China Telecom 24Q1: Steady growth, becoming a value stock

On the evening of April 23, 2024, China Telecom released its first-quarter performance report for 2024.

During the reporting period, the company achieved total operating revenue of 134.495 billion yuan, a year-on-year increase of 3.65%; net profit attributable to the parent company was 8.597 billion yuan, up 7.68% year-on-year; non-GAAP net profit was 9.160 billion yuan, an increase of 5.40% year-on-year.

Net cash flow from operating activities was 20.862 billion yuan, down 27.87% year-on-year; basic earnings per share were 0.09 yuan, and the weighted average return on equity was 1.92%.

In the first quarter of 2024, China Telecom's mobile communication service revenue reached 52.226 billion yuan, up 3.2% year-on-year, with a net increase of 3.88 million mobile users, bringing the total to 412 million. 5G package users increased by 10.06 million, reaching 329 million, with a penetration rate of 79.9%. Mobile user ARPU was 45.8 yuan, up 0.9% from last year.

In the first quarter of 2024, fixed-line and smart home service revenue reached 31.824 billion yuan, up 2.2% year-on-year, with wired broadband users totaling 192 million. Smart home revenue grew 10.4% year-on-year, driving comprehensive broadband ARPU to 48.6 yuan, up 2.1% from last year, with continued growth in smart home value contribution.

Notably, during the reporting period, China Telecom continued to advance industrial digitalization services. The company meets the digital needs of households and industries with its "network + cloud + AI + applications" strategy, driving rapid development in strategic emerging businesses and deepening the integration of digital technologies with the real economy. In the first quarter of 2024, the company's industrial digitalization business revenue reached 38.679 billion yuan, up 10.6% year-on-year.

As a key domestic telecom and cloud service provider, China Telecom has achieved significant improvements in quality and efficiency in recent years. With the continuous development and popularization of 5G and other communication technologies, users now have more choices, while an increasing number of application scenarios are leading telecom operators to explore new business opportunities.

From the perspective of the increasingly popular cloud services, China Telecom's Tianyi Cloud has maintained rapid growth for a long time and is expected to become a new growth driver for the company.

As telecom operators' previous round of capital expenditures gradually comes to an end, deepening existing user and business operations has become a key focus for all players. Therefore, investments by operators show clear trends. Enterprise and government digital transformation represent a sufficiently large market.

In the future, with the continuous maturation of mobile internet, AI, and other technologies, more industrial processes will become intelligent, opening up a vast market space.

In this process, while building on its traditional communication services, China Telecom is actively advancing cloud and digital services, using Tianyi Cloud as a lever to cover a broader industrial internet sector, aligning with major industry trends.

Gradually evolving into a value stock, China Telecom is also seeing continuous improvements in revenue quality, reflecting the advantages of industrial scale.

Additionally, it is worth noting that after the release of the "Nine Guidelines," major listed companies have actively responded to national calls to promote cash dividends. China Telecom stated that starting from 2024, it will gradually increase cash dividends to over 75% of annual attributable profits within three years, actively rewarding shareholders.