By Kinki
A few days ago, China Unicom released its 2020 earnings report, in which China Unicom's profit growth is large, mobile service revenue has turned from negative to positive year-on-year, and innovative business revenue has been improving.
In addition, in this financial report, Unicom for the first time publicized its 5G user data, 2020 as the first year of 5G popularization and commercialization, with the three major carriers of the 5G data out, investors finally got a glimpse of its appearance, in the end, who will be slightly better?
A double increase in profit Unicom, but faced with the plague of user flight
"Melting Finance" in the financial report, Unicom 2020 operating income of 303.838 billion yuan, an increase of 4.6% year-on-year, a net profit of 12.494 billion yuan , an increase of 10.3% year-on-year. Overall, revenue and profit are steadily increasing, and the results are clear under Unicom's "transformation and efficiency" strategy.
Over the past three years, Unicom's revenue and profit growth have been relatively stable, and after 17 years of "mixed reform", through "cost reduction and efficiency" and increasing the development of innovative businesses, Unicom has achieved a substantial increase in profit since 18 years. After the "mixed reform" in 17 years, through the "cost reduction and efficiency" and increase the development of innovative business, Unicom from 18 years, the profit has realized a substantial growth.
However, In contrast, the number of users of Unicom, but "not rise, but decline". As of the end of December 2020, Unicom's cumulative net outflow of users for the year amounted to more than 12 million, with a total of only 306 million subscribers left, which is the highest churn rate among the three major carriers and one of the lowest subscriber numbers.
From the data in the chart above, it's easy to see that the number of users added by China Telecom is almost the total number of users lost by mobile and Unicom, which means that the entire communications market, it has been difficult to realize the number of users of the "quantitative increase", the user growth under the operator, but the flow of users between operators.
And again, although telecoms have seen the most new subscriber growth in terms of data, in reality it's a result of the three carriers leading different strategies. Because mobile has the largest overall subscriber base, its top priority right now is not to find incremental subscribers, but to expand its weaker broadband business and transition to new services, while on the other hand, Telecom, which has a strong broadband business, is more focused on mobile subscriber expansion.
And "melting finance" that , Unicom last year, the reason why the loss of customers is serious, and its aggressive promotion of 2G users to withdraw from the network, when the 2G users in Unicom's overall total number of users , still accounted for nearly 1/3, the cancellation of the 2G network has also caused a lot of dissatisfaction with the Unicom users.
So, for the three operators, in fact, each other understand that simply rely on user growth, it has been difficult to pull the revenue and profit growth, it would be better to focus on more valuable business, such as improving the user's ARPU value, such as to open the penetration rate of 5G.
Second, Unicom has the fewest users and the largest increase in net profit, why?
However, despite the loss of a lot of users, but if you look at the profit performance, Unicom's data is not worse than the other two operators. 2020, although the net profit of Telecom is more than twice as much as Unicom's, but Unicom's net profit increased by 10.3% year-on-year, compared to the Telecom's net profit increased by 1.6%, as of Q3, Mobile's net profit fell 0.3 percent year-on-year.
The question is, whether it's the original subscriber data or the newly announced 5G subscriber data, Unicom is at the bottom of the list, so what's the reason for its profit growth?
From the logic of operation, either there is additional "open source", or "cutting back". The financial report shows that in 2020, Unicom's selling expenses were only 30.461 billion yuan, a year-on-year decline of 9.2%; on the other hand, terminal subsidy costs fell by 99.3% year-on-year, saving expenses into the profit, the books naturally look much better.
One of the reasons why Unicom is losing a lot of customers is that both of these costs are actually for developing new subscribers, and with the costs stuck, the development of new subscribers is naturally not as good as expected.
On the other hand, Unicom is doing its best to "open source" , and the financial data shows that last year Unicom's mobile service revenues amounted to 156.7 billion yuan, a year-on-year increase from negative to positive. "But the traditional business after all, growth is weak, coupled with mobile this huge competitor, so Unicom also gradually shifted the focus to emerging businesses, especially the government and enterprise business. Last year, revenue from Unicom's industrial Internet business rose 30.0 percent year-on-year
The other major revenue growth came from the development of its fixed-line broadband business, with broadband access revenue up 2.4 percent year-on-year to CNY42.6 billion. While the incremental growth isn't huge, this is, after all, Telecom's main battlefield, and given that this number is down year-on-year in 2019, Unicom is doing its best to tap into the battlefield where it can make money.
Third, Unicom 5G, or become an important growth support in the future?
In addition to this, as the last operator to announce 5G data, Unicom's 5G business is also worth looking forward to. Although the current number of 5G users of Unicom is the lowest, but its penetration rate is not low, on the whole with the telecom is not the same, higher than the mobile.
If you look at the cost-benefit perspective, Unicom is prying the most out of a small cost. Last year, Unicom's 5G capital expenditure was 35 billion yuan, Telecom was 45.3 billion yuan, mobile up to hundreds of billions of yuan, for this reason, Unicom announced that it will build the world's first and largest 5G*** build*** enjoyment of the network with Telecom***, it is expected that both sides can save investment of more than 76 billion yuan,
From the point of view of the volume of operation, Mobile and Telecom, Unicom is not a level, Unicom and Telecom cooperation move, will be able to let both enjoy accelerated development in the 5G business, while significantly reducing network operating costs, and shorten the construction cycle of the network.
In addition to doing its best to reduce the cost of investing in 5G services, Unicom is also actively improving the ARPU of 5G users. as of the end of last year, Telecom's 5G user ARPU was 65.6 yuan, while Unicom's was around 70 yuan.
Previously, Wang Xiaochu, chairman of Unicom, also said that Unicom's 2G users will be retired this year, I believe that this part of the user, including Unicom's original 3G, 4G users to 5G, Wang Xiaochu predicted that in 2021, Unicom's 5G users will also increase the ARPU of more than 10%.
Of course, Melting Finance believes that Unicom wants to do its best to develop 5G-related business, but also because Unicom's own traditional business has been at a disadvantage among the three major carriers.
Looking back at the development of mobile ARPU for the last 20 years, no matter if it was in the 2G, 3G, or 4G era, the operators that took the lead in the "new generation of communication networks" often gained an advantage in the process of increasing subscriber ARPU thereafter.
For example, in the 3G era, Telecom's 3G standard was superior, so Telecom joined in and raised its ARPU to about the same level as Mobile.
For example, in the 3G era, because of the superiority of the 3G standard, Telecom joined in and raised its ARPU to about the same level as Mobile. In the 4G era, because Mobile was the first to launch 4G networks, Mobile's ARPU was the first to be raised after 2015, while Telecom and Unicom were on the defensive.
Therefore, for the three operators, the development of 5G business will become an important factor affecting the company's earnings in the future. From 2019 onwards, the mobile ARPU of the three major carriers are falling, which is related to the above mentioned, the overall communications subscribers are close to saturation.
But everyone's ARPU is at an inflection point in 2020, which is related to the fact that the major operators have launched 5G services last year. Taken together, all three major carriers have benefited from 5G services, allowing mobile ARPU to stop falling and rise.
That being the case, how the three major carriers, especially Unicom, will push forward the development of 5G services next will be crucial. Overall, the three major operators focus on different angles of 5G, and the operational approach and priority areas of development also show differences.
China Mobile's user base is the largest among the three operators, and its access to 5G wireless frequency is different from that of Unicom and Telecom, which is 2.6G+4.9Ghz, while Telecom and Unicom have access to 3.5Ghz.
Theoretically, Low Frequency Ensures Coverage, High Frequency Ensures Network Speed, and the mobile's low wireless frequency is in coverage of the same area, requiring the same edge rate. The same area, the same edge rate requirements under the premise, you can use fewer base stations to network, in the early development of 5G, mobile even if less investment, but also to get a larger and faster coverage.
Comparatively, Unicom and Telecom's 3.5Ghz, although currently the world's highest maturity 5G frequency, its speed will be faster, but because of the coverage rate is not high, the number of base stations required is more. For this reason, both Unicom and Telecom need to invest more time and money in development before popularizing their use, which is one of the reasons why the two need to work together to **** build the network.
At present, the mobile "family base" is the thickest, its 5G business development direction is the most complete and broadest, in addition to the terminal consumers (ToC) and industry partners (ToB), but also will provide ubiquitous intelligent cloud and edge computing services, trying to build a new type of intelligent center.
And Telecom will accelerate the infrastructure construction of cloud-network convergence, seize the opportunity of vertical industry development, and march into the field of integrated intelligent information services. That is to say, Telecom, with its advantages in broadband and cooperation with government and enterprises, will plumb the depths of cloud computing services in the future, and Huawei and Aliyun may be its competitors, or partners.
And Unicom's main direction, has been more "vague". In the 2020 work conference of the four major operators, Unicom emphasized more on the innovation and landing of the management structure.
On 5G, Chairman Wang Xiaochu has said that "China Unicom will definitely participate in one or more cooperative situations." In fact, in addition to the cooperation with Telecom, Unicom will jointly develop the 3300-3400Mhz band with Telecom and Radio and Television.
So what exactly does Unicom think? First of all, from the consumer terminal (ToC) point of view, don't look at the current mobile 5G penetration rate is not high, considering its overall number of users is almost three times the number of Unicom and Telecom, the penetration rate is low is not difficult to understand, coupled with the mobile 5G band has a high coverage of first-mover advantage, at this level, Unicom and Telecom even if the joint efforts to surpass the mobile are unlikely.
At present, the three major carriers' 5G tariffs do not differ much, and it is clear that in the matter of 5G networks, Unicom and Telecom have no intention of using the "price war" to grab users.
A few years ago, the three major carriers were still fighting fiercely to get subscribers, for example, Unicom had launched a 48 RMB unlimited traffic package to grab subscribers, and some carrier executives used the phrase "a bowl of soup, a bowl of soup" to describe the predicament that the carriers were in at the time. The company's main goal is to provide the best possible service to its customers," he said.
And, now, even if operators grabbed 5G end users, it no longer means they can make a lot of money. South Korea has pioneered widespread 5G network adoption since mid-19, and so far ARPU for 5G subscribers has increased by about 40%, and DOU has increased by 2-4 times.
DOU value is the average monthly traffic consumption of users, referring to the development model of South Korea's 5G business, under the premise that China's 5G tariffs are still so expensive, traffic consumption will have to be doubled again, it is estimated that it will take a long time.
So it seems that the profitability of 5G is not above ToC. According to the estimate of experts in the communications industry, only 20% of 5G application scenarios are oriented to ToC users, and the remaining 80% are oriented to ToB users. 5G is still a bigger application in the Internet of Things and the industrial Internet.
Mobile and Telecom have found their own ToB business on the starting point, an emphasis on the wisdom of the center, a focus on cloud-network convergence, both of which are favored by various experts, the application of 5G in the industrial Internet, just from the current point of view, has not yet ushered in a wide range of applications of government and enterprises.
And Unicom in last year's 5G World Congress, led the establishment of "5G application innovation alliance", and actively explore the "5G + Internet of Things + big data + AI" convergence application, it seems that Unicom's focus should be to promote industrial enterprises to enter the digital era. It seems that Unicom's focus should be to promote industrial enterprises to enter the digital era. At present, Unicom has carried out 5G innovation cooperation with more than 400 customers in more than ten vertical industries, and incubated more than a hundred 5G innovation commercial projects.
From the ToB business level, Unicom has tightly united its 5G development with China's industrial industry, and the next few years will be a critical period for the upgrading of the domestic industry, so Unicom's move, at least, seems to be stable.
5G track, the three major carriers have just started, it seems too early to talk about which is better or worse, but for the already lagging behind Unicom, at least it is a future that can be expected.
2020 is the first year of the 5G era, and all the major carriers are beginning to reap the benefits of their past investments. Now, it's up to who can go faster on the 5G road.
*This article picture are from the network
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