China’s three major telecommunications operators, China Mobile, China Unicom, and China Telecom, have reported impressive earnings for 2023, with a daily average profit of approximately 4.6 billion yuan. However, the growth of their cloud business is slowing down, and investment in 5.5G technology is not expected to see a significant increase.
Overview of 2023 Financial Results
According to a report by Sohu Technology, the three operators collectively achieved a revenue of approximately 1.9 trillion yuan and a net profit of around 170.373 billion yuan last year. This translates to an average daily profit of about 4.6 billion yuan. Notably, China Mobile’s revenue exceeded 1 trillion yuan for the first time.
China Mobile reported a full-year revenue of 1009.3 billion yuan, up 7.7% year-on-year, with a net profit of 131.8 billion yuan, representing a 5.0% increase. China Unicom’s revenue reached 372.6 billion yuan, up 5% from the previous year, while its net profit was 81.73 billion yuan, up 12.0%. China Telecom’s revenue was 507.8 billion yuan, a 6.9% increase, with a net profit of 30.4 billion yuan, up 10.3%.
Traditional Business Stagnation
The three operators’ traditional business segments, including voice calls, SMS, and internet services for individual markets, have seen relatively stable revenue growth. For instance, China Mobile’s individual market revenue reached 490.2 billion yuan, a mere 0.3% increase year-on-year. China Telecom’s mobile communication service revenue was 195.7 billion yuan, up 2.4%.
5G and 5.5G Market Penetration
The number of 5G subscribers in China has reached nearly 1.4 billion, accounting for nearly 50% of the total user base. However, a significant number of users have subscribed to 5G packages but have not yet started using the 5G network.
In terms of 5.5G, the first standard version, R18, is expected to be finalized in the first half of 2024, making 2024 the year for the commercialization of 5.5G. China Mobile is deploying 5.5G in more than 300 cities across the country, with an investment of around 1.5 billion yuan, as it is based on the evolution of 5G technology and will not see a significant increase in investment.
Cloud Business Growth Slowing
Despite the impressive revenue growth, the operators’ cloud business is experiencing a slowdown in growth. In 2023, the revenue of China Mobile Cloud reached 83.3 billion yuan, up 65.6% year-on-year, while China Unicom Cloud revenue was 51 billion yuan, up 41.6%, and China Telecom’s revenue was 97.2 billion yuan, up 67.9%.
Investment in AI and Big Models
The operators are also actively investing in artificial intelligence and big models. China Unicom has established a 1+1+M big model system, including one basic big model, one big model platform, and more than 10 industry-focused big models. China Mobile has launched the Jiutian·Zongqing Base Big Model and is strengthening its capabilities in 8 major industries, including communication, energy, steel, construction, and transportation. China Telecom has released the Xingchen big model with over one billion parameters, targeting 12 vertical fields such as education, government, emergency response, and transportation.
Conclusion
While the three major operators in China continue to achieve impressive financial results, the growth of their cloud business is slowing down, and investment in 5.5G technology is not expected to see a significant increase. The operators are also focusing on the development of AI and big models, aiming to create new business growth points for the future.
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