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China Tower IPO sprint, 99% of revenue comes from the support of the three major operators

via:CnBeta     time:2018/7/12 7:01:19     readed:128

"At present, the listing work is continuing to advance, and there will be certain news at the end of the month." People familiar with the Chinese Tower told the First Financial Reporter that in the long run, the company is considering promoting the employee stock ownership plan.

At the same time, the above-mentioned people told reporters that due to the increase in speed and frequency, the deployment of 5G base stations in the future will be more dense. He said that the China Railway Tower has now expanded its site source through cooperation with various industries such as power, railway and municipal administration, and turned more "social towers" into "communication towers". At present, it has already reserved 10 million social tower resources. Fast layout for 4G, 5G networks.

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China Tower is currently the world's largest provider of communication tower infrastructure services. Its main business includes tower business, room division business, cross-industry site application and information business. Among them, the macro station business in the tower business accounted for the largest proportion of revenue, accounting for 97.3% of the revenue in 2017. Regarding the problem of excessive communication business, China Railway Tower official told reporters that cross-industry business in the first four months of this year exceeded the full year of 2017, and the future will be the most promising business development direction of the company.

Ninety-nine percent of revenue comes from three major operators

In 2018, it was the fourth year of the establishment of the Chinese Tower. Since its inception, the China Tower has been labeled as a "telecom industry reform test field" and other similar labels, from the tower infrastructure to centralized operations, to the future "optional listing" to achieve "mixed ownership."

"We were ten choices at that time, that is to say, ten people campaigned, and finally only one person could enter the work of the tower company." An internal staff member of a tower told reporters. He said that now, in the past three years, many people's mentality has become more peaceful. Everyone is a entrepreneurial mentality. The tower is more streamlined from the staff. The whole company has more than 15,000 people, which may be more than a city-level operator. The number is still small.

In fact, the birth of the China Tower was to package the infrastructure of the three major operators, and set up a new company to operate and manage. The three operators will use the tower to lease to the China Tower. According to the prospectus submitted by the China Tower to the Hong Kong Stock Exchange, the revenue of China Tower in 2017 was 68.665 billion yuan, an increase of 22.6% over the same period of the previous year. China Tower said that it was mainly due to the increase in the number of tenants. From the end of 2016 to the end of 2017, the total number of tenants increased from 2.419 million to 2.687 million.

From the perspective of business income, the main business of China Tower is still tower business, room and micro station business, cross-industry site application and information business. Among them, the macro station business in the tower business is its main source of income. In 2017, this business accounted for 97.3% of the total revenue. Tower service refers to providing site space, maintenance service and power service to communication operators based on site resources, and supports through macro station service and micro station service. The former refers to the wide coverage of mobile communication networks, and the latter refers to Supplementary coverage of population- and densely populated areas of cities and specific areas outside the city.

In other words, the three major operators are still the largest customers of the current Tower Company. In 2017, revenues from China Mobile, China Unicom and China Telecom accounted for 53.6%, 23.7% and 22.5% respectively.

"From the perspective of progress, the China Tower has completed two steps in the 'three-step' strategy. The third step is also on the market. Although it may be slightly slower than previously expected, the overall calculation is progressing smoothly and the relationship with the three major operators. It is also more rational. In the future, with the mutual checks and balances of the three major operators and further dilution of equity, the operator's voice will be weakened, and the independence of the tower will be higher." Telecom industry expert Fu Liang told reporters.

But he also said that the tower needs to find new profit growth points in addition to communication services, and the funds that are listed may be used to expand the new business model.

A preliminary study on cross-industry profit model

In fact, the establishment of the China Tower is to fundamentally avoid the waste of resources caused by the repeated construction of the three major operators and to improve the degree of “co-construction and sharing” of telecommunications infrastructure. However, from the perspective of the real environment, the business development of China Tower is also restricted by the three major operators.

"Our company must reduce the cost of the three companies (the three major operators) on the one hand, and create profits for the shareholders on the other hand," said Ji Jilu, chairman and general manager of China Tower.

At a communication summit, Qi Jilu said that in the past three years, the China Tower has undertaken a total of 1.58 million tower construction projects, which is almost equivalent to the total amount of construction in the previous 30 years. In addition, the new share with China Unicom reached 92.4%, China Telecom's new share reached 90%, and China Mobile's share rate reached 46.8%. In the past three years, the new sharing rate has increased from 14.3% to 72%, which is equivalent to the construction of 568,000 new base stations. The efficiency brought about by the three resources is obvious.

However, some experts pointed out that the coverage of the two areas of micro-station business and room-division business is much more difficult than the public domain. Fu Liang said that the local environment faced by the micro-station and the room division will have monopoly factors, and the tower needs to solve many new problems.

"In fact, China Mobile has already had an internal KPI this year. 75% of new base stations need to be shared with the tower. For us, this is an opportunity." One insider of the China Tower told reporters that the future 5G will also help the tower to carry out More business development models.

He said that the China Tower has allocated tens of millions of social tower resources for the 5G site. Since 2017, China Tower has built 20,000 new base station projects using social resources such as streetlight poles, monitor poles, billboards and water towers.

"For example, the public network construction of the Hong Kong-Zhuhai-Macao Bridge uses social resources such as bridges, machine rooms, pipelines, and electric power to achieve mobile network coverage quickly, efficiently, economically, and beautifully; Xicheng High-speed Railway makes full use of railway equipment rooms and cables. Existing resources such as channels, rail holes, and protective measures have reduced resource occupancy costs by 60%." The above-mentioned people told reporters that cross-industry business in the first four months of this year exceeded the full year of 2017, the future It will complement the tower's new business growth.

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