China Unicom (Hong Kong) Limited (762) Earnings Call Transcript & Summary

Respected investors, analysts and friends from the media, ladies and gentlemen, good afternoon. I am Wang Lingsheng from the Board of Directors' Office of China Unicom. Welcome to our 2024 Interim Results Briefing. Thank you for your support all along. We are having our briefing both in Beijing and in Hong Kong with an online and off-line combination. So I with Ms. Shui Ming Chung and myself will be hosting the meeting on the 2 places and to serve all of you. The management has always been attaching a lot of importance to the communication and interaction with you all. So they are here, all of them are here. They are respectively, Mr. Zhongyue Chen, Chairman and CEO. Mr. Qin Jian, Executive Director and President ; Mr. [indiscernible], Head of Discipline, Inspection and supervisory team of the group. Mr. Baojun Liang, Senior Vice President; Ms. Yuzhuo Li, Executive Director and CFO, Senior Vice President, Mr. [indiscernible] and Senior Vice President, Mr. [indiscernible]. According to our schedule, we will first invite Mr. Chairman, to walk us through the interim results of 2024. And then the management will have exchanges with you. We will proceed in Chinese, but then we will have English simultaneous interpreting. First of all, let us invite Mr. Chen to walk us through 2020 for midterm performance.

Respected investors, analysts and friends from the media, ladies and gentlemen, good afternoon. Welcome to the 2024 interim results of China Unicom. July 19, we host a business partner conference with a joint vision and to share our new results. And we have organized a historical exhibition and business exhibits of 100 years of heritage and 30 years of innovation, for us to understand more about China Unicom. We have been developing both in scale and in profitability. In the first half, we have a RMB 197.3 billion of operating revenue. That's a 2.9% of increase. And our Service revenue was at RMB 175.7 billion, an increase of 2.7%. Our profitability also increased by 10.4% to RMB 16.9 billion. That's a consecutive 8 years of double-digit growth. Facing the great opportunity of industrial reform, we promote the 3 innovations in network technology and service and to create synergies and precisions and also open up new opportunities in our connectivity network as well as our computing network. We promote for synergies and precision in resources allocation. In the first half of the year, we have already invested RMB 23.9 billion of our RMB 65 billion total of CapEx and building a very strong basis. In the first half, the main focus of investment is in connectivity, computing as well as Data networks. As far as Connectivity is concerned, we will continue to enhance our mobile network coverage. In the first half, we have 1.31 million 5G mid-band BTS, 780,000 low-band BTS and over 2 million 4G mid-band BTS. There's over 100 cities achieved commercial deployment of key 5G-A technologies, such as RedCap and carrier aggregation. And we also stepped up on broadband network building, we promoted gigabyte networks and the proportion of 10GPON ports reached 79% which is leading the industry. And then we also launched a 50GPON pilot project, to support the construction of 10-gigabyte cities. As far as Computing network is concerned, we have build intelligence, computing centers with more than over 10,000 AI accelerators in Shanghai and Hohhot. 29 large-scale computing center parks to fulfill the Eastern Data and Western computing hubs and nodes. We also accelerated the construction of the New Eight Vertical and Eight Horizontal national backbone networks. So we have built a Unicom Chain's TPS of more than 1 -- sorry, 100,000, which is the Top 5 in industry. And we have also -- for flexible broadband connectivity. And with data, we have a high-quality AI DATA, a Multi-modal high-quality Shared dataset for AI, empowering data factor of trusted data resource base. And we will continue to promote innovation in our investments, and we have increased 13% of our R&D investment. We emphasize on original technology and also to build data and network platform such as the [indiscernible] model, et cetera. This June, we have the 5G key technology and generic application price and also a first prize in National Science and Technology Progress. As far as network is concerned, we focus on the long-distance lossless transmission, meaning the industry's first 3,000 kilometers, lossless transmissions, enabling the transfer of terabytes of data in minutes. We also built the computing power AI network and that is to support 800G upgrades to ensure integrity and security of the network. We continue to apply 5G-A our 6G technologies to probe into the standards of 6G standards satellite Internet, low attitude intelligent networks, air ground, integrations, et cetera. With data, we continue to promote data factor X to launch AI DATA, a multi-modal high-quality shared dataset for AI as well as empowering data factor circulation of trusted data resource space. And we will also launch trustworthy data platform to provide trustworthy data use. As far as intelligence innovation is concerned, we will continue to promote the the 1+1+M2 deployment and to promote the integration of AI with various industries and also to promote the [indiscernible] model, to promote the increase in users and to form 35 industry-specific large models, covering consumer industry and various aspects of life and society. We will continue to promote our Service innovation. We promote with continue to promote new circumstances of the use of connectivity we will enhance our connectivity and communications as well as computing and digital smart applications to cover various industries and aspects. In the first half we have for CC revenue, 125.1 billion, that's a 2.1% increase. And our CDS revenue increased by 6.6% to RMB 43.5 billion. First of all, let's take a look at Connectivity our -- the users and the value also increased. In the first half, we have an additional of 8,000 new customers the total exceeds now 1.07 billion. And mobile subscribers reached 339 million. That's a new high for us. In IoT connections exceeded 562 million. Fixed line, broadband subscribers continue to grow to 117 million, of which integrated subscribers takes up more than 80 million. And the customer mix continues to improve. 5G package subscriber penetration has exceeded 85%, gigabyte broadband subscriber penetration rate is at 25%. ARPU exceeded RMB 103. As far as new scenarios and creating new value, we continue to grow through such a new integration. So the integration rate continues to improve and our product integration versus personal customers, we have developed end products with over RMB 1 billion in revenue. As far as family customers is concerned, we have been expanding Unicom Cloud Drive Video Ringtone to bring them quality upgrades. The FTTR subscribers is nearly 300,000 small- and medium-sized enterprises. As far as terminal integration is concerned, there is a 4.3% increase in cumulative terminal sales volume up to 25 million. We have promoted the integrated development in our various offers. Let's take a look at computing power business. In the first half, Unicom Cloud revenue is at RMB 31.7 billion, that's a 24.3% increase. There is a breakthrough in both computing as well as product revenue. So we have been able to build ministerial cloud provision government affairs clouds, medium to large enterprise clouds as well as medical clouds. So IDC business has been growing and leading the industry. We have launched 5 computing products to bring differentiated and scenariolized products. Our data services also is industry-leading. In the first half, we have an 8.6% increase in our Data Services revenue. We continue to achieve multiple effect of data factors and promote various big data services to various industries. We continue to build trustworthy data platforms as well as dedicated operation of public data and building data infrastructure. So we work with different partners such as Big Data partners to continue to push innovations in both public and private services. And as far as digital application is concerned, we have a double-digit growth we have RMB 3.7 billion of revenue in the first half. That's a 13.5% increase. We have built 5,800 5G factories and 38,000 plus 5G digital smart applications, our influencing intelligent connectivity continues to rise. We have Gewu platform supports ubiquitous and intelligence connectivities devices, with over 1,000 standard object models and over 10,000 categories of connected devices. We have empowering digital transformation of customers and over 100,000 customers is using our services. We have strong growth in Cybersecurity. We have a RMB 1.4 billion revenue in the first half, that's a 58.2%. We have a Mogong platform servicing, that's a security operation service platform, servicing over 200 cooperative products and 200-plus governments. Our Security Hub serves more than 1,400 customers with 100-plus partners. Let's take a look at our International business. With the increase in international travel, we have been enjoying a lot of opportunities. We have, for the first half, RMB 6 billion of revenue, that's an 8.4% increase. That's mainly coming from international roaming and mobile prepaid revenue having a lot of growth. The network and other main products, we're growing very quickly. And there's a breakthrough of 93% in international IoT revenue. This June, we organized the international development plan of China Unicom. We have also organized in Shanghai, Global Partnership Conference in order to build our synergies and to take a wider stride towards international business development. Now through continuous improvement in management, operations and service, we have seen a lot of improvement. We have optimized our system and also the operating cost and the management cost continues to come down. Our quality continues to improve. We have been able to optimize our product and also to optimize our strategy and our speed to market as well as the service. And we're also building smart customer service that's 99% of building a UniAI customer service launch model and an 84.6% in resolution ratio of customer cases by smart customer service. We have 95 investors events in the first half and over 1,000 investors engaged in the first half. In the first half, we have reduced GHG emission by 6.78 million tonnes. And our energy efficiency enhancement has improved by 6%. And we have also contributed to beauty for China efforts. We also focus on administrative villages covered -- turning them into Digital Villages. There are over 250,000 of such villages. We have been shouldering the responsibilities as -- that we should take, and we also have been communicating with our investors and enhancing the value that we can offer to our customers. Now while we increase our revenue, we continue to share with our shareholders, we will continue to 0.059 per share. And this this payout ratio is higher than our revenue growth ratio. And we will continue to bring better return to our shareholders. Today's China Unicom has an even stronger basis for development with more energy and we have a much, much better base. So we expect double-digit growth in revenue. And our investment in CapEx will be kept within RMB 65 billion of profit before tax. We will expect that to be also a double-digit growth. So thanks a lot for your support. We will continue to try our best to create more value for investors and for the society.