China Tower secures IoT monitoring agreements
China Tower, a leading telecoms infrastructure service provider in China, has renewed multi-year framework agreements with two major players in the market: China Telecom and China Unicom.
These long-term contracts will help China Tower prepare for the enormous anticipated demand associated with providing IoT monitoring data and data analysis services. This demand is driven by increased business activity within the strategically important “Smart Tower” segment.
According to a filing with the Hong Kong Stock Exchange on August 7th, China Tower has entered into separate agreements with China Telecom and China Unicom. These contracts allow China Tower to lease crucial transmission and cloud resources, including telecoms electricity cables, equipment, cloud private lines, and cloud infrastructure.
The primary objective of these new framework agreements is to enhance China Tower’s capacity to manage the increasing demand for data transmission and analysis services associated with mid- and high-point IoT devices. These devices, which include video cameras, weather sensors, radar systems, and other monitoring equipment, form a critical part of China Tower’s “Two Wings” business strategy.
The “Smart Tower” segment, one of the two “wings” in this strategy, utilises advanced digital towers equipped with IoT devices to collect valuable data. This information is then provided to government agencies for monitoring and managing various sectors, including water resources, transportation, environmental protection, and emergency response systems. The second “wing” of the strategy focuses on energy services, encompassing battery exchange and power backup solutions.
Both framework agreements have taken immediate effect and will run until the end of 2026. They include annual transaction caps that reflect the anticipated growth in services. For the China Telecom agreement, yearly transactions are capped at CNY 150 million (approximately US$20.9 million), CNY 190 million, and CNY 230 million for 2024, 2025, and 2026, respectively. The China Unicom agreement sets caps at CNY 120 million, CNY 150 million, and CNY 180 million for the same period. These figures represent a significant increase from the CNY 84 million paid to China Telecom and CNY 73 million paid to China Unicom for leasing services in 2023.
China Tower’s first-half 2024 financial results, also released on August 7th, demonstrate the growing importance of its Smart Tower business. Revenue from this segment grew by 17.6% year-on-year, reaching CNY 3.9 million. Notably, 63% (CNY 2.5 million) of this revenue was generated from the tower monitoring business. The energy business, the other component of the “Two Wings” strategy, saw a 2.4% year-on-year growth, with revenues just exceeding CNY 2 million. Combined, the “Two Wings” segment accounted for 12.4% of China Tower’s operating revenue in the first half of 2024, marking a 0.9% increase compared to the same period last year.
The company’s overall financial performance for the first half of 2024 was robust. China Tower reported a net profit of CNY 5.33 billion, representing a 10.1% year-on-year increase, with a net profit margin of 11%. Operating revenue grew by 3.8%, reaching CNY 48.24 billion.
In terms of infrastructure expansion, China Tower added 9,000 new sites in the first half of 2024, bringing its total tower count to slightly over 2 million. Total tower tenancies increased by 84,000, reaching 3.73 million.
The growth in China Tower’s operations aligns with the broader expansion of 5G infrastructure across China. According to recent figures from China’s Ministry of Industry and Information Technology (MIIT), as reported by the state news agency Xinhua, Chinese telecom operators installed 540,000 5G base stations in the first half of 2024. This expansion brings the total number of 5G sites in the country to 3.92 million, accounting for one-third of all base stations in China.
For context, China Tower was established in 2014 as a joint initiative by China’s major telecoms operators to consolidate and optimise the construction of telecom infrastructure. The company’s current ownership structure reflects this collaborative approach, with China Mobile holding the largest share at 27.9%, followed by China Unicom and China Telecom at 20.6% and 20.5%, respectively. The state-owned asset manager China Reform holds a 4.4% stake, with the remaining shares publicly traded.
(Photo by Hanny Naibaho)
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