|
2018 |
2017 |
(RMB in billions) |
Total
amount | As a
percentage
of service
revenue |
Total
amount | As a
percentage
of service
revenue |
Service revenue |
263.68 | 100.0% |
249.02 | 100.0% |
Include : Voice service |
46.06 | 17.5% |
53.52 | 21.5% |
Non-voice service |
217.62 | 82.5% |
195.50 | 78.5% |
Voice Service
In 2018, service revenue from the voice service was RMB46.06 billion, down by 13.9% year-on-year.
Non-Voice Service
In 2018, service revenue from the non-voice service was RMB217.62 billion, up by 11.3% year-on-year.
COSTS AND EXPENSES
In 2018, total costs and expenses amounted to RMB277.80 billion, up by 2.0% year-on-year.
The table below sets forth the items of the costs and expenses and their respective percentage of the revenue for the years of 2018 and 2017:
|
2018 |
2017 |
(RMB in billions) |
Total amount | As a percentage of revenue |
Total amount | As a percentage of revenue |
Total costs and expenses |
277.80 | 95.50% |
272.24 | 99.06% |
Operating costs |
281.75 | 96.86% |
270.89 | 98.57% |
Include: Interconnection charges |
12.58 | 4.32% |
12.62 | 4.59% |
Depreciation and amortisation |
75.78 | 26.05% |
77.49 | 28.20% |
Network, operation and support expenses |
55.08 | 18.93% |
54.51 | 19.83% |
Employee benefit expenses |
48.14 | 16.55% |
42.47 | 15.45% |
Costs of telecommunications products sold |
27.60 | 9.49% |
26.64 | 9.69% |
Selling and marketing expenses |
35.17 | 12.09% |
34.09 | 12.40% |
General, administrative and other expenses |
27.40 | 9.43% |
23.07 | 8.41% |
Finance costs, net of interest income |
-0.09 | -0.03% |
4.09 | 1.49% |
Share of net profit of associates |
-2.48 | -0.85% |
-0.89 | -0.32% |
Share of net profit of joint ventures |
-0.60 | -0.21% |
-0.57 | -0.21% |
Other income-net |
-0.78 | -0.27% |
-1.28 | -0.47% |
Interconnection charges
The interconnection charges amounted to RMB12.58
billion in 2018, down by 0.3% year-on-year and, as
a percentage of revenue, decreased from 4.59% in
2017 to 4.32% in 2018.
Depreciation and amortisation
Depreciation and amortisation charges were
RMB75.78 billion in 2018, down by 2.2% year-on-year
and, as a percentage of revenue, decreased
from 28.20% in 2017 to 26.05% in 2018.
Network, operation and support expenses
Network, operation and support expenses were
RMB55.08 billion in 2018, up by 1.0% year-on-year
and, as a percentage of revenue, decreased from
19.83% in 2017 to 18.93% in 2018.
Employee benefit expenses
As a result of the improved operating results, the
Company’s employee benefit expenses amounted
to RMB48.14 billion in 2018, up by 13.4% year-on-year
and, as a percentage of revenue, changed from
15.45% in 2017 to 16.55% in 2018.
Cost of telecommunications products sold
Costs of telecommunications products sold
amounted to RMB27.60 billion and revenue from
sales of telecommunications products amounted
to RMB27.19 billion in 2018. Loss on sales of
telecommunications products was RMB0.41 billion,
of which handset subsidy cost amounted to RMB0.96
billion in 2018, down by 23.7% year-on-year.
Selling and marketing expenses
Selling and marketing expenses were RMB35.17
billion in 2018, up by 3.2% year-on-year and, as a
percentage of revenue, decreased from 12.40% in
2017 to 12.09% in 2018.
General, administrative and other
expenses
General, administrative and other expenses were
RMB27.40 billion in 2018, up by 18.7% year-on-year
and, as a percentage of revenue, changed from
8.41% in 2017 to 9.43% in 2018.
Finance costs, net of interest income
Finance costs, net of interest income, was RMB-0.09
billion in 2018, down by 102.1% year-on-year.
Other income-net
Other income-net was RMB0.78 billion in 2018,
down by RMB0.50 billion year-on-year.
EARNINGS
Profit before income tax
In 2018, the Company’s profit before income tax was RMB13.08 billion, up by RMB10.49 billion year-on-year.
Income tax
In 2018, the Company’s income tax was RMB2.82 billion and the effective tax rate was 21.6%.
Net profit
In 2018, the Company’s net profit1 was RMB10.20 billion, up by RMB8.37 billion year-on-year. Basic earnings per share was RMB0.333, up by 347.9% year-on-year.
EBITDA2
In 2018, the Company’s EBITDA was RMB84.91 billion, up by 4.3% year-on-year. EBITDA as a percentage of service revenue was 32.2%, down by 0.5 percentage points year-on-year.
CAPITAL EXPENDITURE AND CASH FLOW
In 2018, capital expenditure of the Company totaled RMB44.87 billion, which mainly consisted of investments in mobile network, broadband and data, and infrastructure and transmission network etc. In 2018, the Company’s net cash inflow from operating activities was RMB92.39 billion. Free cash flow was RMB47.52 billion after the deduction of the capital expenditure.
The table below sets forth the major items of the capital expenditure in 2018.
|
2018 |
RMB (in billions) |
Total amount |
As
percentage |
Total |
44.87 |
100.0% |
Include: Mobile network |
18.73 |
41.7% |
Broadband and data |
9.16 |
20.4% |
Infrastructure and transmission network |
10.32 |
23.0% |
Others |
6.66 |
14.9% |
BALANCE SHEET
The Company’s total assets changed from RMB571.98
billion as at 31 December 2017 to RMB540.32 billion
as at 31 December 2018. Total liabilities changed
from RMB267.64 billion as at 31 December 2017
to RMB226.03 billion as at 31 December 2018.
The liabilities-to-assets ratio down by 46.8% as at
31 December 2017 to 41.8% as at 31 December
2018. The debt-to-capitalisation ratio down by
19.5% as at 31 December 2017 to 11.3% as at
31 December 2018. The net debt-to-capitalisation
ratio was 2.8% as at 31 December 2018.
Note 1: Net profit represented the profit attributable to
equity shareholders of the Company.
Note 2: EBITDA represents profit for the year before
finance costs, interest income, shares of net profit
of associates, share of net profit of joint ventures,
other income-net, income tax, depreciation and
amortisation. As the telecommunications business
is a capital intensive industry, capital expenditure
and finance costs may have a significant impact
on the net profit of the companies with similar
operating results. Therefore, the Company
believes that EBITDA may be helpful in analysing
the operating results of a telecommunications
service operator like the Company.