China Unicom (Hong Kong) Limited Stock

Ladies and gentlemen, good afternoon. I am Chen Shuxiong from China Unicom Hong Kong office. I'm happy to meet with all of you again. Thank you so much for your long-term concern and support to the company. On behalf of the company, I would like to welcome all of you to our 2025 results announcement. We are going to proceed with online and off-line models connecting Hong Kong with Beijing. We attach great importance to our interactions with the friends of the media and our investors.

Allow me to introduce to you members of the management today. They are our Chairman of the Board and CEO, Mr. Dong Xin, Executive Director and President, Mr. Jian Qin; Executive Director, Mr. Tang Yongbo; Executive Director and CFO, Ms. Li Yuzhuo; and our Senior Vice President, Mr. Hao Liqian.

We will first invite our Chairman to introduce the performance of the company for the year 2025, and then we will have interactions with our media friends, investors and analysts. We'll use Chinese with English simultaneous interpretation.

First of all, let's invite Mr. Dong to introduce the performance of the company in 2025.

Thank you. Ladies and gentlemen, good afternoon. I'm very delighted to be here to meet with you at our results announcement by China Unicom. I can see here many new friends and old friends. And I'm very delighted to meet with so many familiar faces, and we feel very confident meeting with some new friends as well. With your support, China Unicom has been enjoying very good development at today's presentation, well, it is indeed very important because we are wrapping up the 14th 5-year plan and we need to report to you our plans and direction for the new 5 year.

For the longest time, we have been adhering to preserve and innovate steady and far-reaching principles. We focus on the 4 core tracks of connection, computing power service and security. With your support year-on-year, we have been making very steady steps forward. The same happened for the 14th 5-year plan, and we are even more determined to move ahead into the new 5-year plan. So we will seek stability while we continue to adhere to our original principle.

And our revenue has reached RMB 392.2 billion. Total profit, RMB 25.5 billion, return on net asset, 5.7%; free cash flow, RMB 36 billion, up 28.5% year-on-year. While we innovate, we continue to be far reaching to create this century old company. We seize a new round of technological and industrial innovation opportunities, implement our AI+ initiative. Revenue share of strategic emerging industries has gone over 86%. Revenue share of computing power business over 15% and the share from AI, more than 140% year-on-year. International business contribution more than 9%. Well, that is a bit disappointing. So hopefully, we will see 2-digit growth in the future.

In 2025, our CapEx, RMB 54.2 billion. Concerning this figure, it is not really supporting our development in a stand-alone manner because we are also enhancing our investment in efficiency by deepening co-construction and sharing and building minimal list network. CapEx is expected to be around RMB 50 billion in 2026. Computing power investment accounting for more than 35%. So in our future development, this proportion will continue to expand. Concerning RMB 50 billion, unless there are any major profitable and essential projects, we will exercise strict control.

The company's attainment of such excellent results is inseparable from the long-term trust of our customers and shareholders, the strong support of media friends and all sectors of the society. Just like I have now mentioned many old friends, many new friends. Many of you actually communicated with me, chatted with me before we came on to the stage in relation to our future development, you have shared some great insights. So with your guidance, and also because of the 4 major arenas, we continue to move ahead. That is why we have attained such results.

Now I would like to talk about the 4 major arenas quickly. First of all, when it comes to connections, over the years, connection is the foundation of a company like us. It's the necessary condition, and we have feelings towards connections. We want to expand it and make it denser. This is our foothold. It is the stabilizer for our revenue and profit. We can, of course, call it something else. If you think that is not suitable, we enhance our network coverage, improve network quality and promote expansion of connection phones from mobile networks and broadband networks to the Internet of Things, vehicles, industrial Internet evolving towards low altitude intelligent networks and satellite networks, which represent the next era.

So we are pursuing stable connections, which are high-speed, ubiquitous, intelligent and efficient. That is definitely the way forward and also the demand from our users. It is also profit stabilizer and creator looking ahead. How are we going to make that happen? First of all, we need to enhance network capabilities. We need to implement signal upgrade and broadband upgrade, carry out joint construction, sharing maintenance and optimization with the mobile network population coverage exceeding 99%. We are not just talking about people, but all the demands in the market.

Network perception in key scenarios has won user recognition. Recently, we are talking about 6G when we were developing 4G, you talked about 4G plus. Now we are working on 5G, and you're talking about 6G. So stable progress allows us to talk about the deployment of 5G. In the industry, it is a great aspiration. So we have base stations covering more than 330 cities. We promote gigabyte expansion and 10 gigabit upgrade. Nearly 90% of broadband services have gigabit access capabilities. 10 gigabit optical networks have been piloted and put into commercial use in over 100 cities. They are in frontier fields such as 6G and quantum communication and launch quantum security, dedicated lines are now possible. They are at the very edge of the frontier.

In our 3 decades of development, we have been focusing on stability and securing our capabilities at the moment and also tracking what may be potentially possible in the future, especially technologies that are related and relevant to our business. So we continuously make new attempts such as quantum security and communication.

In the past, we had fixed lines and then we move towards the mobile era. And now we are talking about IoT, IoV. In the future, it will continue to expand, connected scenarios will continue to increase. So when we make scenario assumptions from our users, AI and emergence of new scenario, we have made bold assumptions. Total number of users has already exceeded 1.2 billion. And I think there will be even further acceleration in such growth.

If you look at our available resources and assets, we are promoting many integrated packages and we seek synergy on the business level. The ARPU is more than RMB 100. For 5G dedicated network, the growth has been more than 50%. If you look at the current situation, 5G functionalities, we are fully equipped already. And because of different scenarios emerging, we still have some unused capabilities. Frontier computing, greatly enhancing our efficiency, there is still room for improvement.

We have also obtained a license to operate satellites. You may ask, so concerning satellite operation, it will require heavy investment. Where is the efficiency? I can give you an example. When it comes to high type of military users, we're talking about capability storage. So concerning such storage, they are always strategic in nature. So concerning satellites, it's similar in the future. We will continue to build on the concept of connection, continuously innovate and construct network infrastructure.

Now let's move on to the second arena, which is computing power. It represents our future. It represents innovation. We have injected new content into this phrase to make it faster and more accurate. Computing power in the future will be a propeller. So you see this is the second machine. Computing power will be a propeller. If you don't like this term, of course, we can change it. So this is a foundation. And on this foundation, China Unicom will combine Big Data, AI and important network development, cloud development, we will make everything happen. We are going to create a computing cluster, which is a quantum computing cluster.

There are many solutions available, and we are adjusting them. For example, how we strengthen the hub nodes and green computing. We have run some pilots and Rack sales has already exceeded 1.1 million. We have built 7 AIDC parks with capacity of 100 megawatts each. We will continue to optimize these assets and expand our scale with investments well under control.

When it comes to Unicom Cloud, it has been growing very rapidly. We will accelerate transformation towards AI cloud. We are using this new model of application plus model plus resources for computing power operation, and we support construction of over 180 provincial and municipal government clouds, empowering nearly 400,000 enterprises customers with digital transformation and established a brand image of AI smart selection Unicom Cloud.

As you will continue to guide us, we will do well our branding work. We have been sparing no effort and also because of your concerted efforts, some upstream providers and downstream users, you are also very creative. So we are going to open this intelligent platform. For example, we have launched the [indiscernible] data engineering platform, the [indiscernible] platform and [indiscernible] Intelligent agent platform.

When it comes to computing power, it is going to be our core. We will moderately build in advanced computing infrastructure. We are all prepared. Computing power is going to be a major foundation for the development of our society and the entire world. There are many risks, and it is a lot of hard work and a lot of uncertainty concerning future revenue, especially when there are some domestic initiatives and developments. We'll continue to use new algorithm, new frameworks to establish this computing power foundation so that we, in the future, can build on this foundation and reap wonderful fruits so as to evade some risk wherever possible.

It is like water and power. We need to make computing power readily available, ready for use anytime when we provide our services. Our users hopefully can participate and upstream operators can also participate, so that we can create greater computing power. The third one is about our services. In fact, it covers a very wide range. We are talking about security and safety. They are all closely connected to services. But services represents our roots. We are in the tertiary industry. Our production and our consumers' utilization will happen at the same time.

In the future, our production will be ahead of our users so that we can provide resources, think ahead on behalf of our users to complete our layout other than fundamental connections of the networks, we will also do encryption. And naturally, clouds will emerge. And then on this foundation, we will have cross connection. And we have to do something about providing support to digital consumption. We'll expand our cloud intelligence products. And intelligence is the key in our future. It applies to all our users in different scenarios.

And then we also need to support digital industrialization, upgrade 5G and industrial Internet, combine everything with our cloud so that we can continue to grow and enjoy profits, enhance our capabilities. These are the keys. At the moment, we are working on 5G plus industrialization plus Internet. We offer a series of products. We serve more than 95 million vehicles. At the moment, we offer different services and packages to our consumers.

And if you look at the volume of vehicles, perhaps the increase may not be very substantial, but we are talking about enhancing their overall functionalities. And then we would also like to empower the digital government. In the past, there would be single platform operations. And in the future, there will be full connection. And there will also be digital or intelligent analytics on our IoT network.

Many people have recently been talking about some heated topics, and we do pay very close attention. We also want to accelerate internationalization development, covering Asia Pacific, Asia, America, Asia, Africa, Europe, especially, we have been doing very well. The One Belt, One Road initiative, meeting great demands. So just now, I have talked about our branding system.

China Unicom, this brand and our sub-brands in 2026, we've done some research. This system will continue to grow and be optimized. We are going to make announcements about our overall branding strategies in that time.

Now let's talk about safety. When it comes to safety and security, just like computing power, we believe there is a lot in its content, and it has wide coverage. We call this the safeguard machine. What about the surfaces? Did I miss something about our surfaces? Did I talk about that? Yes. Accelerator. Please remember that. And security is the safeguard machine. It is our safety net. We want to provide the best network and the best products to safeguard national security for those who support our business and development. We also want to safeguard you for those who need information services, we want to safeguard you. That is what we want to achieve in the future.

We believe that the 4 major arenas will be sufficient to allow China Unicom to uphold our social corporate responsibilities, economic responsibilities and make good returns to our investors. It should be sufficient. That is where our capabilities lie.

When it comes to future development, everything will need to be connected. No single company can rule the world. We will continue to develop our products. We'll continue to innovate. For those who are willing to share with us the best technologies and products, we are ready to work with you. So as to enhance our efficiency, we will continue to uphold our corporate social responsibilities. And every year, we make announcements concerning our ESG efforts. We make public announcements concerning such initiatives, and it has attracted a lot of attention and support from our community.

For example, we have received this Asian Sustainability Development Award. And our data centers have saved a lot of energy and power use. So for years, we have been widely recognized.

When it comes to creating return to our shareholders, we attach great importance to shareholder returns. As an enterprise, we need to develop in the society. And at the same time, we need to be held responsible towards our investors, our shareholders because that's where all the resources have come from for many years. That is why with our concerted efforts in reducing our cost and increasing revenue, improving our profit, we can make great returns to our shareholders.

According to the current calculation, for 2025, dividend per share is expected to be RMB 0.417, which is 3.1% higher year-on-year. Payout ratio has risen to 61.3%. Concerning the dividend level, the interim dividend already issued was RMB 0.2841. Is that suitable? Well, we hope so, and we stand ready to receive your comments.

Our Board of Directors, our management believe it is at a reasonable level. We need to save some funds to continuously do well our development so that in the future, money will create more money, assets will also create more money so that our shareholders can enjoy even greater return. At the beginning of the year, we had this work meeting with my colleagues. We have talked about our future development and direction. We have drawn some conclusions. We realize that we can draw a summary of the development of China Unicom. The opening and the closing are changes. Movement without end is called circulation.

It showcases our future development, our determination and characteristics. We will stay open, we are ready to collaborate and co-share. Our peers in the industry, we can create a better market for everyone. That is our ultimate goal.

In 2026, which is the first year for the 15th 5-year plan, we will remember our original intention. We are transforming from our traditional operations into this innovative player at a very high level. So we will continue to grasp the main arenas of upholding tradition and innovation. We will move steadily and achieve far-reaching goals. We would like to promote high-quality growth so that we can continuously create great value for our shareholders and customers. It may not be very well spoken, but I would like to take questions. Thank you very much for your time.