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On March 25, China Mobile released its 2020 annual performance report. Currently, China Mobile, China Telecom, and China Unicom have all released their 2020 annual reports. Over the past year, the three major operators achieved a total revenue of 1465.5 billion yuan and a net profit of 141.2 billion yuan, both showing positive growth.

2020 was the final year of the 13th Five-Year Plan. Faced with the impact of the COVID-19 epidemic and a complex international situation, the three major operators worked hard to overcome various difficulties and challenges. Their operational data and 5G network construction progressed smoothly, boosting industry confidence.

5G construction investment continues to increase

Against the backdrop of new infrastructure construction in 2020, the three major operators continued to increase their investment in 5G network construction, with a total expenditure of 175.7 billion yuan, an increase of 8.3% compared to 2019. The three major operators provide 5G services to cities, some counties, and key areas nationwide, building the world's most technologically advanced and largest 5G SA commercial network.

According to the annual report data from the three major operators, China Mobile's capital expenditure in 2020 was 180.6 billion yuan, of which 102.5 billion yuan was invested in 5G. Approximately 340,000 new 5G base stations were built throughout the year, bringing the total number of 5G base stations to 390,000. China Telecom's 2020 capital expenditure was 84.8 billion yuan, with 39.2 billion yuan allocated to 5G; China Unicom's 2020 capital expenditure was 67.6 billion yuan, with 34 billion yuan for 5G.

In the 3G and 4G eras, China had six networks. In the 5G era, China Mobile, China Broadcasting, China Telecom, and China Unicom will jointly build and share through two methods. During the 5G construction period, only two high-quality networks need to be built. China Unicom and China Telecom's joint construction and sharing for over a year has resulted in the world's first and largest 5G jointly built and shared network, achieving continuous 5G network coverage in all prefecture-level cities and above, key counties, and important buildings. The peak rate reaches 2.7Gbps.

Recently, the Ministry of Industry and Information Technology (MIIT) released the "Dual Gigabit" Coordinated Network Development Action Plan (2021-2023). The plan aims to basically complete the "dual gigabit" coverage of urban areas and eligible towns within three years, building network infrastructure to ensure that fixed and mobile networks generally have "gigabit access" capabilities. Gigabit optical networks and 5G users are accelerating development, and user experience is continuously improving.

Under the three-year action plan and the network construction policy of "moderate advancement," operators' 5G capital expenditure continues to increase. In 2021, the three major operators' 5G capital expenditure is expected to reach 184.7 billion yuan, a slight increase compared to 2020. Operators can leverage the advantages of 700MHz spectrum resources to significantly reduce network construction costs. In 2021, 5G network coverage will expand to all counties and some villages.

Wang Xiaochu, chairman of China Unicom, stated that capital expenditure from 2020 to 2022 will remain at around 70 billion yuan, with 5G investment accounting for approximately 35 billion yuan. After three years, 5G investment will begin to decline.

The C-end market structure is becoming stable, and the B-end business value is becoming prominent.

According to the annual reports of the three major operators, China Mobile continues to lead in the number of mobile users. As of the end of December 2020, China Mobile had 942 million mobile users, China Telecom had 351 million, and China Unicom had 306 million. China Mobile accounts for 59% of mobile users, while China Telecom and China Unicom account for 22% and 19%, respectively. Among them, China Mobile has 165 million 5G package users, accounting for 53% of the market. China Telecom and China Unicom have 87 million and 71 million 5G package users, respectively.

In terms of fixed-line broadband, China Mobile's fixed-line users surpassed China Telecom's starting in 2018. In 2020, China Mobile's fixed-line broadband business accounted for 46% of the market share, making it the largest fixed-line operator in China. China Telecom and China Unicom accounted for 35% and 19%, respectively.

Industry insiders point out that China Mobile's fixed-line business revenue is expected to maintain growth. By continuously increasing fiber optic investment, optimizing broadband quality, and improving universal service coverage in rural areas, operators have formed a complete system for sustained growth in fixed-line revenue. With the expansion of fixed-mobile convergence services, China Mobile will further increase the stickiness of fixed-line users while developing 5G connectivity.

With the slowdown in revenue growth of C-end mobile services and the lack of consumer-level blockbuster 5G applications, operators are highly focused on the B-end industry market to gradually overcome the situation of increasing volume without increasing revenue, and the business layout is gradually highlighting its value.

Over the past year, China Mobile has reached 13.84 million government and enterprise customers, a net increase of 3.56 million. Dedicated line revenue reached 24 billion yuan, a year-on-year increase of 19.3%; DICT revenue reached 43.5 billion yuan, a year-on-year increase of 66.5%, contributing 2.6 percentage points to the increase in communication service revenue. Among them, mobile cloud revenue reached 9.2 billion yuan, a year-on-year increase of 353.8%.

In 2020, China Telecom's digital industry revenue reached 84 billion yuan, a year-on-year increase of 9.7%, and its network-wide cloud business revenue reached 13.8 billion yuan, a year-on-year increase of 58.4%; China Unicom's industrial internet business revenue increased by 30.0% year-on-year to 42.7 billion yuan, of which ICT business revenue was 13.4 billion yuan, a year-on-year increase of 33.4%, and IDC and cloud computing business revenue reached 23.4 billion yuan, a year-on-year increase of 26.1%; Internet of Things business and big data business revenue reached 4.2 billion yuan and 1.7 billion yuan, respectively, with year-on-year growth of 39% and 39.8%, respectively.