Telecom operators are experiencing rapid growth in digital transformation revenue, which accounts for approximately 30% of their main business income. The continuous decline in capital expenditure not only facilitates profit release but also preserves sufficient cash for each company. Overall, telecom operators demonstrate steady business growth and improved dividend payout ratios, highlighting shareholder return value.

Recently, the three major telecom operators successively released their semi-annual reports and profit distribution plans. China Mobile, China Unicom, and China Telecom propose to distribute cash dividends of 2.50 yuan, 0.11 yuan, and 0.18 yuan per share respectively, higher than the same period last year, with dividend yields exceeding 2%.

Before large-scale 6G network construction begins, 5G-A serves as a transitional phase with limited overall demand. 5G base station construction is gradually slowing, while co-construction sharing and 5G lightweight approaches have improved investment efficiency. In 2025, the three operators plan to reduce capital expenditure by 9%, with actual first-half capital expenditure below original plans, and future capital spending expected to remain low.

The decline in capital expenditure can reduce depreciation pressure and provide certain profit support while improving free cash flow. Gradual relief in cost pressures creates objective conditions for operators' high dividend distributions.

In the first half of 2025, the three major telecom operators maintained low revenue growth rates, primarily because mobile phone and broadband service penetration rates in China are already very high. However, continuous growth in data traffic consumption keeps ARPU (Average Revenue Per User) slightly increasing. Compared to traditional businesses, 5G private networks, cloud services, and smart connectivity show growth rates far exceeding traditional communication services, forming new growth curves.

The three major operators hold over 50% of the domestic data center market share. Each company is increasing investment in AI large models, enhancing autonomous control, improving AI terminal intelligence experiences, and leading industry quality and efficiency improvements. As AI technology develops and applications deepen, operators' cloud computing, data centers, and smart connectivity businesses have further growth potential.

**Slowing Growth**

In the first half of 2025, the three major telecom operators achieved steady revenue growth. China Mobile realized operating revenue of 543.8 billion yuan, including main business revenue of 467.0 billion yuan, up 0.7% year-on-year. Applications and information services revenue reached 136.7 billion yuan, increasing 5.9% from the previous year.

China Unicom achieved operating revenue of 200.2 billion yuan in the first half, up 1.5% year-on-year, with connected communication revenue of 131.9 billion yuan, up 5.4% year-on-year.

China Telecom's operating revenue was 269.4 billion yuan, up 1.3% year-on-year, with service revenue of 249.1 billion yuan, up 1.2% year-on-year.

Due to China's already high mobile phone and broadband service penetration rates, the three major operators maintain low revenue growth. Although basic telecom tariff levels remain stable, they are offset by continuous growth in data traffic consumption.

Ministry of Industry and Information Technology data shows that national 5G mobile phone users reached 1.118 billion in the first half of 2025, a net increase of 104 million from year-end, accounting for 61.8% of mobile phone users. Mobile internet access traffic reached 186.7 billion GB, up 16.4% year-on-year, with June monthly per-user mobile internet access traffic reaching 20.75GB, up 14.4% year-on-year, maintaining rapid growth.

Currently, the three major operators have low new 5G base station additions, while 5G network customer penetration is rapid, ARPU values have improved, and 5G private network revenue has increased significantly.

In the first half of 2025, China Mobile's personal market revenue was 244.7 billion yuan. Mobile customers reached 1.005 billion, a net increase of 560,000, including 599 million 5G network customers, a net increase of 46.91 million, with a penetration rate of 59.6%. China Mobile's 5G network investment totaled 25.8 billion yuan in the first half, with cumulative 5G base stations exceeding 2.599 million, a net increase of 187,000, achieving core network cloudification integration.

The company's ARPU reached 49.5 yuan, with household customer comprehensive ARPU at 44.4 yuan, up 2.3% year-on-year. Household market revenue was 75.0 billion yuan, up 7.4% year-on-year. As of June 2025, gigabit coverage reached 500 million households.

Government and enterprise market revenue was 118.2 billion yuan, up 5.6% year-on-year. Government and enterprise customers numbered 34.84 million, a net increase of 2.25 million. 5G private network revenue grew rapidly to 6.1 billion yuan, up 57.8% year-on-year, maintaining leadership in 5G vertical industry applications.

China Telecom's 5G network user penetration rate increased 6.1 percentage points from year-end, with mobile user ARPU reaching 46.0 yuan and broadband comprehensive ARPU at 48.3 yuan. China Telecom accelerated building "5G+AI+Cloud+Applications" integrated 5G custom network products, launching 5G industrial control intelligent systems for mining, manufacturing, and power sectors.

China Unicom didn't disclose specific 5G private network revenue, but this income also grew rapidly, with 60% year-on-year growth in the first half, implementing over 50,000 5G application projects cumulatively. China Unicom's user base exceeded 1.2 billion, with 5G network users and gigabit broadband users accounting for approximately 50%. IoT connections increased by over 60 million net additions, totaling 690 million, including 86 million connected vehicles.

**Stable Performance Supporting High Dividends**

In 2024, global major telecom operators averaged 15.66% ROE. Domestic operators' ROE was slightly below the global average, but as 5G enters the investment recovery period, securities analysts point out that domestic operators' cost pressures will gradually decrease, driving sustained improvement in ROE and profitability toward better global telecom operator profit levels.

In the first half of 2025, China Mobile, China Unicom, and China Telecom achieved diluted ROE of 5.62%, 3.29%, and 4.65% respectively.

6G commercialization is expected after 2030. Currently in the mid-to-late stage of 5G construction and promotion, co-construction sharing and 5G lightweight approaches have improved investment efficiency, with operators' capital expenditure entering a downward cycle.

In 2025, the three operators plan 9% capital expenditure reduction. China Mobile plans 151.2 billion yuan, down 7.8% year-on-year; China Telecom plans 83.6 billion yuan, down 10.6%; China Unicom plans 55.0 billion yuan, down 10.4%.

Actually, China Mobile's first-half capital expenditure was 58.4 billion yuan, down 8.8% year-on-year, with full-year expenditure expected below the initial guidance of 151.2 billion yuan. China Telecom's capital expenditure was 34.2 billion yuan, down 28%, including 12.1 billion yuan for mobile network investment and 11.6 billion yuan for industrial digitalization investment.

China Unicom's first-half capital expenditure was 20.2 billion yuan, down 15%. Streamlined network implementation progressed orderly, saving nearly 1 billion yuan in annual operating expenses, with data center resource utilization exceeding 70%, expecting 55.0 billion yuan full-year fixed asset investment.

Capital expenditure reduction can alleviate depreciation pressure, supporting profits while improving free cash flow. Taking China Mobile as an example, the company's first-half attributable net profit was 84.2 billion yuan, up 5.0% year-on-year; operating cash flow was 83.8 billion yuan with free cash flow of 25.5 billion yuan. The company has no interest-bearing debt, with actual interest coverage ratio of 60 times.

As of June 2025, China Mobile's asset-liability ratio was 33.1%, down 1.2 percentage points from year-end, with modest overseas asset scale. Accounts receivable totaled 105.8 billion yuan, up 39.7% from year-end, due to increased government and enterprise business receivables, as such customers typically pay at year-end, making mid-year receivables usually higher than year-end.

AI is bringing new changes to the global telecom industry, mainly through AI tools assisting network operations to reduce maintenance costs, helping companies better understand customer needs to improve value-added service monetization, and achieving cost reduction and efficiency improvement in administrative departments like finance and human resources.

The three major operators' first-half sales expenses and management fees (excluding R&D) as percentages of operating revenue all declined. China Mobile optimized its digital intelligence organizational system, establishing a digital intelligence department to integrate AI into all production and operation management fields. "AI+" covers multiple scenarios in office, human resources, finance, audit, and supply chain, using digital employees to reduce labor costs.

China Mobile decided on an interim dividend of 2.75 Hong Kong dollars per share for 2025, expecting the proportion of cash-distributed profits to shareholder profits to further increase throughout 2025. Both China Telecom and China Mobile's dividend payout ratios exceed 72%.

Securities analysts point out that compared to ten-year government bond yields, telecom operators' static dividend yields have relative advantages, with obvious dividend asset characteristics. As operators maintain sustained healthy business growth and improved payout ratios, shareholder return value becomes prominent.

Based on current market values, all three major operators have dividend yields exceeding 2%. For interim 2025, China Unicom proposes 0.11 yuan cash dividend per share, while China Telecom proposes 0.18 yuan, both higher than the previous year's 0.10 and 0.17 yuan respectively.

**Rapid Revenue Growth from Digital Transformation**

The three major operators hold over 50% of domestic data center market share, with different companies having distinct data center locations and characteristics. Related business growth rates far exceed traditional communication services, forming a "second growth curve."

China Mobile's digital transformation revenue reached 156.9 billion yuan, up 6.6% year-on-year, accounting for 33.6% of main business revenue, up 1.9 percentage points year-on-year. The company accelerated "cloud-to-intelligence" upgrades, with mobile cloud revenue reaching 56.1 billion yuan, up 11.3% year-on-year.

The company operates two large-scale intelligent computing centers in Hohhot and Harbin efficiently, with self-built intelligent computing capacity reaching 33.3 EFLOPS. The "Computing Network Brain" has been deployed in Wuhu and other national nodes, with total intelligent computing scale reaching 61.3 EFLOPS including leased capacity.

China Mobile's data centers cover all national hub nodes, serving over 660,000 external IDC racks in the first half, with over 1,300 platform capabilities and 803.5 billion total calls. The company built the Wutong big data platform, aggregating over 2,000PB of data with over 110 billion first-half calls.

China Telecom, building on Beijing-Tianjin-Hebei and Yangtze River Delta ten-thousand-card clusters, actively introduces new technology to build super-node clusters in the Guangdong-Hong Kong-Macao Greater Bay Area hub, with self-owned intelligent computing capacity reaching 43 EFLOPS while broadly accessing partner computing power.

The company operates over 580,000 data center racks, with eight major hub nodes accounting for 85%. The company optimizes information and communication technology levels, providing integrated solutions for small and medium enterprise customers' office and production scenarios, with servers integrating all-optical networking, general computing, and intelligent computing for computing-network integration. Nearly 500,000 new integrated gateways have been deployed.

China Telecom's industrial digitalization revenue reached 74.9 billion yuan, with AIDC revenue up 7.4% year-on-year. Tianyi Cloud revenue reached 57.3 billion yuan, with AI and intelligent computing services revenue at 6.3 billion yuan, up 89.4% year-on-year; security revenue reached 9.1 billion yuan, up 18.2% year-on-year.

China Unicom's computing network digital intelligence revenue reached 45.4 billion yuan, with proportion increasing to 26%. Intelligent networking serves over 280 cloud service providers, connecting over 400 data centers. Five new overseas intelligent computing centers were built, creating multiple overseas benchmark projects for more comprehensive international intelligent computing deployment.

Unicom Cloud revenue reached 37.6 billion yuan. Data center intelligent adaptation showed significant results, with more internet platform companies and financial institutions like banks settling in Unicom data centers, generating 14.4 billion yuan revenue, up 9.4% year-on-year, with AIDC contract value up 60% year-on-year.

The company has built and operates intelligent computing centers in Shanghai Lingang, Hohhot, Ningxia Zhongwei, and Qinghai Sanjiangyuan. Data center capacity reserves reach 2,650MW, with total intelligent computing scale of 30 EFLOPS, accelerating evolution toward 800G and 1.2T ultra-high bandwidth to achieve high-speed, secure, lossless interconnection of computing hub nodes.

In low-altitude intelligent connectivity, China Mobile builds "communication-sensing-management-navigation" low-altitude intelligent network technology systems, deploying 5G-A 4.9GHz communication-sensing integrated base stations to meet low-altitude logistics and security business needs.

For connected vehicles, China Mobile cumulatively serves over 69 million intelligent connected vehicles, building the first vehicle-road-cloud integrated pilot. Commercial customer packages reached 36.95 million, with net additions of 10.11 million.

Video connectivity business expanded rapidly, with video connectivity connections growing 20.9%, achieving 89.38 million video cloud interconnections. In low-altitude economy, the China Mobile Lingyun platform achieved 38% industry-wide winning rates, with data connectivity becoming mainstream national data flow technology infrastructure and practical solutions, rapidly deploying in seven pilot cities.

**Expanding AI Applications**

In March 2025, China Unicom partnered with ZTE to jointly release AI smart home terminal series products, covering smart home screens, AI gun-ball linked cameras, and AI companion cameras with screens.

In May, China Telecom Tianyi released the new generation Tianyi AI mid-screen, upgrading it to an AI life assistant. Securities analysts believe that from industry trends, operators have strong competitive advantages in smart home business, expected to deeply integrate mobile smart screens with 5G and broadband services, promoting AI terminal applications in home scenarios.

China Mobile launched the VLA18 embodied intelligence large model in artificial intelligence, completing trillion-parameter large model pilot experiments. Large models accelerate breakthroughs, with "Nine Heavens" general-professional large model product matrix upgraded to 3.0, focusing on energy, transportation, new industrialization, healthcare, and over 50 industry large models.

First-half AI+DICT contract projects reached 1,485, jointly building industry large models with energy, water, agriculture, and other central enterprises, supporting digital intelligence transformation across industries. Serving millions of households, the company promotes AI embedding in all products and services, with "AI-enabled products" serving nearly 200 million customers.

The company released AI intelligent assistant Lingxi Intelligence 2.0, with monthly active customers exceeding 60 million. Partnering with industry leaders, it released AI intelligent terminals, intelligent robots, intelligent connected vehicles, supporting over 4,800 smart city and digital village projects.

Additionally, the company built multi-model and intelligent agent aggregation service engine MoMA, enabling autonomous selection and matching of large and small models, different modalities, various tool chains, and intelligent agents. Big data accelerated aggregation, creating over 200 multi-modal data annotation governance tools, building general high-quality datasets covering 32 industries and exceeding 3,500TB, supporting construction of national-level data annotation bases in Baoding and Changsha.

China Telecom's self-owned and accessed computing capacity totals 77 EFLOPS, providing heterogeneous computing services covering general computing, intelligent computing, supercomputing, and quantum computing. The company has launched over 80 industry large models and over 30 industry intelligent agents, providing integrated intelligent cloud services with mature business models in government affairs, emergency response, industry, energy and chemicals, and housing construction.

The company built the fully domestic Xingchen large model, introducing third-party foundation large models and various industry large models to meet diverse needs for large model selection and application scenario innovation. The "Xinghai" data intelligence platform integrates proprietary datasets, open-source datasets, and third-party datasets, aggregating over 10 trillion tokens of general large model corpus data and 14 industry datasets, totaling over 350TB.