A Closer Look At China Telecom’s Key Revenue Streams

China Telecom (NYSE:CHA) is a telecommunications company that provides wireless and wireline based voice and data services and related applications across Mainland China. The company has 4 operating segments (1) Mobile Services & Phones: provides wireless and data services across Mainland China. The segment also sells mobile handsets. (2)Landline Phone Services: provides landline voice services and Information and Communications Technology related services. (3) Broadband Internet: this segment provides wireline broadband Internet services in China (4) Business lines: provides managed data services as well as Optic fiber, circuits, VPN, and bandwidth which are leased out by the company. In this analysis, we break down the key drivers of the company’s revenues.

View our interactive dashboard analysis on China Telecom Revenues: How Does China Telecom Make Money?

China Telecom’s Total Revenue has grown 7.5% from $53 billion in 2016 to almost $57 billion in 2018 and is expected to grow 12% to around $64 billion in 2 years

Revenue growth of about $7 billion over two years to be driven by $5 billion increase in (A) Mobile Services & Phones and $1 billion increase each in the (B) Landline and (C) Broadband division.

(A) Revenue from Mobile Services & Phones to increase 16% (about $4.7 billion) in the next two years, with its share of Total Revenue expected to be about 51% by 2020

• Segment revenues grew from $26 billion in 2016 to $28 billion in 2018, driven by a higher number of wireless subscribers, although this was partly offset by falling ARPUs.
• We expect revenues to grow to about $33 billion in 2020, driven by further growth in the number of subscribers as well as slightly higher ARPUs.

(B) Revenue from Landline Phones & Services to increase 8% (about $1 billion) in the next two years, with its share of Total Revenue expected to be about 24% by 2020

• Segment revenues grew from $12.7 billion in 2016 to $14.1 billion in 2018, driven by higher revenues from its Information and Communications Technology (ICT) services, while Landline services revenues declined.
• We expect revenues to grow to about $15 billion in 2020, driven by further growth in ICT operations.

(C) Revenue from Broadband Internet to increase 12% (about $1.4 billion) in the next two years, with its share of Total Revenue expected to be about 19% by 2020

• Broadband revenues declined from $11.5 billion in 2016 to $11.2 billion in 2018, driven by a significant decline in average monthly revenues per user (ARPU) amid higher competition from rivals such as China Mobile.
• We expect revenues to grow to about $12.6 billion in 2020, driven by stabilizing ARPUs and a growing subscriber base.

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