pandemic. Going forward, Mobile noted that it would continue to promote its ‘5G+’ sales programme to promote growth for the full year. EBITDA for the three quarters was down 3.8% y-o-y to CNY216.9 billion, however, whilst profit attributable to shareholders dipped by 0.3% to CNY81.6 billion. Commenting on the results, the operator indicated that the dip was the partly the result of expenditure related to 5G development, noting: ‘Facing the challenges resulting from increasing costs incurred by 5G operations and maintenance and business transformation, the group will allocate resources by adhering to the principle of ensuring a sufficient budget for areas essential to promote growth, while reducing and controlling expenses on certain selected areas. In addition, it will take further measures to reduce costs and enhance efficiency, alongside efforts to maintain good profitability.’ Regarding its operating data, meanwhile, the company claimed a total of 946 million mobile users at end-September 2020, down from 947 million three months earlier, of which 770 million were 4G users and 114 million were ‘5G package customers’, compared to 760 million and 70 million respectively in June 2020. Its fixed broadband user base grew to 204 million from 197 million in the three months to end-September.

China Telecom also reported an increase in operating revenue for the nine month period, recording operating revenue of CNY292.6 billion an improvement of 3.5% compared to CNY282.8 billion in the first three quarters of 2019. EBITDA improved by 0.3% y-o-y to CNY92.2 billion, whilst operating expense grew by 4.2% as increases in network and personnel costs offset cuts in sales and other expenses. Profit attributable to shareholders grew by 1.7% to CNY18.7 billion, aided by a 19.1% reduction in financing costs and additional income from investments and share of profits associates (such as China Tower), which improved by 25.1% y-o-y. Telecom claimed a total of 349.4 million mobile subscribers at the end of September 2020, compared to 330.4 million a year earlier, including some 64.8 million 5G package subscribers. Telecom’s fixed broadband user base grew to 156.8 million from 152.7 million in September 2019.

Finally, China Unicom reported revenue of CNY255.4 billion for 9M 2020, an increase of 3.5% y-o-y, whilst EBITDA improved by 0.8% to CNY73.7 billion. Profit attributable to shareholders was CNY10.8 billion, an increase of 10.2% compared to the first nine months of 2019. Unicom noted that its mobile user base continued to contract, sliding to 309.18 million at end-September 2020 from 324.73 a year earlier although its 4G customer base grew to 266.45 million from 251.15 million. Indeed, the company explained that it had ‘proactively adjusted the development priority’ of its mobile business since the second half of last year and as such ‘customer acquisition cost was rigorously controlled, while the subscriber quality was improved’, contributing to a 2.9% increase in mobile ARPU to CNY41.6. Elsewhere, Unicom attributed growth of 3.7% in fixed broadband access revenues (to CNY32.1 billion) and an increase in subscribers to 86.56 million – from 84.45 million in September 2019 – to rising demand from the pandemic and the company’s promotion of smart home products.

China, China Mobile, China Telecom Corporation, China Unicom