Telecommunications operation services belong to the communications sub-sector, the stable growth of telecommunications business revenue is the source of vitality for the healthy operation of the communications industry.2020 China's telecommunications business revenue accelerated, the cumulative completion of 1.36 trillion yuan, an increase of 3.6% year-on-year, of which, the fixed value-added and other services contributed 79.1% to the growth of the revenue, becoming the first engine of the growth of telecommunications business revenue;.

With the application of new technologies such as cloud computing, big data, Internet of Things, artificial intelligence, etc., and the vigorous expansion of emerging businesses, fixed value-added and other business revenues will be further developed, driving the growth of telecom business revenues. In addition, 5G penetration rate continues to improve, 5G users continue to increase to promote also telecom business revenue development.

Telecommunications operation service belongs to the communications industry

The communications industry can be subdivided into two subsectors: the communications equipment manufacturing industry and telecommunications operation service industry. Among them, telecom services include fixed telecom services, mobile telecom services and other telecom services. The industrial chain position of telecom operation services in the telecom industry is as follows:

Stable growth of telecom business revenue

Telecom business revenue is the entry point of the total revenue of the telecom industry, and stable growth of telecom business revenue is the source of vitality for the healthy operation of the telecom industry. According to the preliminary accounting of the Ministry of Industry and Information Technology (MIIT), in 2020, China's telecommunications business revenue totaled 1.36 trillion yuan, an increase of 3.6% year-on-year, and the growth rate increased by 2.9 percentage points year-on-year.

The impact of the epidemic, the development of online business and the growth of reliance on broadband, traffic, connectivity, accelerated broadband business, data business, innovative business revenue higher growth, is an important factor in driving the growth of telecommunications revenue.

In 2021, with the increase in 5G penetration and further popularization of 5G terminals, and further expansion of 5G connections, annual revenue growth is also expected to remain above the 3% range. Unless the operating companies carry out large-scale fee reduction activities, the telecom industry continues to remain at a more reasonable growth level.

Fixed value-added business becomes the first engine of growth

Telecom revenue includes fixed telecom revenue, mobile telecom revenue, and other telecom revenue, with fixed telecom business including fixed value-added business (e.g., revenue from data center, cloud computing, big data, and Internet of Things business) and fixed data and Internet business. business; mobile telecom includes mobile data and internet business.

In 2020, the fixed data and Internet business realized revenue of 237.6 billion yuan, an increase of 9.2% year-on-year, contributing 42.9% to the growth of the industry's telecommunications revenue; fixed value-added business realized revenue of 174.3 billion yuan, an increase of 26.9% year-on-year, contributing 79.1% to the growth of revenue. Mobile data and Internet business realized revenue of RMB 620.4 billion, up 1.7% year-on-year, contributing 22.3% to revenue growth. Fixed value-added business became the first engine of telecom business revenue growth.

Increasing 5G Penetration Rate Drives Telecom Business Revenue

In addition to the fixed value-added business drive, the increasing 5G penetration rate and the increasing number of 5G subscribers likewise drove the growth of telecom business revenue.In March 2021, the "Outline of the Fourteenth Five-Year Plan for the National Economic and Social Development of the People's Republic of China and the Outline of Visionary Goals for 2035" pointed out to accelerate the large-scale deployment of 5G networks and increase the user penetration rate to 56%.

According to ICT, in February 2021, 5G cell phone shipments in the domestic market reached 15.071 million, accounting for 69.3% of cell phone shipments during the same period; 5G cell phone shipments are expected to reach 326 million in 2021, with a penetration rate of 80%.5G penetration is increasing and will drive telecom business revenue.

Since the commercialization of 5G in November 2019, 5G services have been provided to users by China's three major operators, and 5G users have been increasing. By the end of 2020, the number of China Mobile 5G package subscribers had exceeded 165 million, when 162.5 million were added in the year 2020. This growth rate exceeded the target set by China Mobile in its early days. For China Telecom, the number of 5G package users reached 86.5 million, and 81.89 million were added in 2020 as a whole.

In order to focus on 5G subscriber growth, China Telecom has stopped announcing 4G subscriber numbers. China Unicom, on the other hand, has maintained its long-standing style of not announcing the number of 5G users, and throughout 2020, the relevant executives of China Unicom have not communicated to the public specific development goals related to 5G users.

Overall, the sum of China Mobile + China Telecom's 5G users in 2020 has exceeded 250 million, the development speed exceeded expectations. Among them, China Mobile's 5G user penetration rate is 17.5%, and China Telecom's 5G user penetration rate is 24.6%.

The growing 5G penetration rate and the increasing number of 5G users in 2021 will drive the continuous growth of telecom business revenue, while at the same time, the tariffs of 5G may further decline, but the growth of users will make up for the impact of the tariff decline. Through the application of new technologies such as cloud computing, big data, Internet of Things, artificial intelligence and vigorously expanding emerging businesses, fixed value-added and other business revenues will be further developed to promote the growth of telecommunications business revenues.

-- For more data, please refer to China Telecommunications Industry Development Prospect Forecast and Investment Strategy Planning Analysis Report published by Prospect Industry Research Institute.