Major Chinese telecom companies are scaling back investments and increasing dividends in line with government directives.
Capital Spending Decreases Across Telecom
China’s leading telecom operators, including China Telecom, China Mobile, and China Unicom, have announced significant reductions in capital spending for 2024 and 2025. China Telecom is reducing capital expenditure by 5% in 2024 and 11% in 2025, focusing on AI infrastructure and 6G. China Mobile plans to cut its budget by 9% in 2024 and another 8% in 2025. China Unicom declared a major decrease, reducing investments by 17% in 2024. These adjustments indicate a shift towards enhancing data network and cloud capabilities.
Share Price Increases Are the Focus
All three companies have reported increases in dividends in compliance with government policies promoting higher returns for shareholders. China Mobile aims to raise its dividend ratio to over 75% by 2026, with a 5.4% increase in 2024 distributions. China Telecom increased dividends by 11%, while China Unicom made the largest jump with a 20% increase.
Government's Investment Strategies Directive
The business strategy change towards higher dividends and lower capital spending aligns with directives from China's State-owned Assets Supervision and Administration Commission (SASAC). Since 2022, the government has emphasized improving market value and corporate governance of state enterprises to strengthen the country's stock market.
China's telecom giants are preparing for the next technological leap with 6G development while aligning with government recommendations to boost market value and shareholder returns.
