Earnings Call: H1 2021

Aug 19, 2021

Good afternoon, ladies and gentlemen. I am Jackie, Company Secretary of China Unicom. Welcome to our results conference call. First of all, please allow me to introduce the management present today. Mr. Wang Xiaochu, Chairman and CEO. Mr. Chen Zhongyue, Executive Director and President. Mr. Liang Baojun, Senior Vice President. Now, let's invite Chairman Wang to talk about our 2021 interim results. Good afternoon, ladies and gentlemen. It's my great pleasure to discuss with you China Unicom's results. Due to the pandemic, unfortunately, we still can't meet in person in Hong Kong today and need to discuss via a teleconference. Stay safe and healthy, everyone. In today's presentation, I will summarize our overall results in the first half of 2021. Mr. Chen Zhongyue will then discuss our operating and financial performance. Lastly, the management will take any questions you have. Highlights of the company's results in the first half are as follows. First, our revenue and profit growth accelerated on the back of determined innovative transformation and in-depth mixed-ownership reform. Second, we accelerated increase in shareholder returns and strive to unlock the potential investment value of the company. Third, our 5G-led mobile business transformation and innovative development delivered remarkable success. Fourth, our digital transformation empowered continuous robust growth in innovative businesses. Fifth, we deepened network co-build, co-share, and effectively enhanced our edges and returns. Lastly, we are going to seize new opportunities of the industry and endeavor to achieve high-quality development. In the first half, the company practiced new development philosophies, deeply implemented the strategy of focused innovation and cooperation, and sped up comprehensive digital transformation. Our revenue and profit growth accelerated. Our service revenue was RMB148.7 billion, up by 7.5% year-on-year. Net profit was RMB9.2 billion, up by 21% year-on-year. The company's growth quality and return kept improving in recent years. Our service revenue mix was further optimized. Industry internet revenue contributed to 19% of our total service revenue, giving fresh impetus to our growth. Benefiting from sustained good control of CapEx and efficient operation, we had generated free cash flow of over RMB170 billion over the past four and a half years. Our net profit continued to grow at double digits. The company's fundamentals have further strengthened. The company has high regard for shareholder returns. Dividend per share grew at double digits over the past three years. To accelerate increase in shareholder returns, with due regard to the company's robust business development and strong free cash flow, the board decided to distribute an inaugural interim dividend of RMB0.12 per share in 2021. Meanwhile, the company will raise 2021 full-year dividend payout ratio, with the magnitude to be decided by the board in March next year, taking into account such factors as the company's profitability, cash flow, future capital requirements, et cetera. Based on public data from Bloomberg, the average of over 20 analyst target prices for the company is HK$7.44 per share, showing huge potential investment value. Building on our solid results achieved in the first half, the company will endeavor to drive revenue, profit, and dividend growth to unlock our potential investment value, creating greater value for our shareholders. In the first half, the company deepened 5G-driven growth and insisted on rational and orderly competition. We struck an effective balance between value operation and scale development, driving transformation and innovative development of mobile business. We had 113 million 5G package subscribers with a market share of 23%, which was 3.7 percentage points higher than our overall mobile market share. Following the turnaround last year, our mobile service revenue grew by 7.3% year-on-year in the first half. Our mobile ARPU increased by 8.5% year-on-year, demonstrating further success in our value-oriented operation. In innovative businesses, we formed Unicom Digital Technology to create integrated and differentiated edges. We actively nurtured and promoted innovative 5G-plus vertical applications and deepened the comprehensive cooperation with strategic investors and industry leaders. Our industry Internet business maintains strong growth momentum with revenue reaching CNY 28 billion in the first half, up by 24% year-on-year. It has become our key revenue growth driver. Going forward, the company will continue to enhance our proprietary capabilities in platform development, R&D centralization, product standardization, proprietary integration, and delivery, striving to achieve higher quality growth in the digital era. To seize the new opportunities in the industry, the company proposed to spin off CUSC, a subsidiary specialized in Internet of Vehicles operation in the Asia market. After being spun off as an independent listed company, CUSC's financing capability and operation of flexibility will be strengthened, accelerating its business growth and enhancing its competitiveness. As a controlling shareholder, China Unicom will benefit from its value unlocking. In the future, strategic cooperation between China Unicom and CUSC can create strong alliance with synergetic advantages to promote mutual growth. For 5G network deployment, the company maintained a focused approach. By working closely with China Telecom, we continue to deepen network co-build, co-share, delivering prominent achievements. In the first half, we sped up in-depth and indoor coverage in urban areas and achieved 5G coverage of major counties and affluent towns. We added about 80,000 shared 5G base stations with China Telecom. With the total number of 5G base stations in use reaching over 460,000 with industry-leading 5G network speed. Going forward, the company will conduct dynamic investment with due regard to technology advancement, value chain maturity, market and business demand, et cetera. 5G CapEx budget for the full year is CNY 35 billion. The number of 5G base stations in use is expected to reach 700,000 by the year-end. Our 5G network co-build co-share with China Telecom has effectively boosted investment return for both companies. Our network edges and customers' perception were significantly enhanced. The two operators altogether achieved cumulative CapEx savings of over CNY 86 billion, and substantial savings in other costs, including tower usage fee, network maintenance costs, and utility charges, et cetera. For 4G network sharing, the number of shared base stations reached 460,000, leading to a cumulative CapEx savings of CNY 24 billion. Customers' experience saw a substantial improvement. Meanwhile, we continue to promote co-build, co-share and co-maintain of transmission and other resources, and actively engaged in new co-build, co-share cooperation with cable, power, high-speed railway, and oil industries, et cetera, to maximize investment efficiency. The company continued to deepen comprehensive digital transformation. We have basically established a core capability of five middle platforms, resulting in centralized and unified IT service capabilities, as well as an efficiently centralized and integrated innovation system. Our centralized IT advantage is fast turning into an operational edge. Internally, we leverage data to power up business development, customer service, network operation, and supervision management. Allowing the company to greatly improve its productivity and develop a professional digital team of more than 15,000 talents during the process. Externally, we can better satisfy the nationwide service needs of government and enterprise customers, the mobility needs of individual customers, and the information consumption upgrade needs of household customers, forging differentiated new edges. Going forward, facing a new blue ocean of digital economy spawned by new technology like 5G, the company will seize the critical window to firmly implement the strategy of focus, innovation, and cooperation, accelerate comprehensive digital transformation, strengthen intelligent operation and services, deepen mixed-ownership reform, and continuously expand in network co-build, co-share and co-maintain. We will fully enhance growth quality and operating efficiency, and are dedicated to building an exceptional, smarter, and brighter China Unicom, creating greater value for shareholders, customers, and society. Next, we will have our President, Mr. Chen Zhongyue, to introduce the company's operating and financial performance in the first half of 2021. Thank you, Chairman Wang. First, let me introduce the company's operating performance in the first half of 2021. In mobile business, the company continues to drive value enhancement and scale development with 5G. We launched the innovative China Unicom app, forming an ecology while drawing traffic through omnichannels and touchpoints. The number of monthly active users reached over 100 million. We accelerated the scale development of broadband and mobile integration via three gigabit networks, and leveraged privileged content and financial tools to improve product value. We utilized big data to precisely drive existing customer upgrade. We are unlocking 5G customers value through coordinated development of terminal network and business. In the first half, the company registered net addition of 42.5 million 5G package subscribers with an industry-leading penetration rate, driving sustained mobile ARPU and service revenue growth. In fixed-line business, the company grabs the boosted demand for digitization, cyberization, and intelligent transformation of the economy and society by leveraging proprietary resources and edges such as three gigabit networks resources, cloud plus network plus applications integrated servicing capability, and efficiently centralized innovation product offerings. We actively empower enterprise customers and enhance smart family customer experience, driving integrated development of innovative and fundamental businesses. In the first half, with the rapid growth of smart family home products and innovative businesses, our fixed-line service revenue grew by 8% year-on-year. The company focused on digitization to strengthen the development of broadband and mobile integration via three gigabit networks. We continue to strengthen the capabilities of our smart community and smart home platforms and promote our digital village platform service, sharpening the differentiated edges for broadband business. In Northern China, we leveraged broadband to expand mobile and promoted the mutual growth dynamics. We achieved ultimate integration with high-quality service and drove paradigm shift with multiple SIM. In Southern China, we expanded broadband to boost mobile and will probably increase broadband investment to achieve focused coverage and spot transcendence. In the first half, our smart home products revenue increased by 13% year-on-year. The penetration of broadband and mobile integration went up by 6% year-on-year. In innovative business, the company innovated 5G application product system leveraging five major components, namely industry private network, MEC, industry platform, customized service, and terminal, to support over 15 industry applications. We integrated our own capability, expanded ecology cooperation to push forward the integrated and innovative development of 5G plus industry vertical applications. We actively explore business models and agilely address 5G industry customers' needs. We successfully developed a number of 5G lighthouse projects in key areas such as industrial internet, smart mining, smart medical, and smart city, et cetera, with over 300 5G lighthouse customers nationwide. We are promoting faster 5G commercialization. In the first half, cumulative contract value of 5G industry application amounted to over CNY 1.3 billion. The company accelerated the building of proprietary innovation platform capabilities and key products. The competitiveness and business value of our innovative business continued to gain value and momentum. First, in IT service, our proprietary research capability in key vertical progressively improved, and the business scale expanded rapidly. Second, the capability of our proprietary IoT connection and equipment management platform was further strengthened. Third, our big data business is leading in the industry. The company developed China Unicom Cloud as the base for digital transformation and integrated innovation, focusing on security and reliability, cloud network integration, dedicated customization, and multi-cloud collaboration. We provide customers with integrated innovative solutions, including cloud resources, cloud platform, cloud service, cloud integration, cloud interconnection, and cloud security, et cetera. For public cloud, we targeted medium, small, and micro-sized enterprises and deepened cooperation with strategic investors. For private cloud, we consolidated our resources to focus on building paths with fully integrated capability and offered secure and trusted private cloud service to government and enterprise customers, leveraging information technology innovation cloud and multi-cloud management capabilities. For industry clouds, we deployed nationwide backbone cloud pools, aggregating innovation capabilities such as big data and AI. In the first half, China Unicom Cloud revenue reached CNY 7.7 billion, up by 54% year-on-year. In IDC business, the company grabbed the growth opportunities brought by the state's new infrastructure strategy. We sharpened our competitive advantages, striving for both return and scale enhancement. We built a multi-cloud intelligent network to provide customers with superior experience and all-round integrated solutions. We advanced efficiently centralized operation and leveraged our existing network resources and capabilities to capture internet sector customers while optimizing customer mix by actively expanding customers in financial and government sectors. In the first half, our IDC revenue was CNY 11 billion, up by 9% year-on-year. In terms of investment, we focused on high-value and high-demand areas and actively engaged in private capital cooperation. Full-year CapEx budget is CNY 2.7 billion. The number of cabinets available is expected to reach 310,000. This year, the company synergetically advanced reform and comprehensive digital transformation, aiming to raise vibrancy, promote growth, and enhance efficiency. First, we developed a platform to aggregate traffic, forming a smart living new ecology integrating communication, lifestyle, entertainment, and financial services. Second, we systematically promoted reform of six professional functions to enhance the efficiency of smart operational systems, facilitating faster implementation of digital intelligence new operation. Third, we deepened mixed-ownership reform, systematically advanced market-oriented reform among subsidiaries, and introduced digital talents. The transformation of operating mechanism was accelerated, releasing the intrinsic value of the company. Next, let's go on to our financial performance in the first half of 2021. This table shows our key financial information in the first half. Operating revenue was up by 9.2%. Net profit increased by 21%. The company's growth quality continued to enhance. Let's look at the detailed analysis next. Operating expenses increased by 9.7%, which was slightly higher than our operating revenue growth due to the higher initiatives in resources and talent for 5G and innovative businesses, paving the way for sustainable business growth. Of which, depreciation was basically flat, mainly benefiting from our good control of CapEx in recent years and network co-build co-share. We continue to promote incentive mechanism reform to strengthen performance-based compensation and draw innovative talents. Employee benefits went up by 13% year-on-year. Next, let's take a look at the detailed analysis on G&A and other operating expenses and network operation and support expenses. The company capitalized on the opportunities of digital transformation and appropriately stepped up cost initiative to promote capability enhancement and scale development of innovative businesses. G&A and other operating expenses increased by 17%, mainly due to higher technical support expense and cost of IT services for innovative businesses, which together increased by CNY 2.7 billion. But driving CNY 5.4 billion increase in industry Internet revenue and further enhancing our capabilities and potential. Going forward, the company will be devoted to promoting the scale and profitability enhancement of innovative businesses. As our business and network scale continue to grow, network pressure is mounting on network cost. The company has taken multiple measures to strengthen meticulous management, striving to achieve stable network operation and support expenses as a percentage of revenue for the full year. We continue to expand network co-build co-share with China Telecom. Second, we in-sourced network operation. Third, we promoted AI to push smart operation. Fourth, we accelerated 2G, 3G network streamlining and frequency reduction. Fifth, we fully leveraged the favorable new infrastructure policies. Six, we actively engage in energy conservation and emission reduction. For CapEx, we insist on focus and cooperation to enhance network edges with high investment efficiency. First, we focus on the deployment of premium 5G gigabit fiber network and innovative business investment. Second, we focus on the coverage of enterprise premium network and commercial buildings. Third, we focus on high-value areas. In addition, we continuously extend co-build co-share and co-maintain as well as private capital cooperation to drive profitable and fast business growth. In the first half, our customers' overall satisfaction significantly improved with 5G customer satisfaction ranking number one in the industry. In the future, the company will continue to invest efficiently with a full-year CapEx budget of CNY 70 billion. With the execution of digital transformation and the advantage of mixed-ownership reform being unleashed, the company's financial position was further optimized. Our cash flow-generating capability remains strong. Since 2017, the company has accumulated free cash flow of over CNY 170 billion. Our liability to asset ratio declined from 62.9% in 2016 to 38.8% in June this year. The company's financial strength was further enhanced, helping us to capture new 5G opportunities, create new value, boost shareholder returns and counter risk in the future. Looking into the second half, the company will adhere to the strategy of focus, innovation, and cooperation. We will further improve market-oriented operation, enhance systematic innovation capability, and accelerate digital transformation. We will endeavor to shape the five new development edges comprising high-quality services, high-quality development, highly effective governance, high-tech engine, and high vitality operations, striving to lead from in our high-quality development. This is the end of my presentation. Thank you. Good day, and thank you for standing by. Welcome to China Unicom 2021 Interim Results Analyst Briefing Conference Call. At this time, all participants are in a listen-only mode. After the speaker's brief introduction, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. Now I would like to hand the conference over to Mr. Jacky Yung, Company Secretary of China Unicom. Thank you. Please go ahead. Thank you, Amber. Good day, ladies and gentlemen. Welcome to China Unicom's 2021 Interim Results Global Investor and Conference Call. Today with us on the line, we have Mr. Wang Xiaochu, Chairman and CEO of the company, Mr. Chen Zhongyue, Executive Director and President, and Mr. Liang Baojun, Senior Vice President. In the first half of 2021, the company achieved a solid growth in revenue and net profit. Service revenue increased by 7.5% year-on-year, and net profit significantly increased by 21% year-on-year to CNY 9.2 billion. We believe most of you may have seen the company result presentation on the website, and for time convenience, the management will not go through the presentation and will go straight to the questions of your interest. Amber, could you please pass on the first question from investor? Thank you. Certainly. Our first question comes from Danny Chu from Bank of America. Please ask your question. Thank you management for taking my questions. Congratulations on the results. I have three quick questions. My first question is, I saw the announcement about the potential IPO of Smart Connection Technology. Is there any reasons why we consider A share instead of listing this entity on the Hong Kong market? A related question would be, a while ago, I believe management has talked about the potential IPO of our cloud business. Are there any update on that potential IPO as well? That would be my first question. Second question is on page 9 of our presentation. I saw that both our operating revenue as well as the net profit in terms of the year-on-year growth rate far exceed the market expectation. Can management walk us through what areas do you think that the market is being too conservative as a result, the market results exceed the market expectation? That would be my second question. The last question is about the dividend. Again, we are glad that the company announced an interim dividend for the first time. Should we interpret that, given the company said that we are going to raise our dividend payout ratio, but the exact ratio will be announced down the road, should we expect our payout ratio to be similar to our peers, given that China Telecom, they announced their FY 2021 dividend payout ratio to be 60%? That would be my three questions. Thank you. Thank you, Danny。这个投资人有三个问题，第一个是有关分拆上市的。他看到我们业绩发布的时候提到，我会把智网科技去分拆上市，在A股上市。他问为什么不选择在香港上市。然后有关上市，他也是提到以前公司有一个提法，就是可能把云业务也分拆上市，他想看看现在云业务这块上市有没有什么计划或者进展。第二个问题，他提出来就是在第九页，他看到公司的运营收入及那个利益净利润增长很快，比市场预期更快。他想看看是哪一方面导致公司能够有这么好的成绩的。第三个就是有关股息了，他很高兴看到公司第一次派发中期股息，然后公司也提到会提高派息率，他想理解一下，公司会不会参考其他同业，好像中国电信，它已经承诺了今年把那个派息率变成60%。首先，我们这次第一次，我们公司培养了好几个可以具备分拆的这个业务的公司。其中第一个公司，它比较小，但是它离主业是比较远的，就是车联网公司，智网科技，主要是车的智能化的服务。那么我们在选择国内上市，主要是国内的上市的审批相对来讲，如果在创业板的话，它比较简单。所以我们就首选在国内试点看一看。但是并不排除今后其他的公司也可能在其他地，包括香港上市的可能性。 Yeah. Thank you, Chairman. The Chairman would like to explain that we have quite a number of this type of innovative company to be getting listed, and the company has chosen the Smart Connection to be the first one, because relatively speaking, it is smaller and also it is not so integrated with the fundamental business of the company. He expects the approval process for getting listed in the A-share market will be simpler and easier than the Hong Kong Stock Exchange. He thinks it is a good step one for the company to try to put forward the first number one spin-off. In fact, in future, the company will not rule out the possibility of spinning off the other company in Hong Kong Stock Exchange. 那么第二个，我们目前初步考虑不会对云业务单独进行上市。但是你可能现在已注意到我们重新整合的这个数科公司，它是包括了云、大、智、物、安、区块链这六大板块，会不会整体去分拆上市，我们会在今后的时间里面再去进行讨论，董事会和经营层再进行讨论。谢谢。 Chairman would like to explain that the company has no plan to separately list out only the cloud business. Instead, company will be looking at our Unicom Digital Technology Co., Ltd. subsidiary, which will cover a number of this type of new business, including the cloud, Internet of Things and big data and also blockchain and etc. Then the company will be trying to spin off the company as a whole. 关于您提到的第二个问题，就是今年上半年您看到了我们公司的营收超过了市场的预期。为什么能取得这样一个绩效？主要还是得益于两个方面，一个是规模的持续增长，第二个是价值经营的有效提升。那么公司上半年比去年在移动用户的规模上面是扭转了去年上半年负增长八百多万户的局面，到了今年上半年是四百多万户的用户净增长。宽带的用户也是创了今年的新高，上半年到了四百多万户的净增长。所以规模在持续地稳定增长。特别让我们欣喜的是客户的价值经营得到了有效的提升。今年上半年移动的用户ARPU值到了44块4毛，提升了8.5%。同时，宽带和智慧家庭的产品增长了13%，ARPU值也提升了。固网的收入也涨了8%。所以这两个因素共同促成了今年上半年的收入的稳健增长和利润大幅度地提升，主要是得益于这个经营。同时，公司近年以来比较好的创新业务的发展，今年上半年依然保持了比较快速的增长，这也是我们收入增长和利润提升的关键的因素。这就回答您刚才说的市场表现好于预期的两个方面，就是规模提升和价值经营。 Yep. President Chen would like to answer the question too. He would like to emphasize that the reason why we could have the revenue growth and profit growth exceeding market expectation, mainly because we successfully implement the scale development, the value enhancement strategy. For example, he would like to lay out the mobile subscriber number. Instead of the first half of last year, it has been a net loss of 8 million, but in the first half of this year it is 4 million net add. Now the ARPU 44.4 CNY increased by 8.5%. Very good. Also the fixed line broadband subscriber, we have achieved 4 million net add in the first half of this year. While we can see about the broadband and also the smart home value business, the revenue increased by 13%, while the fixed line revenue increased by 8%. More importantly is also the innovative business we have continued to successfully fast grow. All these contribute to our robust revenue and profit growth. 好的，关于您提到的中期派息，第三个问题。你也看到了，中国联通上市以来第一次要中期派息，这个也是得益于公司今年比较好的营收水平和现金流的情况。那么为了加速提升股东的回报呢，董事会决定今年开始派发股息。这个政策我们已经公布了。至于会不会像其他运营商公布的这样的一个派息的比率或者未来的这样预期呢？这个主要还是看公司的利润的增长的情况，包括现金流的总体水平。但整体上我们会把给股东的回报，特别是派息率作为重要的回馈股东的考量因素。谢谢。 President Chen would like to respond to the third question regarding the interim dividend. It is the first time the company paid the interim dividend. Mainly because the company have achieved very favorable operating results as well as the cash flow. Whether the company in the full year will follow the peer company to increase the dividend payout ratio to that level, it depends on the company final outcome on the profit and also the cash flow. President would like to emphasize the company has high regard for the return to the shareholders. Thank you, Danny. Right. Thank you. Our next question comes from James Wang from UBS. Please ask your question. 管理层晚上好，我是瑞银的分析师James，感谢您今天的时间，也恭喜公司在上半年取得很好的业绩。那么第一个问题就是关于21%利润增长上半年，想了解下这个这么好的趋势是否能维持到下半年？还有就是更长期点的话，比如说我们看中国电信在业绩上表示未来有信心两到三年能做到双位数的收入以及利润增长，所以想了解下我们公司是否也有类似的这种预期或者目标？这是第一个问题。第二个问题就是，我们关注到，比如说电信和移动都会去A股上市，相信他们也会通过这个机会来邀请一些战略投资者，在政企上面可能会有更多的一些合作，所以想了解一下我们公司在政企业务上以后会如何做到一个差异化竞争。这是第二个问题。然后第三个问题是关于EBITDA率的。我看公司这几个半年吧，基本上EBITDA都是比较平稳，虽然利润还是增长很快。想了解一下这个趋势是否会保持下去，或者什么时候我们能看到EBITDA开始一个比较明显的正增长。谢谢。 Thank you. Three questions from the investor. First of all, he congratulate the company on the good results. The first question, he would like to point out that the profit growth in the first half of 21% is very robust, and he would like to know about the trend in the second half. He also like to mention that China Telecom has give guidance about in the coming two to three years time, they are able to maintain double-digit growth. He wished to see the company whether we can also make the same guidance. The second question from him, he notice about China Telecom, China Mobile, both of them are getting back to the A-share market for offering and will be introducing strategic investors. He would like to see how the company will maintain some defensive edges on competition in respect of the government enterprise customer businesses. The last question from him is about the EBITDA. He had noticed the company for the past several years, the EBITDA basically remains relatively flat. He wished to know when the company will be able to achieve EBITDA increases. 这个行业，哪怕我们三家公司，包括中国联通，收入的规模都不小。在这样的情况下，任何一个公司说要长期在收入上这个两位数的增长，我觉得都是比较困难的。我们要面对这个现实，规模很大，基础业务基本饱和，那么主要的收入来源是来源于创新的业务。这样的结构实际要保持营业收入要保持两位数的增长，持续几年要保持两位数的成长，我个人觉得判断还是有困难的。但是利润呢，由于每家公司的情况会不同，中国联通今年保持上半年的利润的增长的情况，我们还是有把握的今年。这是第一个问题。 Chairman would like to answer the first question. He wished to point out that all three operators in China nowadays we have quite a large scale of revenue already on a high level. Given that the fundamental businesses of the three operator are relatively saturated, now all three of us are counting on the innovative business to drive the revenue growth. He see to maintain the revenue for double-digit growth for consistently for a few years, in the coming few years, it may not be easy and it may be a challenge. However for profit, he is so confident that the second half of this year we will be able to maintain more or less the same level of profit growth as the first half year. 好，回答一下您刚才提到的第二个问题。在政企领域有两点，一个我们构建契约化、一体化的创新能力体系，得益于混改的优势，我们集聚了最优秀的人才，利用像联通数科这样的公司，把整个公司的创新能力快速集聚起来，服务全国。第二点，就是我们在一些核心平台能力，包括ToB等等的平台能力，全国契约化，这样的话，最高效率，能够服务好客户。那么在这基础上，特别是5G+ABCDE，我们构建了一个非常大的开放合作联盟，也是跟行业和各个方面吧，产业各个方面共同能够把下一步产业数字化的各项工作做好。谢谢。 Our Senior Vice President Mr. Liang Baojun would like to address the second question. He wished to point out that the company will leverage above our centralized unified innovative system, which in particular comprising about our Unicom Digital Technology Co., Ltd. It will integrate the various capability into trying to formulate the businesses. Also we will leverage about the mixed-ownership reform and also our talents. In particular, we will integrate our platform to strengthen our capability to surface, including 5G+ABCDE, including the artificial intelligence and big data and computing, and also the edge computing, etc. In particular, we would like to cooperate with the ecosystem to try to strengthen our service. 那么最后一个问题是关于EBITDA margin。如果你想今年转正的话，其实是很容易的，那就是把创新的投入，5G行业的应用，加ABCDE这些全不投了，能立马大大地转正。但我想我们目标都是一致的，就是不但希望EBITDA好，还要希望这个公司有长远的增长。所以还是到什么时候呢？到创新的收入远远大于创新的投入的时候，那不但有收入增长，EBITDA margin也会更理想。我们希望这一天总会到来的。谢谢。 Chairman would like to address about the EBITDA and or EBITDA margin. He would like to point out that in fact it is so easy for the company to achieve EBITDA increase or EBITDA margin increases if we are going to slow down or reduce our investment or initiative in the innovative businesses or for example, ABCDE investment. However, the company would emphasize we would like to achieve long-term sustainable growth. As a result, we need to invest in this type of businesses. He expects one day it will come, for the revenue increases in these businesses, in the new business, will exceed the investment in this business. Then the profit will come and EBW increase. 谢谢。 Thank you. Thank you. Our next question comes from Edison Lee from Jefferies. Please go ahead. 冠城王总，你好。我有两个问题，第一个问题就是关于产业互联网的增长，上半年20%多就好像比之前的增速要放缓了一点。所以其实你们对于这个产业互联网这一块，下半年的增速，还有明年的增速，现在怎么去看？另外就是看上半年的利润增长非常好，是20%以上，但是由于EBITDA没有增长，基本上主要是依靠一些联营公司的增长，还有一些其他收入的增长。可以讲一下，其实这些联营公司，还有其他的收入的增长主要的来源是在哪里？谢谢。 Thank you. Yeah, sorry. Two questions from the investor. The first one he has noticed about the industrial Internet business of our company. The growth has slowed down and he would like to know about the outlook about the growth in this businesses. Also he noticed although the company profit increased a lot, however, the EBITDA is flat. It means the profit may have come from the non-operating income, in particular the share of net profit of associate. He loves to know more about this type of associate company profit. 第一个问题呢，Edison，就是这个产业互联网今年上半年的增长率下来一点，主要是我们把主要的力量投入到中国联通自身的数字化的改造。随着这个工程到九月份左右结束以后，相当一部分的人员又回到了去做公众市场上的。那么这个增长率下半年会比上半年好一点。但是你也应该看到，整个创新业务在公司里的占比，随着这个规模越来越大，它的这个增长率绝对值还是继续增长，但是增长率略微下来也是很正常的，这个你要理解的。 Chairman would like to explain that for the industry Internet businesses, in the first half year, it may look the growth has been slowed down a bit. In particular, the reason is because the company has emphasized and put more focus on trying to strengthen our digital transformation to strengthen our own capability. By September end, we will have finished about this process, and then business will get to normal. Chairman is confident that the second half growth rate of our industry business will be better then, higher than the first half year. However, he would like to point out that in the long run, of course, given that our scale of the industry Internet business growing, and so as a result, although the absolute value of our growth will be increasing, however, the percentage level of the growth will be slowing down. 那么第二个问题呢，就是正因为我们看到了除了我们主业以外，我们的联营公司，包括我们的财务费用的下降，使得我们整个盈利的上升，我们才有能力多投一点钱到未来的增长，去培育未来的增长，所以在创新业务上多投入一点。当然因为公司的总的利润很高，所以很理想，我们就应该为未来去多考虑，是这么做的决定。所以总的尽管EBITDA margin略有一点下降，但是公司的利润还是很高，而且整个公司的盈利和现金流都是可控的，不存在任何风险。我们认为在这个时候应该看得更远一点，这是第一。 Chairman would like to explain that given that the company has successfully decreased the financial expense, we also achieved more and more share of the net profit of associated companies. Our profit increased very robustly. As a result, we are in a good position to invest more in the innovative businesses for our future growth. We will take this golden opportunity while the EBITDA will be flat, but our profit will be increasing. 那么联营公司的主要是像我们的招联等等这些公司，给公司创造的利润也是很可观的。所以我们也非常感谢这些独立的公司的管理层们的努力。谢谢。 Regarding our share of net profit in associated company or joint venture, the most performing best one will be the Merchant Durian, and they have been contributing quite remarkable profit to the company for development. Thank you. As a reminder, ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Neale Anderson from HSBC. Please add your question. Thank you. Good evening. One question about medium-term cash flows, please. With the co-build co-share network, it looks like your telecom CapEx could be structurally lower for the next several years and even longer. My question is whether you expect CapEx to be quite a bit lower in the future, or whether your investment in new businesses, particularly data centers, etc., will make up some of that gap and the CapEx won't actually change that much over time. Thank you. 这个投资人有一条问题，有关中期来讲那个现金流，特别是他看到公司那个共建共享，基本上把那个基本开支控制着。他原来也知道可能未来过了一两年以后，5G那个CapEx过了以后，我们会不会基本开支就会大幅降低，还是我们的计划是把降低的基本开支挪到其他业务，包括IDC上面呢？他想了解一下。这个是取决于我们的投资能不能得到更好的回报。如果有，我们首选还会继续加大投资。如果我们的投资的回报率低于我们银行的利息，那我们还是把钱分给各位更好。这个公司管理层会向董事会最后建议。但我们更希望的是找到新的增长点，为股东带来更大的价值。谢谢。 Chairman would like to explain that it really depends on whether we can obtain some good investment opportunity. For example, if the investment talking about a very low return and which is even less than the bank interest income, then of course Chairman would recommend paying the dividend back to the shareholders. However, he personally in guide and hopefully we can get some very good investment opportunity with good returns. Thank you. The next question comes from Kai Qian from CICC. Please go ahead. 钱凯：好，我是中金钱凯。我有三个问题。那首先还是要恭喜一下管理层，上半年取得这么好的一个利润增长。那么第一个问题是关于我们的新的业务，包括IDC、云的这些业务。我不知道公司未来有没有可能把这些业务的具体的一些利润指标，比如说EBITDA margin，或者是净利润率给大家披露一下，那么让我们更多地去了解这些业务的一个更好的财务状况，也可以让大家通过更估值法来给这些业务一个更好的估值。这是第一个问题。第二个问题就是我看到公司上半年的云业务增长还是很快，但是相比较移动和电信，他们的增速都是超过了100%。所以我想问一下，我们云的收入的增速和另外俩比起来有点慢的原因是什么？是我们的战略打法、客户有所不同，还是有什么其他的原因？这是第二个问题。第三个问题是关于700MHz。我不知道董事长这边有没有了解，未来700MHz这边有一些新的进展，未来会不会给比如说像我们和电信，也更多地去使用这个700MHz的资源。谢谢。 Thank you Kai. There are three questions from the investor. First of all, beforehand he congratulations the company on the good results. The first one is he wish to see any plan by the company to disclose the EBITDA margin or profit margin of the IDC and cloud businesses in future, because he expects by disclosing the profit margin, it will enhance the valuation appraisal by the investor. The second question from him, he had noticed the company of cart business revenue has been increasing quite robustly, however, which is still less than the China Telecom and China Mobile growth rate on the cloud businesses. He wish to know any reasons, specific reason why our growth is not as good as CT and China Mobile. The last question from him is regarding the co-share, co-build co-share on the 700MHz. He wish to see any progress or plan on that. 首先我们听到了你的这个希望，我们努力去做。就是眼前我觉得过早地去把各项业务分得很细，就云、大数据、人工智能各种创新的业务分得很细，然后收入、成本都要，收入好分，成本要分得很细，实际为这个分成本还要付出很多的成本。在这个规模比较小的时候，我们管理层认为先还不要那么太急。然后到一定时候，到达到一定规模的时候，我们尽量能够把它分一个大概的数字，然后让我们分析员们能够更精准地来看待公司，我们自身也能够知道哪一个是我们的主攻方向，这是第一条。 Yeah. Chairman would like to thank the suggestion from the investor. Chairman would like to say that when we consider about this type of EBITDA margin for different business segments, he would like to say that he try to avoid putting the margin into too detail or too small business segment, because to achieve this type of segment profitability, we need to incur a lot of cost to try to divide out the exact cost or accurate cost of individual business segment. He said revenue is relatively better, but for profitability it is a little bit more cost consuming. However, he like to say that in future, when this kind of new business get into a bigger scale, then it will be a good position for the company to try to spend some cost or efforts in trying to derive some rough estimate of the profitability for different business segments. 第二个问题，首先说明这个云的收入的定义每家公司不太一样，而且成本定义也不一样。比如说有的公司的云是建立在别人的云上面，有的公司云是完全自己开发的。所以你不要只看收入线，还要看看成本，你要分摊给别人的成本是多少，这是第一个大的概念。 Chairman would like to point out that it's important to notice for cloud revenue definition, different operator may have different definitions. Also we need to be careful to look at the cloud revenue component or composition, because maybe some cloud revenue will be counting on the cloud service provided by the other suppliers or provider. As a result, that cloud revenue will need to incur a large amount of cost to be paid to the other providers. 那么中国联通的云是起步在三家公司里边最晚的，实际我们是从SaaS层开始做的。到了实际PaaS层是到今年，底座部分今年才全部完工，基本全部完工。现在能够提供200多个产品。但是我们的私有云的底座完全是自己开发的。所以反而现在的收入规模是要小一点，但是利润远比合作的要高。所以我们认为还是要坚持走自己的路来发展。 Chairman also like to point out that the company started cloud business at a later stage compared with the other two operator. Originally we are counting on the SaaS to generate the revenue while we are strengthening the base for our IaaS. We have complete already this year and we have rolled out 200 products. In fact, we are counting on the proprietary capability on the IaaS basis to promote our public cloud, which will generate a better profitability. 关于您提到的第三个问题，就是700MHz的共享的问题，我们想就是关于低频段的共享，政府监管部门会本着公平合理、有利于整个市场最高效的运营的角度进行科学的配置。所以就是说，700MHz是已知的分配方案，另外还有一些尚未明确的方案，我们相信政府的监管部门会有一个更公平合理的分配，有利于几家运营商开展更好的市场、更充分的有效的市场竞争。 President would like to address the third question on the co-share of the 700 MHz. He would like to say he is confident the regulatory authority will make a fair and equitable decision on the treatment about this low frequency band allocation, and to ensure the high quality development and also the fair competition among the operators. Right. Thank you. As a reminder, ladies and gentlemen, if you wish to ask a question, please press star one on your telephone. Our next question comes from Jiang Hongming from Huatai Securities. Please go ahead. 尊敬的董事长，晚上好。我是华泰证券自营的蒋宏明，恭喜贵公司上半年取得这么好的业绩。我主要想请教一下折旧摊销方面的两个小问题。第一个问题的话就是公司的5G设备的折旧跟4G设备的折旧年限有什么差异？第二个问题的话就是折旧方面的差异将在未来几年对公司的净利润和股息率分别产生什么样的影响？ Yeah. Thank you. Two questions from the investor, and he wishes to know about the depreciation amortization regarding the 5G equipment versus the 4G equipment, whether there is any difference. Also about this type depreciation policy, will there be any impact on our company's profitability and cash flow? 你是比较仔细的一个分析员，研究得也很透。我们的4G、2G、3G、4G，我们所有联通的设备原来的折旧期是七年。那么由于5G和中国电信是共建共享，最早我们也想是七年的，后来由于中国电信的折旧期是十年，我们为了更好地和中国电信合作，在小事上不再计较了，所以就改成了在5G上的折旧。因为是共建共享的资产，你折旧期应该是一样的，所以我们在5G的折旧就变成了十年折旧期。 Yeah. Chairman would like to explain that the investor really has an eye for details, and the company all along for 2G, 3G and 4G equipment, we have a depreciation life of 7 years. However, for 5G, given that it is co-build co-share with China Telecom, and they have 10 years depreciation life. As a result, the company will be aligned with the China Telecom 10 years for the 5G equipment. 那么这样的调整短时间影响不会太大，因为5G的资产在我们总资产占比不高。但是随着5G的投资的累计，那么将来总体上对利润是正面的，但对公司可使用的现金部分实际是减少的。 Yeah. The Chairman explained that in the short term, the impact will not be significant given that the asset size is still small compared with the overall asset of the company. However, in the long run, of course, this will be good to the profitability. However, relatively speaking, the cash flow generated from the profit will be less. 谢谢。 Thank you. Thank you. Our next question comes from 黄岳元 from 中信证券. Please go ahead. 喂，你好，我是中信证券的黄岳元，也非常高兴看到公司有这么强劲的一个增长。那我有两个问题想简单请教一下。第一个是，其实刚刚也提到折旧摊销这一块，我们也看到公司其实整个资本开支，在15年当时的一个高点之后，后面其实整个资本开支就更加平缓、更加合理的水平。那这个其实今年上半年已经看到，你的折旧摊销这一块相当于是一个平稳的状态，没有增长。后面甚至是不是有一定可能会去下降？其实我们看到我们的整个自由现金流比整个的一个EBITDA和整个的一个利润情况各方面都是要好很多的，这个是会逐步地能够更好地转化为公司的利润。您觉得在未来几个季度可能什么时候可能会有更好的一个体现？然后第二个问题是，其实我们也看到公司整个的5G套餐用户的一个渗透率取得一个快速的一个提升。当然其实去年的话，ARPU值已经有很好的一个表现了。今年随着我们整个的最领先的这样的一个5G渗透率之后，我们未来两个季度整个ARPU值环比的一个变化情况，您觉得大致会什么样一个趋势？ Two questions from the investor. The first one he would like to of course congratulate the strong growth result of the company. He has seen that since 2015 the CapEx peaked at that year and thereafter, the CapEx has been controlled at a reasonable pace. As a result, he would expect it will have generated and leading to the good result of depreciation amortization this half year is talking about fact. He would love to see any chance in the coming future about having a decreasing depreciation amortization, which will be very good for the cash flow. The second question from him is regarding the 5G penetration has been increasing a lot in the first half year, and it also contributed significantly or favorably to the ARPU acquisition. He wishes to see in the coming few quarters whether the ARPU can continue about the robust increases quarter-over-quarter. 今天的资本开支平稳，甚至去年是下降，是前几年得益于中国联通的聚焦战略，主要的投资在这个重点地区，重点业务，就是投到有利润的地方去所形成的。但是你要看到的是，由于5G的投资，5G必须投，当然5G的投资会在去年、今年和明年三年的发生，会带动折旧明年应该是略有上升的。那是上升的这个情况。要到后年，假定说除了5G之外，我们找不到其他投资的机会的时候，CapEx大规模的下降的时候，那么折旧才可能又走到了下行的通道。 Yeah. Chairman would like to point out that the company has been able to maintain the good CapEx control. It mainly benefits from the focused strategy of the company, which we have implemented a few years ago, including, of course, we will try to focus our resource or investment in the key areas and the key business, mainly profitable business and profitable areas. However, just like last year, this year and next year, we will be increasing our investment in the 5G. As a result, we expect next year the depreciation will be increasing. However, if we cannot find good investment opportunity next year to invest more in the coming year, it might happen that depreciation will decrease in the year after, i.e. 2023. 第二个问题，关于这个5G的ARPU，总体上今年这个ARPU，我们认为5G是在平稳中还是会略有一些下降的，因为有大量的新的用户的涌入。但是这个移动的总体ARPU会继续上升。谢谢。 Yeah. Chairman expects the overall 5G ARPU will be steady but still declining a bit. However, the planned mobile ARPU or subscriber will be increasing this year. Right. Thank you. Next question comes from Tina Hou from Goldman Sachs. Please ask your question. 非常感谢管理层的时间，也恭喜取得那么好的业绩。我有两个问题，第一个是关于咱们数据中心业务的，我想请问一下，咱们未来就下半年甚至未来的大概三年时间，对这个数据中心业务是有什么样的规划？因为刚才王总也提到了这个ICE基础设施应该也是跟数据中心比较相关的。然后第二个问题是关于前两天出台的一个关键信息基础设施安全保护条例，想问一下这个对我们的将来会产生哪一些影响和变化？就是我们需不需要采取一些额外的一些措施，或者是购买一些额外的硬件、软件和额外的会有一些特定的员工来加强整体的这个信息基础设施的建设。谢谢。 Yeah. Thank you. Two questions from the investors. First of all, she congratulates the company on the good result. The first question will be on the IDC. She wishes to know in the coming three years, the company has any plan for accelerating the development of IDC in particular. The IDC is quite related to the ICE as mentioned earlier. Second, she had noticed about this regulatory directive regarding the critical information infrastructure security. She wishes to know whether the company needs to incur additional investment or to recruit additional talent to satisfy the requirement. 我回答一下你的问题。关于第一个数据中心，整个数据中心是中国联通的核心业务。我们随着在整个全国布局的优化，特别是在热点地区，一些资源能够加快解决的基础上，整个数据中心的业务下半年会比上半年速度加快，会保持两位数的增长，这是一个发展。第二个方面，就是我们在整个布局上，全国我们已经有IDC有583处，整个我们是5+4+31+X，既有像呼市、呼和浩特、贵州这样大型的数据中心，也有像京津冀、长三角、珠三角等等，包括鲁豫、川渝这些地区，以及全国的省会城市，这样满足包括互联网、金融、企业政务客户的需要。随着5G和下一步整个社会数字化进程的加快，将为中国联通整个的业务增长也是提供一个强劲的动力。好，谢谢。 Yeah. Our Senior Vice President, Mr. Liu, would like to address the question on the IDC. He love to point out the IDC is the core business of the company, and he expect the company will fasten the development IDC in the second half this year. He expect the revenue growth in the second half will be higher than the first half and will be double digits, more than double digits. Regarding the deployment about the IDC, right now, the company have 583 IDC sites nationwide, and leveraging above the 5+4+31+X, mainly five economic affluent regions, and also the two Internet data warehouse in Guizhou and also Inner Mongolia, and also the 31 capital city, etc. Plus various applications, we will focus on the government customer as well as some Internet company and the finance company. 关于这个数据安全法的。这刚刚颁布，我要表扬你，你那么快就能，我们看到时间也不长，你就能关注到这个法律的颁布。那么我们也初步地评估了一下，按照新的这个数据安全法，我们中国联通现有这些数据需不需要进行改造。总体上，由于中国联通原有的我们对数据安全的重视，包括什么防火墙、防攻击，我们自己还有一个安全事业部和一个安全公司，所有的这些要做的工作，大头基本上影响不大，基本上都是按照这个标准都能达标的。个别地方需要再修正一下，对于成本基本上不需要有显著性的成本的增加。谢谢。 Yeah. Chairman would like to give applause to Tina about her very updated about the data security law in China. Chairman would like to say all along the company has high regards about the data security and also the network security, information security. So we have a separate security company as well a separate security department overseeing all this. Basically, our company has basically complied with the requirements, and we see no significant additional cost need to be incurred to satisfy the requirements. Thank you. Our next follow-up question comes from Edison Lee from Jefferies. Please go ahead. 你好，我有一个跟进的问题，就是我看到在你们的PPT的第23页，你们说云的收入是77亿，从51亿增长到77亿，但是在你们的第37页工业互联网里的云收入呢，今年只有28亿。其实这个差距是来自什么原因呢？ Yeah, thank you. One follow-up question from the investor is regarding on page 23 of our PPT. He has noticed about this China Unicom Cloud business revenue was CNY 7.7 billion the first half year. However, he also see on our page 37 of the PPT and the cloud computing revenue was CNY 2.8 billion. He wishes to know what's the difference about these two figures. 好，谢谢。关注我们整个云业务的板块。云业务包括但不限于云计算。刚才您说的这个28亿和这个增长的口径呢，是我们云计算主要是在IaaS和计算以及部分的存储产品，所以这个是中国联通云服务的一个部分，这是第一个意思。 Yeah. President would like to explain that. In fact, our China Unicom cloud businesses include one element, which is cloud computing of CNY 2.8 billion, which is mainly comprising about the IaaS as well as the storage. 另外，除了刚才您提到的28亿的云计算的部分之外呢，中国联通的云服务包含了云资源、云平台、云服务、云集成、云互联和云安全，大概目前是六大板块。这个整合起来是将近77个亿，上半年的增长率是54%。这个口径和业内主流的分析和估计的口径是基本相同的。 Yeah. President will also further elaborate about our China Unicom cloud businesses. It comprise mainly six elements, the cloud resources, cloud platform, cloud service, cloud integration, cloud interconnection, and cloud security. The total amount included CNY 7.7 billion, increased by 54% in the first half of this year. The definition is in line with the industry. 好，谢谢。 Thank you. Thank you once again, ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad. We have a follow-up question from Edison Lee, Jefferies. Please go ahead. 对不起，再一个跟进关于云这个收入。所以如果这两个数字相差的这个49亿，其实在你们的财务数字上是反映在哪一个收入的部分？好。Jackie 先来。好, 谢谢. The follow-up question from the investor is regarding, he used to know about the difference between the two, 7.7 billion and 2.8 billion, the 4.9 billion, where we have put it in our accounts. 这一块的收入主要是包含这几部分，除了刚才说的这个云资源的收入之外呢，还有包括平台的服务，主要是PaaS，还有云服务的部分，主要是SaaS，还有云集成的部分，就是IT服务里面的云相关的部分，还有云互联，就是云to云之间的高速互联的服务，以及云的安全。这些大多数都在目前会计科目的IT服务里面。在目前板块就是我们上半年营收100亿的里面，以及部分的物联网的平台部分，以及部分的大数据的人工智能、云智能部分。 Yeah. President would like to elaborate about the allocation into the finance account. For example, when we talk about the cloud platform, it is mainly referring to the PaaS, and the cloud service, it refers to the SaaS. Also when we talk about the cloud integration revenue service, it refers to the IT system integration services. Also the cloud integration connection and cloud security, they are also part of the IT system integration service revenue. So in fact, it will be included in the IT system integration of 10 billion, and also some will be included in Internet of Things revenue, and some will be included in the account, will be the big data revenue. Thank you. Thank you. Our next question comes from Lee Weixiong from Unsynced Trans. Please go ahead. 领导们好。我是来自Unsynced Trans自营的熊立伟。我有两个问题想问一下，首先一块是在携号转网这个方面，我是听说电信是携号转网主要的受益者，然后我就想问一下，在携号转网这一方面会对联通的业务，像用户的数量和用户的收入整体方面会有什么样的影响？然后第二个问题就是关于5G消息方面。前一段时间我是有看到华为和运营商之类的有在探讨5G消息，那我就想问一下，咱们联通在5G消息这个行业里面，之后有一个什么样的布局和什么样的规划？谢谢。 Yeah. Two questions from the investor. The first one is regarding the mobile number portability. He understands or he has heard about China Telecom is the beneficiary of this policy, and he wishes to know any impact on China Unicom, no matter on the subscriber or revenue. The second question from him is regarding the 5G messaging services. He has heard something from Huawei and is in progress. He wishes to know any plan by the company about the 5G messaging services. 好，我先回答您的第一个问题，关于携号转网的问题。应该讲携号转网是一项非常有利于客户自主选择的服务。携号转网开通以来，特别是今年上半年，公司携号转网的这个用户，中国联通还是为净携出。但是这个趋势已经得到了很好的扭转。携出的用户在持续减少，携入的用户在持续增长。 President would like to say that the mobile number portability policy is good to the customer for them to have better choices. So far, for the first half of this year, the company has net port out. However, we have seen over the months the net port out figure has been decreasing while the port in figure has been increasing. 整体尽管是净携出，但是对公司的影响现在应该讲还是比较微小。总的这个上半年净携出的用户不到0.4%。 President would like to elaborate saying that the overall impact of the net port out is negligible, because overall speaking, for the whole six months, in the first half year, the net port out figure represents 0.4% of the total subscriber number, 0.4%. 而且特别可喜的是，公司已经在十多个省实现了携入用户为正，就净携入用户为正的这个趋势向好的变化。 President would also like to share a pleasant news. He has noticed about more than 10 provinces of our company, we have net port in already and is improving. 您刚才提的第二个问题，关于5G消息的，这个是我们非常关注的一个5G的应用。现在正在进行紧锣密鼓的商用前测试，目前测试的进度应该讲还是比较顺利的。 President would like to say the 5G messaging service is something the company have high regard to about this application. So far we are carrying out the trial before the commercial service roll out. So far so good. 目前现在有大量的友好体验客户，还有就是5G消息的服务提供商，就是我们的To B客户，正在积极参与中国联通的这个试商用的测试计划。我们预期在年内会正式推出这个服务。谢谢。 And so far we have some friendly users and also some suppliers on our To B businesses. They are participating in the trial and we are planning to go out before the end of this year. Right. Thank you. Our next question comes from Zhang Hongyun from Ren zhou zhi chan. Please go ahead. 管理层好，可以听见吗？可以。我听你讲。首先恭喜公司上半年取得如此优秀的增长。然后请教两个问题，第一个问题是我看到咱们其实营业利润收入的增长是低于咱们整体收入的增长的，然后我想请教一下这个是什么原因，然后我们什么时候能看到对公司的营业利润这一块，它的增速会大于收入增速？这是我第一个问题。然后第二个问题是有关资产减值的，因为我们看到电信去年有一笔3G资产的减值，然后移动上半年其实也有一些盘值的处理，然后我不知道咱们这边2G、3G还有一些低效的资产有没有存在这种减值的迹象，然后未来咱们这一块是如何安排的？谢谢，两个问题。 Yeah. Thank you. Two questions. The investor, he first of all congratulate the company on the good result again. Very good. Then first of all, he like to point out that he has noticed about the revenue growth, the profit growth of businesses is less than the revenue growth. He love to understand the reason why. The second question is he has noticed about China Mobile and China Telecom. They have done some adjustment to the residual value of certain assets, resulting in some as a write down or accelerated depreciation. He wish to see any similar plan by the company. Once again, ladies and gentlemen, if you wish to ask a question, please press star one on your telephone. 基本上我来。就刚才说过的。对。好，谢谢你关注到我们公司的利润增长的构成。就像你看到的，就是整体的利润增长率还是非常的快速，但是主业的利润增长，就EBITDA这一块的增长变化不是太大，这个主要是由于我们上半年在创新业务的领域里面加大了投入，另外也加快了这个创新领域优秀人才的引入，以及适当地提高了重点领域里面的激励，以求公司整个更长远地、更可持续地主营业务的利润增长。当然另外一方面，也有我们投资板块为公司创造的利润增长比较明显，所做出的贡献。这是第一个问题。 Yeah. President would like to explain that the reason why although our profit grew very fast, although the profit grew quite fast, however, the core business profit or EBITDA seems to be quite flat. Because the company has invested a lot in our innovative businesses on the initiative as well as recruiting some talents and giving them incentives to try to drive the business grow for our long term sustainable growth. We also benefit a lot from the investment income to achieve a very robust profit growth in the first half year. 那么关于资产处置方面，今年上半年我们资产的拨备是15个亿。现在公司的总体的资产，像2G资产基本都拨完了，只剩一点了。那么3G还有100多亿，但是3G由于要承接移动的5G非VoLTE所有的语音，如果5G没有VoLTE的地区，就要回落到3G网上，所以可能还要长期地保持。所以要保留一个薄的3G网来承接整个移动的除VoLTE以外的、不能提供VoLTE的语音，所以还要长期地保留，还不可以过快地进行拨备。其他的资产总体现在都比较优良。 Yeah. Chairman would like to say that the asset written off among in the first half this year was CNY 1.5 billion. He would like to point out that for 2G assets, in fact, the residual value nowadays is negligible. For 5G, the amount of the residual value or the value of the 3G is talking about more than CNY 10 billion. However, it's important to keep this 3G asset because the voice will be counting on this. In particular, the non-VoLTE voice services, including from 5G, will fall onto the 3G network. So we will at best trying to streamline the 3G network, but we will keep the 3G network. Overall speaking, the quality of the asset of the company is good. Thank you once again, ladies and gentlemen, if you wish to ask a question, please press star one. Our next follow-up question comes from Edison Lee from Jefferies. Please ask your question. 你好，我有一个跟进的问题是关于频率重耕的问题，就是现在你们今年就大量地建在了在2.1频率之上。然后未来由于这个5G的普及率越来越高，是不是代表未来有更多的4G的频率，甚至是2G的频率都可以拿出来重耕这个5G？这样是不是对将来这个5G的总体的资本开支，做成一个非常可控的状态？ Yeah, thank you. A follow-up question from the investor. He is regarding the spectrum refarming, and he has noticed that the company will be using the 2.1 gigahertz for the 5G rollout this year. He wished to know whether there's any chance we can reallocate or refarm some existing 2G spectrum or 4G spectrum for 5G use. In that way, we can control our 5G CapEx even better. 从总体上看，在6G出现以前，3、4、5G是会相当长时间地并存的，因为它们各自有各自的任务。所以这个频谱，当然就是3G可以做得很薄，4G在城市里边，如果是5G投资，就是它的价格迅速下降的时候，是可以考虑4G也可以减频一些频率用到5G上去。当然总体上都要保留一定的频率来保证这三个，3、4、5同时并存，可能是一个相当长的时间。谢谢。 Yeah. Chairman would like to point out that before 6G come, he expect the 3G, 4G, 5G will coexist for a relatively long period of time. Although the company could streamline the 3G network, in case the 5G equipment price come down in a rapid manner, the company can also streamline the 4G. But he expects the 3G, 4G, 5G network will coexist for a relatively long period of time. Great, thank you. Once again, ladies and gentlemen, to ask a question, please press star 1. We have a follow-up question from Zhang Hongyun from Ren zhou zhi chan. Please go ahead. 范宇飞：好，我追问一个问题，就是您前面提到今年其实运营利润增长比较慢，主要是因为咱们投入比较多。我想知道未来咱们这个投入的节奏，咱们现在投入的业务会不会吃掉咱们未来的利润增长，导致咱们比如说明年后年整个利润的增长比较慢。这是第一个问题。然后第二个我追问一下，就是我比较了一下国内的三家运营商的应收账款减值这一块，发现咱们减值的比例是最高的。我想请教一下这一块是为什么？ Yeah. Two questions from the investor. The first one is regarding, he has understood about the investment in the innovative business, driving down the profit, and he wants to know whether it will also similarly affect the next year and the year after profit. Also about the accounts receivable, the decrease pace is faster compared with the other two operators. 首先，我要说清楚的是，我们的联营公司的收入可能和其他公司的不一样。我们这些公司都是这个连续性的收入，尽管它不被记录在EBITDA里边，但实际上它和我的主营收入是一样的，每年、每个月、每天都在发生。这个收入是稳定的，而且持续在增长的。正因为根据这个收入的保障，我们才敢于在创新业务上多投一点，那么我们将来的增长发展得更好。我建议分析员们，你们不要老死盯住一个这个EBITDA margin。实际上如果你只盯住它，我要完成很容易。我刚才讲我可以现在把今后要创新的部分全给它停掉，那我立马EBITDA变得很好。但是企业的后劲在哪里？你们想过没有？它能不能创造更多的联营公司，能够持续地为我们带来新的价值？因为我们这个联营公司它的收入不是一次性的，是每个月都在发生，而且每个月都在持续地增长。我刚才讲的，比如说我们举例的我们的这个招联公司，今年的利润增长100%，它已经10多亿的利润，今年上半年增长了176%。所以我想在这样的情况下，它持续稳定地增长，我们为什么不可以超前再去布局一些其他的领域呢？这是回答你的第一个问题。 Thank you, Chairman. Yeah. Chairman would like to share his view about this type of investment. First of all, he would like to point out that this non-operating income, for example, the share of net profit of associate company. In fact, they are not one off, they are sustainable. Given that their sustainable nature, we are in a good position to make investment for future growth. For example, in the new innovative businesses. Chairman would like to reiterate about his example. The company can easily enhance or increase the EBITDA margin if we are going to reduce the investment in the innovative business or investment in the future growth. However, it may not be in the best interest of the company. For example, the Merchant Union is a very successful associate or joint venture of the company. In fact, the profit increased year-over-year, and in the first half of this year it increased by 176%. In fact, it is good to nurture more and more this type of associate company to try to enhance the overall profitability of the company. 那么第二个问题，就是实际我们的这个坏账的拨备，我们就是把账龄比较长的，从我们的审慎、稳健的这个角度上讲，保守的角度上，我们今年是拨备多一点的。但实际它并不可能全部发生。相当一部分，因为有很多的项目，尤其是政府的项目，它的付款都是到年底，年底11、12月份。这个11、12月份它大量地会回款，所以我们先提前把它这个坏账的拨备提前多拨一部分。但是到年底，我们的历史的经验告诉我们，大概有三分之一，就是27亿里边有三分之一并不是坏账，它是会能够正常回款回来的。以往的历史经验是这样，今年我们认为也是这样的。所以这一块我们只是从审慎、安全的角度多拨了一部分。也这里向你们做一个解释。谢谢。 Chairman would also love to explain about the bad debts. The company has made provision for the bad debts in the first half of this year on a prudent basis. We have regard to the overdue amount. However, in the general historical experience, the government and enterprise customer, generally, we can strengthen the collection from them in November and December before the year end. From historical experience, the company believes that although we have made the provision of CNY 2.7 billion in the first half of this year, about one third of them, hopefully we can recover. Thank you. I think time has come for us to wrap up the meeting. Thanks again for attending the conference and thanks to the management. Should you have any more questions, please feel free to send it to our investor relation department. Thank you. 由于时间关系，这次会议到此结束了。再次感谢大家参加今天的会议。如果大家有任何问题，请随时发送到我们的投资者关系部。感谢董事长，还有各位领导。感谢感谢。谢谢各位。 Thank you. Amber, we are done with our conference call today. You may now conclude the call. Thank you. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.