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DIGITALISING the FUTURE
DIGITALISING the FUTURE
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ANNUAL REPORT 2020
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About
China Telecom
China Telecom Corporation Limited (“China Telecom” or the “Company”, a joint stock
limited company incorporated in the People’s Republic of China with limited liability,
together with its subsidiaries, collectively the “Group”) is a large-scale and leading
integrated intelligent information services operator in the world, providing wireline & mobile
telecommunications services, Internet access services, information services and other
value-added telecommunications services primarily in the PRC. As at the end of 2020, the
Company had mobile subscribers of about 351 million, wireline broadband subscribers of
about 159 million and access lines in service of about 108 million. The Company’s H shares
are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Hong
Kong Stock Exchange” or ”HKSE”).
Contents
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86
2020 Milestones
Corporate Information
Financial Highlights
Chairman’s Statement
120 Table of the ESG
Indicators
125
Independent Assurance
Report
126 Appendix – ESG
Biographical Details of Directors,
Reporting Guide Index
Senior Management and
Supervisors
Management’s Discussion and
Analysis
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38
Business Review
Financial Review
Report of the Directors
Report of the Supervisory
Committee
Recognition and Awards
Environmental, Social and
Governance Report
88 Corporate Social
Responsibility Report
112 Human Resources
Development Report
130 Corporate Governance
Report
160 Independent Auditor’s Report
164 Consolidated Statement of
Financial Position
166 Consolidated Statement of
Comprehensive Income
168 Consolidated Statement of
Changes in Equity
169 Consolidated Statement of
Cash Flows
171 Notes to the Consolidated
Financial Statements
245 Financial Summary
247 Shareholder Information
Corporate Culture
February
Quickly launched 5G services for Huoshenshan and
Leishenshan hospitals and developed 5G remote diagnostics
and consultation platforms to support Epidemic prevention
and control.
April
R e l e a s e d “ 5 G R C S W h i t e P a p e r ” j o i n t l y w i t h o t h e r
telecommunications operators and industry partners.
May
China Telecom’s six targeted counties for poverty alleviation
and offer of support and assistance, namely Yanyuan County
in Sichuan, Muli County in Sichuan, Shufu County in Xinjiang,
Tianlin County in Guangxi, Banbar County in Tibet and Jiuzhi
County in Qinghai, have all been lifted out of poverty.
July
Implemented the “Cloudification and Digital Transformation”
strategy to push forward the high-quality development.
September
China Telecom received one national group commendation
and two national individual commendations at Awards
Ceremony for COVID-19 Fighters.
October
Commenced comprehensive reform in government and
enterprise business field and built a vertically integrated
business group serving government and enterprise customers.
November
Pioneered 5G standalone (SA) scale commercialisation and
rolled out customised 5G network.
Took the lead in the industry to launch 5G cloud mobile
phone, namely “e-Surfing One”.
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002
2020 MILESTONESChina Telecom Corporation Limited Annual Report 2020 BOARD OF DIRECTORS
Executive Directors
SUPERVISORY COMMITTEE
Sui Yixun (Chairman and Shareholder Representative)
Ke Ruiwen (Chairman and Chief Executive Officer)
Zhang Jianbin (Employee Representative)
Li Zhengmao (President and Chief Operating Officer)
Dai Bin (Employee Representative)
Xu Shiguang (Shareholder Representative)
You Minqiang (Shareholder Representative)
LEGAL REPRESENTATIVE
Ke Ruiwen
COMPANY SECRETARY
Wong Yuk Har
INTERNATIONAL AUDITOR
Deloitte Touche Tohmatsu
LEGAL ADVISERS
Haiwen & Partners
Freshfields Bruckhaus Deringer
Sullivan & Cromwell LLP
HONG KONG STOCK EXCHANGE
STOCK CODE
728
COMPANY WEBSITE
www.chinatelecom-h.com
Shao Guanglu
Liu Guiqing
Zhu Min (Chief Financial Officer and
Secretary of the Board)
Non-Executive Director
Chen Shengguang
Independent Non-Executive Directors
Tse Hau Yin, Aloysius
Xu Erming
Wang Hsuehming
Yeung Chi Wai, Jason
AUDIT COMMITTEE
Tse Hau Yin, Aloysius (Chairman)
Xu Erming
Wang Hsuehming
Yeung Chi Wai, Jason
REMUNERATION COMMITTEE
Xu Erming (Chairman)
Tse Hau Yin, Aloysius
Wang Hsuehming
NOMINATION COMMITTEE
Wang Hsuehming (Chairlady)
Tse Hau Yin, Aloysius
Xu Erming
003
CORPORATE INFORMATIONChina Telecom Corporation Limited Annual Report 2020 Operating revenues (RMB millions)
EBITDA1 (RMB millions)
EBITDA margin2
Net profit3 (RMB millions)
Capital expenditure (RMB millions)
Free cash flow4 (RMB millions)
Total debt/Equity5
Earnings per share (RMB)
Dividend per share (HK$)
2018
377,124
104,207
29.7%
21,210
74,940
22,457
27.9%
0.2621
0.125
2019
375,734
117,215
32.8%
20,517
77,557
21,725
22.4%
0.2535
0.125
2020
393,561
118,880
31.8%
20,850
84,800
14,276
14.7%
0.2576
0.125
1
2
3
4
5
EBITDA is calculated based on operating revenues minus operating expenses plus depreciation and amortisation.
EBITDA margin is calculated based on EBITDA divided by service revenues.
Net profit represents profit attributable to equity holders of the Company.
Free cash flow is calculated based on EBITDA minus capital expenditure, income tax and depreciation charge for right-of-use assets other than
land-use-rights.
Total indebtedness refers to interest-bearing debts excluding lease liabilities. Total equity represented equity attributable to equity holders of the
Company.
Forward-Looking Statements
Certain statements contained in this report may
be viewed as “forward-looking statements”
within the meaning of Section 27A of the U.S.
Securities Act of 1933 (as amended) and Section
21E of the U.S. Securities Exchange Act of
1934 (as amended). Such forward-looking
statements are subject to known and unknown
risks, uncertainties and other factors, which may
cause the actual performance, financial condition
or results of operations of the Company to be
materially different from any future performance,
financial condition or results of operations implied
by such forward-looking statements. In addition,
we do not intend to update these forward-looking
statements. Further information regarding these
risks, uncertainties and other factors is included
in the Company’s most recent Annual Report
on Form 20-F filed with the U.S. Securities and
Exchange Commission (the “SEC”) and in the
Company’s other filings with the SEC.
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For further information, please browse
our website at www.chinatelecom-h.com
FINANCIAL HIGHLIGHTSChina Telecom Corporation Limited Annual Report 2020 OPERATING REVENUES
(RMB millions)
2020
2019
2018
EBITDA
(RMB millions)
2020
2019
2018
NET PROFIT
(RMB millions)
2020
2019
2018
DIVIDEND PER SHARE
(HK$)
2020
2019
2018
393,561
375,734
377,124
118,880
117,215
104,207
20,850
20,517
21,210
0.125
0.125
0.125
005
FINANCIAL HIGHLIGHTSChina Telecom Corporation Limited Annual Report 2020 10
1
01
Cloudification
for Endowment
服務收入
⇧2.0%
連續7年
高於行業
平均
移動用戶
規模約
3.36億戶
躍居
國內行業
第2位
1
0
1
800
0 9
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Ke Ruiwen Chairman and Chief Executive Officer
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1
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127
1
300
6
1
Dear
Shareholders,
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008
2020 was an extraordinary year. Facing the outbreak of the COVID-19 Epidemic
(“Epidemic”), the Company coordinated its efforts in Epidemic prevention and
control with operation and development, firmly seized opportunities emerging
from the digital transformation of the economy and society, and promoted the
“Cloudification and Digital Transformation” strategy on all fronts. The Company
also strengthened its sci-tech innovation capabilities and deepened corporate
reforms, achieving steady growth of its operating results, while continuing to
share the high-quality development results of the Company with its shareholders
and the society.
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 1
1
0
127
1
6
300
0
1
1
0
1
1
0
1
1
0
1
800
0 9
0
1
1
1
服務收入
⇧2.0%
連續7年
高於行業
平均
移動用戶
規模約
3.36億戶
躍居
Service revenues 4.5%
國內行業
Surpassing industry’s
第2位
average growth rate over
several consecutive years
OVERALL RESULTS
In 2020, operating revenues of the Company amounted to RMB393.6 billion, representing
an increase of 4.7% over last year. Service revenues1 amounted to RMB373.8 billion,
representing an increase of 4.5% over last year, surpassing the industry’s average growth
rate2 over several consecutive years. Of which, mobile service revenues amounted to
RMB181.7 billion, representing an increase of 3.5% over last year. Wireline service revenues
amounted to RMB192.1 billion, representing an increase of 5.5% over last year. EBITDA3
amounted to RMB118.9 billion, representing an increase of 1.4% over last year. Net profit4
amounted to RMB20.9 billion, representing an increase of 1.6% over last year, while basic
earnings per share were RMB0.26. Capital expenditure was RMB84.8 billion and free cash
flow5 was RMB14.3 billion. The Company’s financial position remained robust.
Taking shareholders’ returns into full consideration, alongside the Company’s profitability,
cash flow level and capital needs for its future development, the Board of Directors has
decided to recommend at the 2020 Annual General Meeting that a final dividend equivalent
to HK$0.125 per share for the year 2020 to be declared. Going forward, the Company will
continue to create shareholder value, while fully balancing the cash flow required for the
long-term development of the Company with returns to shareholders.
1
2
3
4
5
Service revenues are calculated based on operating revenues minus sales of mobile terminals, sales of
wireline equipment and other non-service revenues.
MIIT’s statistical communique of the communications industry in 2020: telecommunications revenue grew
by 3.6% year-on-year in 2020.
EBITDA is calculated based on operating revenues minus operating expenses plus depreciation and
amortisation.
Net profit represents profit attributable to equity holders of the Company.
Free cash flow is calculated based on EBITDA minus capital expenditure, income tax and depreciation
charge for right-of-use assets other than land-use-rights.
009
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 5G package subscribers
86.50 Mil
Penetration 24.6%
BUSINESS PERFORMANCE
In 2020, technologies such as 5G, cloud and artificial intelligence (AI) integrated
to bring about fusion with robust development in digital economy. The Company
built up new information infrastructure with 5G and cloud as the core, and
stimulated increasing and diversified customer demand for integrated intelligent
information services.
Rapid 5G penetration with subscriber scale and value further expanded
Leveraging “5G + e-Surfing Cloud”, the Company provided its users with an
excellent network experience as well as differentiated applications and services.
The Company established a 5G member privilege system unique to China
Telecom, launched exclusive privileges related to network, security, services
and etc. The Company also cooperated with more than 30 top application
partners to launch over 100 eco-privileges. Leveraging the features of high
access speed and low latency, as well as edge computing capabilities of its
5G network, the Company rolled out a number of applications featuring 5G,
including e-Surfing Cloud Drive, e-Surfing Ultra HD, Colour Ringback Tone with
Video, e-Surfing Cloud VR and e-Surfing Cloud Game. The Company took
the lead in the industry to launch 5G cloud mobile phone, namely “e-Surfing
One”, which leveraged the capabilities of cloud-network integration to break
through performance bottlenecks for devices and facilitated the accelerating
popularisation of 5G devices.
The Company’s 5G consumer service achieved a promising start, enabling a
scale expansion of its mobile subscriber market with value. As of the end of
2020, the total number of the Company’s mobile subscribers reached 351
million, representing a net addition of 15.45 million and expanding its market
share to 22.0%. The number of 5G package subscribers reached 86.50
million with a penetration rate of 24.6%. The total number of subscribers for
applications featuring 5G exceeded 150 million, while the year-on-year decline
for mobile ARPU continued to narrow.
010
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 Convergence and upgrade of Smart Family services
with its value contribution gradually becoming
prominent
The Company comprehensively upgraded its family
informatisation services. The Company promoted its “Triple-
Gigabit” access service comprising 5G + Fibre Broadband
+ WiFi6 as well as its Whole-home WiFi service. The
Company also optimised the Internet surfing experience of
its subscribers, designed the e-Surfing Webcam product
which integrates functionalities such as security, video,
and wireless access as a whole. The Company stimulated
families’ demand for cloud services and developed the DICT
products and services portfolio for Smart Family to meet
the increasingly diversified scenario-based demand from
family customers. As a result, the value of the Company’s
broadband access service was restored, with the value
contribution from Smart Family services becoming
prominent.
In 2020, the number of the Company’s broadband
subscribers reached 159 million. Revenue from wireline
broadband access amounted to RMB71.9 billion,
representing an increase of 5.1% over last year. Broadband
access ARPU was RMB38.4, up by 0.8% over last year.
The declining trend in both revenue and ARPU was turned
around. Revenue from Smart Family reached RMB11.1
billion, representing an increase of 37.5% over last year. The
broadband blended ARPU6 reached RMB44.4, representing
an increase of 4.2% over last year. The value contribution
from Smart Family continued to enhance.
Chairman Ke Ruiwen presented at China
Telecom’s 5G Innovation and Cooperation
Conference
Broadband revenue and
ARPU turned around
37.5%
Smart
Family revenue
Value
contribution of
Smart Family
increasingly
prominent
6
Broadband blended ARPU is calculated based on the sum of monthly average revenues from
broadband access, e-Surfing HD and Smart Family applications and services divided by the
average number of broadband subscribers.
011
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 ≈1,900
customers signed
contracts for 5G
industry applications
>1,100
use cases launched
Accelerating development of Industrial Digitalisation7 maintaining an
upward trend
Capturing opportunities emerging from the digital transformation of the economy
and society, the Company integrated emerging information technologies such as
5G and cloud, established a digitalised platform, re-packaged its fundamental
capabilities to form new services, and accelerated its technological endowment.
The Company pioneered 5G standalone (SA) scale commercialisation and rolled
out customised 5G network to meet the differentiated demands from vertical
industries for low latency, wide-area connectivity and network security, among
others. Leveraging the technical features of 5G “Super Uplink”8, edge cloud,
and the Internet of Things (IoT), the Company built a series of benchmarks
for various vertical industries such as industrial Internet, smart energy, smart
healthcare and smart parks, and gradually launched 5G innovative applications
such as remote control, machine vision, and Automated Guided Vehicles
(AGV). As of the end of 2020, the Company had signed contracts with a total of
nearly 1,900 customers for its 5G industry applications, with more than 1,100
use cases being launched. Focusing on the scenario-based demands from
enterprises’ cloud migration, the Company continued to optimise its resource
deployment for IDC and cloud. The Company strengthened its unified cloud
service capabilities comprising public, private, dedicated and hybrid clouds,
conducted proprietary research and development (R&D) of the key core
technologies for e-Surfing Cloud, collaborated with more than 500 partners, and
established a cloud product portfolio integrating cloud, data and intelligence.
In 2020, revenue from the Company’s Industrial Digitalisation reached RMB84.0
billion, representing an increase of 9.7% year-on-year, maintaining the industry-
leading position in terms of revenue size and market share.
COMPREHENSIVE IMPLEMENTATION
OF “CLOUDIFICATION AND DIGITAL
TRANSFORMATION” STRATEGY
In 2020, the Company sped up its cloud & network convergence based
digital upgrade, established the new development pattern from an all-round
perspective and strived to enhance its market competitiveness and corporate
vitality.
7
8
Industrial Digitalisation includes Industry Cloud, IDC, Network Dedicated Line, Internet of Things (IoT), Internet Finance, system integration services
and other informatisation services.
The development of the 5G “Super Uplink” (UL Tx switching) was led by China Telecom. It was incorporated into the 5G R16 global unified
specification by 3GPP on 3 July 2020.
012
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 79
Industrial Digitalisation
revenue 9.7%
Maintaining
industry-leading
position in terms of
revenue size and
market share
Strengthening the distribution of cloud-network capabilities and building
new infrastructure based on cloud-network integration
The Company adhered to the strategic direction of “Cloud central, Network
around, Network adaptive to cloud, Cloud and network as one”, and sped up
the construction of new infrastructure based on cloud-network integration.
The Company continued to promote 5G network co-building and co-sharing.
The number of 5G base stations in use exceeded 380,000. The Company
also took a global lead in achieving scale commercialisation of 5G SA network,
and launched customised 5G networks including “Wide-area”, “Adjacent” and
“Wingspan”. At the same time, the Company conducted 4G network co-sharing
and activated approximately 170,000 co-shared 4G base stations throughout
the year, which further optimised the network coverage, as well as achieved
savings in investment and operations and maintenance costs. In line with the
overall “2+4+31+X+O” deployment, the Company accelerated the construction
of e-Surfing Cloud and IDC, with the number of cloud resource pools exceeding
100 and the number of IDC cabinets exceeding 420,000. Of which, about 80%
of cabinets were deployed in the four major regions, namely Beijing-Tianjin-
Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macau, and Shaanxi-
Sichuan-Chongqing. Leveraging its massive amount of exchange buildings at
the edge, the Company commenced the development of multi-access edge
computing (MEC) and forged capabilities of cloud-edge coordination. The
Company pushed forward the upgrade of its Gigabit fibre broadband network
in 280 cities and completed the construction of five major regional ROADM9
transmission backbone network with nationwide coverage, while expanding the
coverage of its superior OTN network for government and enterprise customers.
Revenue from Overall Cloud10 services reached RMB13.8 billion, with the
Company continuing to rank at forefront in terms of the market share in public
cloud in China.
9
10
ROADM represents Reconfigurable Optical Add-Drop Multiplexer.
Overall Cloud includes Industry Cloud, Family Cloud and access service directly related to cloud, etc.
013
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 Building a digitalised platform to empower digital transformation
The Company strengthened the planning of its digitalised platform to empower
the internal and external digital transformation. Internally, the Company pushed
forward the digitalisation of its operation. The Company explored the potential
demand for 5G and Smart Family by leveraging AI and Big Data. The coverage of
targeted marketing exceeded 85%, significantly enhancing marketing resources’
effectiveness in driving incremental revenue. The Company accelerated the
construction of its new-generation cloud-network operating system to support
the scale commercialisation of 5G SA and enhance the efficiency of service
activation and product loading, while optimising its network quality and user
experience. The Company’s overall satisfaction rate11 maintained the industry-
leading position. The Company also conducted proprietary research of AI
algorithms to promote energy saving for 4G base stations, as well as to explore
smart energy saving solutions for 5G base stations. The Company gradually
expanded its trial scope and implemented smart energy saving initiatives for
IDC sites. As a result, the Company’s electricity cost as a percentage of service
revenues was at low level in the industry. Applying Big Data to achieve precision
investment and construction, the Company redeployed under-utilised 4G base
stations to busy or blind-spot areas, and enhanced the utilisation rate of its fibre
broadband ports.
Externally, the Company propelled cloud migration, the use of data and
intelligence injection for its customers, and built the technological foundation
for digitalised platform. Supported by its digitalised platform, the Company
aggregated its internal fundamental capabilities including communications,
security, AI, Big Data and IoT, among others, while combining external digital
ecology, to inject intelligence powered by data and provide endowment for
products and services, so as to propel industrial digitalisation and intelligent
transformation. The number of times for capabilities deployment of the whole
network exceeded 10 billion.
Promoting sci-tech innovation to accelerate the shift towards a sci-tech
company
The Company pushed forward its R&D system reforms and stimulated vitality
for sci-tech innovation. Focusing on its technological development objectives,
the Company increased its investment in R&D, elevated the input and output
efficiency of R&D resources, and strengthened its R&D teams in key areas such
11
12
Source is from the result of MIIT’s national user satisfaction survey on telecommunications
service quality.
Source of ranking in IDC industry: Internet Weekly
≈700 IDC sites
420k cabinets Nationwide
Industry No.112
014
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 IaaS
Public cloud IaaS14
Global No.7
Among telcos No.1
as cloud-network integration and security. The Company strengthened its own
problem-tackling efforts for core technologies, and reinforced its challenge-
confronting efforts for core technologies in key areas such as 5G, cloud-
network integration as well as network and information security. The Company
conducted proprietary R&D of e-Surfing Cloud 3.0 and mastered 20 core
technologies, including platform-as-a-service (PaaS). The Company commenced
scale commercialisation of e-Surfing Cloud content delivery networks (CDN)
and distributed storage systems. As a result, the Company’s competitiveness
in cloud computing market was effectively elevated. The Company’s e-Surfing
Cloud PaaS platform has been widely adopted by internal and external
customers, providing stable hosting for hundreds of millions of customers, while
CDN is serving a number of top Internet customers. The Company conducted
proprietary R&D for MEC platform and launched trial projects for top vertical-
industry customers. Through the gradual deployment of equipment such as
frequency-shifting MIMO indoor distribution systems, expandable small cells
and lightweight UPF13, the cost for 5G network construction was effectively
reduced. During the year, the Company completed 40 global standardisation
projects and filed 882 new patents. In GSMA, the Company led and organised
global industry chain in the development and release of “5G SA Implementation
Guidelines”. The Company also continued to optimise the planning of its sci-
tech innovation and collaborated with partners from the ecosystem to carry
out cooperative innovation among industry, academia and R&D institutes in the
fields of quantum communications and network security. The Company also has
strategic cooperation with universities and research institutes to jointly promote
research in key technologies and application innovation.
Deepening reforms on all fronts to inspire corporate vitality and
expanding cooperation to forge ecological competitiveness
The Company pushed forward reforms on all fronts, sped up the establishment
of a new customer-oriented institutional system and built a vertically integrated
business group serving government and enterprise customers. The Company
enhanced its capabilities of informatisation development as well as its operating
vitality in government and enterprise market, by sharing and integrating
fundamental capabilities, products and services on its digitalised platform.
13
14
UPF represents User Port Function.
Source of public cloud IaaS ranking: Released by IDC in 2019.
015
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 Overall satisfaction
The Company also orderly promoted reforms of its professional companies,
explored structural optimisation for system integration, and strengthened
core technological capabilities. System Integration company was included in
the “Science Reform Demonstration Action” list by SASAC15. The Company
commenced the restructuring of its cloud company, fully consolidated the cloud
resources, strengthened R&D, operation and ecological cooperation for its
cloud service, while also deepening the market-oriented mechanism reforms.
The Company streamlined its departments and personnel in the headquarters,
commenced reengineering for operation and management procedures, and
carried out reforms to grant and delegate power to provincial branches, with an
aim to enhance operating efficiency. The Company also innovated its market-
oriented talent recruitment mechanism, strengthened the recruitment and
promotion of young employees, built a team of sci-tech and innovative talents
and optimised its performance-based remuneration system, so as to enhance
employees’ vitality and efficiency. The Company strengthened its planning
of ecosystem, continued to expand its corporate boundaries and deepened
cooperation of the whole industry chain. Leveraging its core capabilities and
platform, the Company enriched the ecology for industries such as family
informatisation and vertical industries for government and enterprise customers.
The Company also strengthened cooperation and eco-aggregation with capital
financing, expanded innovative cooperation in emerging areas, and gradually
create an industry chain ecology with a larger scope and at a higher-level.
CORPORATE GOVERNANCE AND SOCIAL
RESPONSIBILITY
As a large-scale and leading full-service, integrated intelligent information
services provider in the world, the Company has long been insisting on
integrating environmental, social and governance responsibilities into its business
operation and management. The Company is also continuously enhancing
the respective risk management and internal control systems. By adhering to
excellent, prudent, and effective corporate governance principles, the Company
insists on compliance with laws and regulations, as well as standardised
and green operation. The Company proactively responded to changes in the
external environment to ensure its healthy and sustainable development and
safeguard the long-term interests of the Company and its shareholders. During
15
State-owned Assets Supervision and Administration Commission of the State Council.
Maintained
industry-leading
016
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 the past year, the Company’s continuous efforts and outstanding performance
have been widely recognised and highly acclaimed. The Company received
“ESG Leading Enterprise Award” from Bloomberg Businessweek and was
named “Most Honoured Company in Asia” for the 10th consecutive year by
Institutional Investor. The Company was also awarded the “Platinum Award –
Excellence in Environmental, Social and Governance” for the 12th consecutive
year by The Asset. In addition, the Company was awarded “The Best of Asia –
Icon on Corporate Governance” for the 13th time by Corporate Governance Asia.
Moreover, the Company was named “No.1 Best Telecommunications Company
in Asia” by FinanceAsia.
With the outbreak of the Epidemic in 2020, the Company quickly completed
the construction of 5G network and cloud platform for Huoshenshan and
Leishenshan hospitals, among others, and built the widely-acclaimed “cloud
supervision” live broadcast platform. The Company also developed 5G remote
diagnostics and consultation platforms to support Epidemic prevention and
control. The Company launched “Operation Warm Spring”, which comprised
of nine types of informatisation services, to support the resumption of work
and production for the society. The Company also provided care for its
employees and dedicated itself to safeguarding the safety and well-being
of its employees based locally and overseas. In recognition of these efforts,
China Telecom received one national group commendation and two national
individual commendations. The Company proactively shouldered the poverty
alleviation work, vigorously promoted poverty reduction in areas of industry,
employment, consumption and education. The Company continued to promote
poverty reduction in areas of network, communications and informatisation.
The targeted counties and villages which received partner assistance to poverty
reduction from our companies at different levels have all been lifted out of
poverty. The Company proactively created a favourable operating environment,
promoted value enhancement for the industry, further implemented Speed
Upgrade and Tariff Reduction and Mobile Number Portability, and safeguarded
network and information security. The Company also initiated informatisation
service support designed specifically for SME customers, while helping small,
medium and micro enterprises, as well as self-employed merchants to reduce
their operational burdens. The Company also successfully completed tasks
such as emergency communications and communications assurance for key
projects.
017
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 OUTLOOK
2021 marks the first year of China’s “14th Five-Year Plan”.
Entering the new stage of its development, the Company
will insist on new development philosophy and establish
new development pattern. Seizing the opportunities
brought by the robust development of digital economy
as well as the accelerated digital transformation of the
Finally, on behalf of the Board of Directors, I would like to
take this opportunity to express our sincere appreciation
to all our shareholders and customers for their ongoing
support. I would also like to express our sincere thanks to
all our employees for their hard work and contributions.
Furthermore, I would like to extend our heartfelt gratitude
towards Mr. Chen Zhongyue and Mr. Wang Guoquan
for their outstanding contributions during their tenure as
society, the Company will comprehensively and deeply
directors of the Company.
promote “Cloudification and Digital Transformation”
strategy. The Company will continue to deepen reforms,
commence the initial public offering and listing of shares
in the domestic capital market, innovate systems and
mechanisms, enhance corporate and employees’ vitality,
expand ecological cooperation and enhance its sustainable
development capabilities. The Company will strengthen
sci-tech innovation centred around problem-tackling of
core technologies and accelerate the integration of 5G,
cloud and AI to develop new information infrastructure.
The Company will also stimulate the ever-migrating and
evolving demands from the society for informatisation
Ke Ruiwen
Chairman and Chief Executive Officer
Beijing, China
under converged scenarios, continue to build its digitalised
9 March 2021
platform, and proactively empower internal and external
digital transformation. The Company will also proactively
shoulder its social responsibility to promote rural
revitalisation, and facilitate the construction of Cyberpower,
digital China and smart society. The Company will
share the results of its high-quality development with
shareholders and customers and continue to create value
for the society.
018
CHAIRMAN’S STATEMENTChina Telecom Corporation Limited Annual Report 2020 MR. KE RUIWEN
Age 57, is an Executive Director, the Chairman of the Board of Directors
and Chief Executive Officer of the Company. He joined the Board of
Directors of the Company in May 2012. Mr. Ke obtained a doctorate
degree in business administration (DBA) from the ESC Rennes School
of Business. Mr. Ke served as Deputy Director General of Jiangxi Posts
and Telecommunications Administration, Deputy General Manager of
Jiangxi Telecom, Managing Director of the Marketing Department of
the Company and China Telecommunications Corporation*, General
Manager of Jiangxi Telecom, Managing Director of the Human
Resources Department of the Company and China Telecommunications
Corporation, Executive Vice President, President and Chief Operating
Officer of the Company, Vice President and President of China
Telecommunications Corporation and the Chairman of Supervisory
Committee of China Tower Corporation Limited. He is also the Chairman
of China Telecommunications Corporation. Mr. Ke has extensive
experience in management and the telecommunications industry.
MR. LI ZHENGMAO
Age 58, is an Executive Director, the President and Chief Operating
Officer of the Company. He joined the Board of Directors of the Company
in May 2020. Mr. Li graduated from Sichuan University with a major in
radio electronics and received a master degree in radio technology from
Chengdu Telecommunications Engineering Institute and a doctorate
degree in communication and electronic system of radio engineering
from Southeast University. Mr. Li served as an Executive Director and
Vice President of China Unicom Limited, a Director and Vice President
of China United Telecommunications Corporation, a Vice President of
China Mobile Limited which is listed on the Main Board of the HKSE, a
Vice President and General Counsel of China Mobile Communications
Group Co., Ltd. and a Director and Vice President of China Mobile
Communication Co., Ltd., a Non-Executive Director of China
Communications Services Corporation Limited which is listed on the
Main Board of the HKSE and a Vice Chairman of True Corporation Public
Company Limited which is listed on the Stock Exchange of Thailand.
Mr. Li is also a Director and the President of China Telecommunications
Corporation. Mr. Li has extensive experience in management and the
telecommunications industry.
*
Now known as “中國電信集團有限公司”, the controlling shareholder (within the meaning of Part XV of the Securities and Futures Ordinance of
Hong Kong) of the Company, holds approximately 70.89% of the issued share capital of the Company.
019
China Telecom Corporation Limited Annual Report 2020BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORS MR. SHAO GUANGLU
Age 57, is an Executive Director of the Company. He joined the Board
of Directors of the Company in May 2020. Mr. Shao is a professor
level senior engineer. He graduated and received master degrees
in engineering and economics from Harbin Institute of Technology
and a doctorate degree in management from Nankai University. Mr.
Shao served as a Deputy General Manager of China United Network
Communications Group Company Limited, an Executive Director and
Senior Vice President of China Unicom (Hong Kong) Limited which
is listed on the Main Board of the HKSE, a Senior Vice President of
China United Network Communications Limited which is listed on the
Shanghai Stock Exchange, a Director and Senior Vice President of
China United Network Communications Corporation Limited, a Non-
Executive Director of China Communications Services Corporation
Limited, China Tower Corporation Limited and PCCW Limited, all of
which are listed on the Main Board of the HKSE, a member of the
board of directors of Open Networking Foundation, a member of the
strategy committee of GSM Association and a Vice President of China
Information Technology Industry Federation. Mr. Shao is currently
a Director of China Telecommunications Corporation and a Deputy
Director of Communications Science and Technology Committee of the
Ministry of Industry and Information Technology of the People’s Republic
of China. Mr. Shao has extensive experience in management and the
telecommunications industry.
MR. ZHANG ZHIYONG
Age 55, was appointed as an Executive Vice President of the Company
on 10 July 2018. Mr. Zhang is a senior engineer. He graduated from the
Changchun Institute of Posts and Telecommunications with a bachelor
degree in radio engineering. He also received a master degree in control
engineering from Yanshan University and a master of management
degree from BI Norwegian School of Management. Mr. Zhang served as
Managing Director of the Sideline Industrial Management Department of
China Telecommunications Corporation, President and Executive Director
of China Communications Services Corporation Limited which is listed
on the Main Board of the HKSE, General Manager of Xinjiang branch and
Beijing branch of China Telecom Corporation Limited. He is also a Vice
President and Chief Network Security Officer of China Telecommunications
Corporation, the Chairman of the board of directors and an Executive
Director of China Communications Services Corporation Limited and a
Non-Executive Director of China Tower Corporation Limited, both are listed
on the Main Board of the HKSE. Mr. Zhang has extensive experience in
management and the telecommunications industry.
020
BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORSChina Telecom Corporation Limited Annual Report 2020 MR. LIU GUIQING
Age 54, is an Executive Director and Executive Vice President of
the Company. He joined the Board of Directors of the Company in
August 2019. Mr. Liu is a professor-level senior engineer. He received
a doctorate degree in engineering science from National University of
Defense Technology. Mr. Liu served as Deputy General Manager and
General Manager of China Unicom Hunan branch and General Manager
of China Unicom Jiangsu provincial branch. He is also a Vice President
of China Telecommunications Corporation, a Deputy Director General
of China Institute of Communications and a Director of Global System
for Mobile communications Association (GSMA). Mr. Liu has extensive
experience in management and the telecommunications industry.
MADAM ZHU MIN
Age 56, is an Executive Director, Executive Vice President, Chief Financial
Officer and Secretary of the Board of the Company. She joined the
Board of Directors of the Company in October 2018. Madam Zhu is a
senior accountant. She received a master degree in system engineering
from the Faculty of Management Engineering at the Beijing Institute of
Posts and Telecommunications and a doctorate degree in business
administration from the Hong Kong Polytechnic University. Madam Zhu
served as Managing Director of Finance Department of China Telecom
(Hong Kong) Limited, Managing Director of Finance Department of China
Mobile (Hong Kong) Group Limited, Deputy Chief Financial Officer and
Managing Director of Finance Department of China Mobile Limited which
is listed on the Main Board of the HKSE, Director General of Finance
Department of China Mobile Communications Corporation, Deputy
Chief Accountant and Director General of Finance Department of China
Mobile Communications Group Co., Ltd. and a Director of Shanghai
Pudong Development Bank Co., Ltd. which is listed on the Shanghai
Stock Exchange. She is currently the Chief Accountant of China
Telecommunications Corporation. Madam Zhu has extensive experience
in finance, management and the telecommunications industry.
021
BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORSChina Telecom Corporation Limited Annual Report 2020 MR. CHEN SHENGGUANG
Age 57, is a Non-Executive Director of the Company. He joined the
Board of Directors of the Company in May 2017. Mr. Chen graduated
from Zhongnan University of Economics with a major in finance and
accounting, and obtained a postgraduate degree in economics from
Guangdong Academy of Social Sciences and a master degree in
business administration (MBA) from Lingnan College of Sun Yat-sen
University. Mr. Chen is currently the Director and General Manager of
Guangdong Rising Holdings Group Co., Ltd.* (one of the domestic
shareholders of the Company). Mr. Chen served as the Manager of
Finance Department and Deputy General Manager of Guangdong Foreign
Trade Import & Export Corporation, Head of Finance Department,
Assistant to General Manager and Chief Accountant of Guangdong
Guangxin Foreign Trade Group Co., Limited, a Director of FSPG Hi-
Tech Co., Ltd. which is listed on the Shenzhen Stock Exchange, a Non-
Executive Director of Xingfa Aluminium Holdings Limited which is listed
on the Main Board of the HKSE, a Director of Guangdong Silk-Tex
Group Co., Ltd., the Chief Accountant and Deputy General Manager
of Guangdong Guangxin Holdings Group Ltd.. Mr. Chen has extensive
experience in finance and corporate management.
*
A substantial shareholder of the Company within the meaning of Part XV of the Securities and Futures Ordinance.
022
BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORSChina Telecom Corporation Limited Annual Report 2020 MR. TSE HAU YIN, ALOYSIUS
Age 73, is an Independent Non-Executive Director of the Company.
He joined the Board of Directors of the Company in September 2005.
Mr. Tse is currently an Independent Non-Executive Director of CNOOC
Limited, Sinofert Holdings Limited, SJM Holdings Limited and China
Huarong Asset Management Co., Ltd., all of which are listed on the
Main Board of the HKSE. Mr. Tse is also an Independent Non-Executive
Director of OCBC Wing Hang Bank Limited (formerly known as “Wing
Hang Bank Limited”, which was listed on the Main Board of the HKSE
until October 2014). From 2004 to 2010, he was an Independent Non-
Executive Director of China Construction Bank Corporation, which is
listed on the Main Board of the HKSE. From 2005 to 2016, Mr. Tse was
also an Independent Non-Executive Director of Daohe Global Group
Limited (formerly known as “Linmark Group Limited”), which is listed on
the Main Board of the HKSE. Mr. Tse was appointed as an Independent
Non-Executive Director of CCB International (Holdings) Limited, a wholly
owned subsidiary of China Construction Bank Corporation in March
2013. He is also a member of the International Advisory Council of the
People’s Municipal Government of Wuhan. Mr. Tse is a fellow of the
Institute of Chartered Accountants in England and Wales, and the Hong
Kong Institute of Certified Public Accountants (“HKICPA”). Mr. Tse is
a past President and a former member of the Audit Committee of the
HKICPA. He joined KPMG in 1976, became a partner in 1984 and retired
in March 2003. Mr. Tse was a Non-Executive Chairman of KPMG’s
operations in China and a member of the KPMG China advisory board
from 1997 to 2000. Mr. Tse is a graduate of the University of Hong Kong.
023
BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORSChina Telecom Corporation Limited Annual Report 2020 PROFESSOR XU ERMING
Age 71, is an Independent Non-Executive Director of the Company.
He joined the Board of Directors of the Company in September 2005.
Professor Xu is a Vice Chairman of the Chinese Enterprise Management
Research Association. He is entitled to the State Council’s special
government allowances. Professor Xu served as a professor, Ph.D.
supervisor of the Graduate School and Dean of Business School at the
Renmin University of China, a professor and Dean of Business School
of Shantou University, and was an Independent Supervisor of Harbin
Electric Company Limited and an Independent Non-Executive Director of
Comtec Solar Systems Group Limited, both are listed on the Main Board
of the HKSE. Over the years, Professor Xu has conducted research in
areas related to strategic management, innovation and entrepreneurship
management, and has been responsible for research on many subjects
put forward by the National Natural Science Foundation, the National
Social Science Foundation, and other authorities at provincial and ministry
level. He has received many awards such as the Ministry of Education’s
Class One Excellent Higher Education Textbook Award, the State-Level
Class Two Teaching Award and the National Excellent Course Award.
Professor Xu has been awarded the Fulbright Scholar of U.S.A. twice
and the visiting scholar of McGill University, Canada. Professor Xu was
previously a lecturer at the New York State University at Buffalo, U.S.A.,
the University of Scranton, U.S.A., the University of Technology, Sydney,
the Kyushu University, Japan, Panyapiwat Institute of Management,
Thailand and the Hong Kong Polytechnic University.
024
BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORSChina Telecom Corporation Limited Annual Report 2020 MADAM WANG HSUEHMING
Age 71, is an Independent Non-Executive Director of the Company. She
joined the Board of Directors of the Company in May 2014. Madam Wang
received a bachelor of arts degree from the University of Massachusetts
and attended Columbia University. She was a Senior Advisor and former
Chairman of BlackRock China. She was also the former Chairman of
China at Goldman Sachs Asset Management. She joined Goldman
Sachs in 1994, became a Partner in 2000 and an Advisory Director from
2010 to 2011. With nearly 30 years of experience in financial services,
she participated in pioneering efforts in China’s economic reform and
development. She was instrumental in advising Ministry of Posts and
Telecommunications and Ministry of Information Industry (now known as
Ministry of Industry and Information Technology) in the privatisations and
listings of its mobile and fixed line businesses. She also participated in
advising appropriate operators in strategic investments by international
telecom companies. The early cross-border financings of aircraft and
other capital equipment in China’s aviation sector, as well as the separate
listings of national airlines, and important provincial and municipal credit
restructurings also formed part of Madam Wang’s understanding of
China’s economic growth in the past three decades.
025
BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORSChina Telecom Corporation Limited Annual Report 2020 MR. YEUNG CHI WAI, JASON
Age 66, is an Independent Non-Executive Director of the Company.
He joined the Board of Directors of the Company in October 2018. Mr.
Yeung is currently the Group Chief Compliance and Risk Management
Officer of Fung Holdings (1937) Limited and its listed companies
in Hong Kong, an Independent Non-Executive Director of Bank of
Communications Co., Ltd, which is listed on the Main Board of the
HKSE and the Shanghai Stock Exchange and a member of Hospital
Authority Board of Hong Kong. Mr. Yeung has extensive experience in
handling legal, compliance and regulatory matters and previously worked
in the Securities and Futures Commission of Hong Kong, law firms and
enterprises practising corporate, commercial and securities laws. Mr.
Yeung served as a Director and the General Counsel of China Everbright
Limited, which is listed on the Main Board of the HKSE and was also a
partner of Woo, Kwan, Lee, & Lo.. He acted as the Board Secretary of
BOC Hong Kong (Holdings) Limited which is listed on the Main Board
of the HKSE, from 2001 to 2011 and concurrently acted as the Board
Secretary of Bank of China Limited which is listed on the Main Board of
the HKSE and the Shanghai Stock Exchange, from 2005 to 2008. He
also served as the Deputy Chief Executive (Personal Banking) of Bank of
China (Hong Kong) Limited from April 2011 to February 2015. Mr. Yeung
received a bachelor degree in social sciences from the University of Hong
Kong. He then graduated from The College of Law, United Kingdom
and received a bachelor degree in law and a master degree in business
administration from the University of Western Ontario, Canada.
SUPERVISORS
MR. SUI YIXUN
Age 57, is a Shareholder Representative Supervisor and the Chairman of the Supervisory Committee of the Company.
He joined the Supervisory Committee of the Company in May 2015. Mr. Sui is currently a Supervisor of Tianyi Telecom
Terminals Company Limited and a Supervisor of China Tower Corporation Limited which is listed on the Main Board
of the HKSE. Mr. Sui received a bachelor degree from Beijing Institute of Posts and Telecommunications and a master
degree in business administration from Tsinghua University. Mr. Sui served as Deputy General Manager of China Telecom
Shandong branch, Deputy General Manager of the Northern Telecom of China Telecommunications Corporation, General
Manager of China Telecom Inner Mongolia Autonomous Region branch and the Managing Director of audit department
of the Company. Mr. Sui is a senior economist and has extensive experience in operational and financial management in
the telecommunications industry.
026
BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORSChina Telecom Corporation Limited Annual Report 2020 MR. ZHANG JIANBIN
Age 55, is an Employee Representative Supervisor of the Company. He joined the Supervisory Committee of the
Company in October 2012. Mr. Zhang is currently the Deputy Managing Director of the Legal Department (Compliance
Management Department) of the Company and the Deputy General Counsel of China Telecommunications Corporation.
Mr. Zhang graduated from the Law School of Peking University in 1989 and received a LLM degree. He also had an
EMBA degree from the Guanghua School of Management at Peking University in 2006. He previously worked at the
Department of Policy and Regulation of the Ministry of Posts and Telecommunications (“MPT”) and the Directorate
General of Telecommunications of the MPT. Mr. Zhang has extensive experience in corporate legal affairs.
MR. DAI BIN
Age 52, is an Employee Representative Supervisor of the Company. He joined the Supervisory Committee of the
Company in May 2020. Mr. Dai serves as the Vice Chairman of the Labour Union of China Telecommunications
Corporation. Mr. Dai is a senior economist. He graduated from Xiamen University and received a bachelor degree in
Chinese language and literature. He also obtained an EMBA degree from the Guanghua School of Management at
Peking University. He served as a Deputy Managing Director of the Office of the Board of Directors of the Company and
the Deputy Managing Director of the General Affairs Office (Office of the Board of Directors and Security Department)
of China Telecommunications Corporation. Mr. Dai has extensive experience in operational management in the
telecommunications industry.
MR. XU SHIGUANG
Age 41, is a Shareholder Representative Supervisor of the Company. He joined the Supervisory Committee of the
Company in October 2018. Mr. Xu is currently the Deputy General Manager of Inner Mongolia Autonomous Region
branch of the Company. Mr. Xu received a bachelor degree in auditing and a master degree in accounting from the
Nankai University. Mr. Xu served at various positions in internal control and auditing at China Telecommunications
Corporation for many years and was the Director of general office of audit department of the Company. Mr. Xu is a
member of the Chinese Institute of Certified Public Accountants and a Certified Internal Auditor with extensive experience
in internal control and auditing.
MR. YOU MINQIANG
Age 47, is a Shareholder Representative Supervisor of the Company. He joined the Supervisory Committee of the
Company in May 2020. Mr. You serves as a Deputy Director of the Organisation Department (Human Resources
Department) of Zhejiang Provincial Financial Development Co., Ltd. (one of the domestic shareholders of the Company)
and the Chairman of the Supervisory Committee of Zhejiang Nongdu Agricultural Products Co., Ltd.. Mr. You is a senior
economist. He graduated from Hangzhou University and received a bachelor degree in education. Mr. You served
in Armed Police Hangzhou Command School and Zhejiang Provincial Financial Holdings Co., Ltd.. He has extensive
experience in the field of human resources.
027
BIOGRAPHICAL DETAILS OF DIRECTORS,SENIOR MANAGEMENT AND SUPERVISORSChina Telecom Corporation Limited Annual Report 2020 AI to Inject
Intelligence
1
0
1
1
0
0
0
1
0
018
10 10
1
1
0
The following table sets out the key operating data for 2018, 2019 and 2020:
Mobile subscribers
Unit
Million
2018
303.00
2019
335.57
2020
change
2020
over 2019
351.02
4.6%
–4.4%
42.3%
3.5%
2.9%
50.9%
–2.7%
Mobile voice usage
Million minutes
827,724
820,346
784,485
Handset data traffic
Wireline broadband subscribers
e-Surfing HD subscribers
IoT connected devices
Access lines in service
kTB
Million
Million
Million
Million
14,073
145.79
105.35
106.93
116.48
24,370
153.13
112.62
157.41
110.85
34,690
158.53
115.92
237.60
107.88
Customers trying out VR application
Cloud gaming application attracted
customers
030
China Telecom Corporation Limited Annual Report 2020MANAGEMENT’S DISCUSSION AND ANALYSISBusiness Review KEY OPERATING PERFORMANCE
IN 2020
In 2020, the Company continued adhering to its
customer-oriented approach, coordinated its efforts
in Epidemic prevention and control with operation and
development, seized the opportunity emerging from
the digital transformation of the economy and society
to actively push forward its “Cloudification and Digital
Transformation” strategy and accelerate its cloud-network
integration. The Company also continued to enhance sci-
tech innovation capabilities and deepen corporate reforms.
As a result, the Company made a significant progress in
its high quality development. The Company’s operating
revenues grew by 4.7% year-on-year to RMB393.6 billion,
of which service revenues increased by 4.5% year-on-year
to RMB373.8 billion, a growth rate that remains higher
than the industry average.
Thriving 5G business development
Mobile subscribers
net add
15.45Mil
Market share
gain
maintained
5G drove development of personal informatisation service;
scale of mobile subscriber base continued to expand
Adhering to customer-oriented operating principles
and backed by “5G + e-Surfing Cloud”, the Company
forged competitive advantages with enhanced network
experience and differentiated services, expedited the
upgrade of its 5G applications, optimised its 5G member
privilege scheme and enhanced personal informatisation
services, which led to solid expansion of its mobile
subscriber base. The Company also adhered to proactive
marketing strategy and strengthened precision marketing
capabilities empowered by data. By targeting the actual
usage scenarios and needs of customers across different
segments, the Company continued to optimise product
convergence and customer upgrade strategies to
expand the scale of its 5G subscriber base. Regarding
5G application upgrade, the Company hastened the
upgrades to e-Surfing-branded ultra HD, cloud games,
cloud computers and cloud VR, among other applications.
The Company also pioneered to launch “e-Surfing One”,
its proprietary brand of 5G cloud mobile phone, facilitating
innovative device-application integration. The Company
improved customer perceptions by enriching its 5G
member privilege scheme, rolling out exclusive privileges
regarding network, security and services, and expanding
portfolio of concessionary privileges with cooperation
partners for common use cases in daily living, education,
and health. The Company strengthened terminal operation
by fully leveraging its sales channels and sales points
as well as broadening its Orange Instalment Payment
Service, to meet consumers’ demand for upgrading to 5G
devices and to foster popularity of 5G terminals. In 2020,
the Company’s mobile subscriber base reached 351
million, representing a net addition of 15.45 million, with
market share gain maintained. The number of 5G package
subscribers reached 86.50 million, with a penetration
rate of 24.6%. The scale of its 5G members and featured
application users expanded rapidly, while total handset
data traffic and mobile service revenue continued to grow.
031
MANAGEMENT’S DISCUSSION AND ANALYSISBusiness ReviewChina Telecom Corporation Limited Annual Report 2020 Mobile Subscribers
(Millions)
5G Package
Mobile
2020
86.50
351.02
2019
4.61
335.57
Wireline Broadband Subscribers
(Millions)
e-Surfing HD
Broadband
2020
2019
115.92
112.62
158.53
153.13
Expedited family informatisation services upgrade with
AI functions and interactive experience of its e-Surfing
overall value of broadband business increased
Webcams and boosted scale development by use case-
The value contributed by the Company’s family
based marketing for “safe villages” campaign, leading
informatisation business continued to grow as the
to a 505% year-on-year growth of e-Surfing Webcam
C o m p a n y f o c u s e d o n m e e t i n g t h e d e m a n d f o r
subscribers. Furthermore, the Company built whole-home
digitalisation and intelligentisation from family customers,
intelligent solutions by enriching the portfolio of terminals
by continuing to enhance the quality of its family
and applications in functional use cases such as home
connectivity services and upgrading its Smart Family
security surveillance, living space cosiness, education
product and service ecosystem. With the “Triple Gigabit”
and entertainment. The number of devices connected to
access service (i.e. 5G + Fibre Broadband + WiFi6),
the Smart Family Platform increased by more than 60%.
the Company enhanced the customer experience of
In 2020, the number of broadband subscribers for the
family services by promoting convergence of 5G and
Company reached 159 million with a net addition of 5.40
family services and accelerating the speed upgrades of
million, while broadband access ARPU recorded positive
family broadband and WiFi services. By upgrading the
year-on-year growth. Revenues from Smart Family
specifications of customised Whole-home WiFi terminals
reached RMB11.1 billion, representing a year-on-year
and launching Gigabit network customisation service,
increase of 37.5%. Smart Family business also propelled
the number of Whole-home WiFi subscribers increased
a year-on-year increase of 4.2% for broadband blended
by 117% year-on-year. The Company strengthened the
ARPU to RMB44.4.
Promote convergence of 5G and
family services with 5G+Fibre
Broadband+WiFi6
"Triple Gigabit"
access
032
MANAGEMENT’S DISCUSSION AND ANALYSISBusiness ReviewChina Telecom Corporation Limited Annual Report 2020 Management presented at new media forum
Reform and innovation of informatisation services
for government and enterprise customers deepened,
revenue size of Industrial Digitalisation maintained
an industry-leading position
Firmly seizing the opportunities emerging from the digital
transformation of the economy and society and leveraging
5G, cloud and other emerging technologies, the Company
accelerated the development of the Industrial Digitalisation
business by constructing digitalised platform, repackaging
fundamental capabilities, and stimulating new demand
for integrated intelligent information services with supply-
side reform. The Company was the first to achieve large-
scale commercialisation of 5G SA, and launched 5G
customised network service with three modes called
“Wide-area”, “Adjacent” and “Wingspan” to meet
different needs of vertical industry customers for features
such as low latency, massive number of connections,
network security and cloud-edge coordination. The
Company also pushed ahead with its efforts to develop
benchmark projects in industrial Internet, new media,
smart healthcare, transportation and logistics and other
areas, while also gradually exploring use cases such as
remote control, HD live broadcasting and machine vision.
Furthermore, the Company stepped up the optimisation of
its cloud resource structure, expedited problem-tackling
efforts in the key core technologies of e-Surfing Cloud,
and built secure, reliable, and trustworthy cloud-network
integration products that meet the needs of customers for
different scenarios of cloud usage. In order to strengthen
capabilities for professional services and operations, the
Company set up dedicated business groups
to serve customers in different sectors.
Leveraging on its digitalised platform, the
Company continued to enrich fundamental
capabilities and aggregate application
ecologies to support the digital transformation
of different industries. In 2020, revenue arising
from the Company’s Industrial Digitalisation
amounted to RMB84.0 billion, representing
an increase of 9.7% year-on-year. Revenue
from Overall Cloud services continued to grow
robustly, reaching RMB13.8 billion. The number of IoT
connected devices was nearly 240 million, with revenues
for IoT increasing by 16.1% year-on-year.
AR application transformed a shopping mall in
Shanghai to an aquarium
Scan QR code to
learn more about
China Telecom’s
5G 2B applications
033
MANAGEMENT’S DISCUSSION AND ANALYSISBusiness ReviewChina Telecom Corporation Limited Annual Report 2020 Actively pursuing digital transformation, with
continual efficiency improvements of operations and
management
Fully leveraging the advantages arising from corporate
i n f o r m a t i s a t i o n , t h e C o m p a n y e x p e d i t e d d i g i t a l
transformation, leading to continual improvement of the
quality and efficiency of operations and management. The
Company promoted the digital transformation of customer
operations by building customer operation teams
comprising relevant talents, strengthening data modelling
for different sales scenarios, improving data-driven insight
capabilities, utilising AI for marketing activities to match
customer needs with high precision. The coverage of
targeted marketing was over 85%, while the Company’s
customer retention and digital and intelligence marketing
capabilities also significantly enhanced. By pursuing
the digital transformation of sale channel operation, the
Company took advantage of online-offline integration,
accelerated the construction of a marketing service system
that integrates all channels, covers all use cases and
engages the cooperation of all ecologies. The Company’s
volume of online subscriber development increased by 7
percentage points year-on-year as it moved businesses
and services online. The Company also continued to
transform its physical outlet network to operate with chain
store-like and experience-oriented approach, providing
a continuously improving customer service perception
on scenario-based experience. The Company pressed
on with the digital transformation of customer services
by establishing a cloud-based platform for customer
service staff to provide service at home, promoting remote
video service counters, and fully utilising intelligent voice
navigation and online service contact points to assure
service quality during the Epidemic. Hence, the Company
enjoyed an industry-leading overall satisfaction.
Propelled live streaming economy development
Coverage of targeted
marketing
>85%
034
MANAGEMENT’S DISCUSSION AND ANALYSISBusiness ReviewChina Telecom Corporation Limited Annual Report 2020 Earnestly pushing forward network construction
while further expanding cloud-network integration
capabilities
The Company adhered to the strategic direction of “Cloud
central, Network around, Network adaptive to cloud,
Cloud and network as one”, and spurred the construction
of new infrastructure of cloud-network integration.
Through the pursuit of co-build and co-share, the
Company had over 380 thousand 5G base stations in use.
The Company also led the development and release of
“5G SA Implementation Guidelines”, while taking a global
lead in large-scale commercial use of 5G SA networks.
Guided by market demand, the Company continued
Develop smart manufacturing project
leveraging 5G technology
to expand fibre network coverage and deployment of
In 2020, following the outbreak of Epidemic, the Company
Gigabit optical broadband network. The Company also
united as one and adhered to the use of technology to
completed the construction of five major regional ROADM
support Epidemic control, actively mobilising equipment,
backbone networks covering the entire country, alongside
technology and personnel to assure the safe and stable
a new planar network for ChinaNet to further reduce
running of its network and business operations. The
cloud-network latency. The Company optimised overall
Company leveraged the advantages of 5G, cloud-
network layout according to “2+4+31+X+O” principle, and
network integration, AI and other areas to quickly set
accelerated the construction of e-Surfing Cloud and IDC. It
up 5G networks and cloud platforms at Huoshenshan
also commenced the development of MEC and promoted
Hospital, Leishenshan Hospital and other hospitals, and
cloud-edge coordination. The Company continued to push
launched “Operation Warm Spring”, which comprised
ahead with the construction of its next-generation cloud-
of 9 informatisation services such as cloud access for
network operating system and progressively established
SMEs, e-Surfing Cloud conferencing and e-Surfing HD
systems for unified cloud-network production and cloud-
Classroom. The Company also co-developed services
network business assurance.
such as the “Big Data Itinerary Card” and “Health QR
Code” with various collaborators across society to
support Epidemic prevention and the resumption of work,
production and schools effectively.
Built 5 major regional
ROADM backbone
network
covering the
entire country
035
MANAGEMENT’S DISCUSSION AND ANALYSISBusiness ReviewChina Telecom Corporation Limited Annual Report 2020 OUTLOOK FOR 2021
China embarks on its 14th Five-Year Plan in 2021. With
vast growth potential brought about by the flourishing
digital economy, the Company will enter a new stage of
development and carry out new development principles
and build new development models. The Company will
propel thorough execution of “Cloudification and Digital
Transformation” strategy on all fronts, deepen corporate
reforms, strengthen sci-tech innovation, construct high-
standard open ecologies, and make all-out efforts to
promote corporate high-quality development.
The Company will continue to insist on a customer-
oriented approach while proactively exploring the
informatisation services market. The Company will
expedite expansion in informatisation market for
government and enterprises, deepen the overall hierarchy
reform of vertical industry servicing teams, strengthen
capabilities of local system integration business teams and
dedicated specialist teams for different sectors, spur the
application and promotion of its fundamental capabilities
and proprietary digital platforms to support the upgrade
of industries, governance as well as consumption.
The Company will speed up expansion in the family
informatisation market, by providing whole-home
intelligent solutions leveraging cloud-network integration,
and pushing forward the upgrade of its family business
towards digitalised and intelligent services covering all
scenarios. The Company will also extend family services
to community and public services by interconnecting the
platforms of Smart Family, smart community and smart
city services. The Company will also speed up expansion
in the personal informatisation market by building an
agile, intelligent and closed-loop customer marketing and
servicing system, and offering a new model of “Platform
+ Applications + Ecosystem” for 5G-based personal
informatisation services on digital lifestyle, with an aim to
continuously fulfil customers’ digitalisation demand for a
better quality of living.
036
The Company will speed up digital transformation to
continue improving development efficiency and customer
experience. It will further accelerate digital transformation
internally and externally, with particular focus placed on
digitalisation of key elements, operations and service.
Internally, it will promote digital operations on all fronts by
leveraging digital means to facilitate precision investment
and cost controls to improve quality and efficiency as well
as energy saving and emission reduction. Externally, the
Company will leverage digitalised platform to aggregate
fundamental capabilities, enhance level of intelligence with
data to empower the digitalisation and intelligentisation of
products, services and industries.
Inject intelligence
powered by data and
provide endowment for
products and services
Overall network capability
was utilised
>10 billion times
MANAGEMENT’S DISCUSSION AND ANALYSISBusiness ReviewChina Telecom Corporation Limited Annual Report 2020 The Company will insist on co-creating and co-sharing
to pursue win-win outcome and build open and high-
standard cooperative ecologies. It will also nurture a
healthy industry ecology focusing on key areas, by
deepening inter-industry coordination, expanding scope
of co-building and co-sharing, as well as by broadening
cooperation on innovations in emerging areas. The
Company will boost the momentum for high-quality
development by continuously expanding platform-based
cooperation, and leverage core platform to aggregate
ecologies of 5G, family DICT, cloud, IoT, vertical industries
and supply chains, to smooth out the circulation among
and within key industries.
In 2021, the Company will adhere to new development
principles, step up sci-tech innovations, expedite
the construction of new information infrastructure by
integrated development of 5G, cloud and artificial
intelligence, continue to build digitalised platform based
on cloud-network integration and nurture open ecologies,
with a view to support the intelligentisation upgrade of
various industries and empower the digital transformation
of the entire society. The Company will work with various
parties to enjoy new digital lifestyles, and to capitalise the
new opportunities stemming from the digital economy
together.
Telemedicine became a benchmark
project for 5G application
Promoting
sci-tech innovation
Mastered
20 core technologies
including PaaS
037
MANAGEMENT’S DISCUSSION AND ANALYSISBusiness ReviewChina Telecom Corporation Limited Annual Report 2020 SUMMARY
In 2020, the Company coordinated Epidemic prevention
and control with operation and development, firmly seized
the opportunities emerging from the digital transformation
of the economy and society, comprehensively promoted
its Cloudification reform as well as digital transformation,
constructed new infrastructure based on cloud-network
integration, and continued to promote high-quality
development. The service revenues of the Company
continued to grow, and the growth rate has surpassed
Management chaired the work meeting on
auditing and risk control
the industry average for many years. Meanwhile, the
OPERATING REVENUES
Company actively supported the development of 5G and
Industrial Digitalisation service capabilities, continued to
The Company captured opportunities arising from the
strengthen precision cost control, effectively improved
digital transformation of the economy and society,
resource utilisation effectiveness, and achieved steady
leveraged the strengths of cloud-network service
growth in operating results. Operating revenues in 2020
capabilities, accelerated the development of Industrial
were RMB393,561 million, representing an increase
Digitalisation service, strived to promote effective scale
of 4.7% from year 2019; service revenues 1 were
development, and continued to maintain healthy growth
RMB373,798 million, representing an increase of 4.5%
in revenue and optimise the revenue structure. Operating
from year 2019; operating expenses were RMB364,921
revenues in 2020 were RMB393,561 million, representing
million, representing an increase of 5.3% from year 2019;
an increase of 4.7% from year 2019. Service revenues
profit attributable to equity holders of the Company was
were RMB373,798 million, representing an increase of
RMB20,850 million, representing an increase of 1.6%
4.5% from year 2019, of which mobile service revenues
from year 2019; basic earnings per share were RMB0.26;
were RMB181,687 million, representing an increase of
EBITDA2 was RMB118,880 million, representing an
3.5% from year 2019, and wireline service revenues were
increase of 1.4% from year 2019 and the EBITDA margin3
RMB192,111 million, representing an increase of 5.5%
was 31.8%.
from year 2019.
1
2
3
Service revenues are calculated based on operating revenues minus sales of mobile terminals (2020: RMB10,711 million; 2019: RMB9,364
million), sales of wireline equipment (2020: RMB5,430 million; 2019: RMB5,226 million), and other non-service revenues (2020: RMB3,622 million;
2019: RMB3,534 million).
EBITDA is calculated based on operating revenues minus operating expenses plus depreciation and amortisation. As the telecommunications
business is a capital intensive industry, capital expenditure, the level of gearing and finance costs may have a significant impact on the net profit of
companies with similar operating results. Therefore, we believe EBITDA may be helpful in analysing the operating results of a telecommunications
service provider such as the Company. Although EBITDA has been widely applied in the global telecommunications industry as a benchmark
to reflect operating performance, debt raising ability and liquidity, it is not regarded as a measure of operating performance and liquidity under
generally accepted accounting principles. It also does not represent net cash from operating activities. In addition, our EBITDA may not be
comparable to similar indicators provided by other companies.
EBITDA margin is calculated based on EBITDA divided by service revenues.
038
China Telecom Corporation Limited Annual Report 2020MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Review The following table sets forth a breakdown of the operating revenues for 2019 and 2020, together with their respective
rates of change:
(RMB millions, except percentage data)
Voice
Internet
Information and application services
Telecommunications network resource and
network equipment services
Others4
Total operating revenues
For the year ended
31 December
2020
40,866
208,019
96,885
22,623
25,168
393,561
2019
45,146
197,244
87,623
21,978
23,743
375,734
Rates of
change
-9.5%
5.5%
10.6%
2.9%
6.0%
4.7%
4
Other revenues in 2020 refers to the aggregate amount of sales of goods and others, included in revenues from contracts with customers, and
revenues from other sources.
Voice
rapid growth, and handset Internet access revenue
In 2020, having been continuously affected by the
was RMB130,655 million, representing an increase of
cannibalisation of mobile Internet services such as OTT,
6.0% from year 2019. The Company comprehensively
revenue from voice services was RMB40,866 million,
promoted the upgrade of family informatisation services,
representing a decrease of 9.5% from year 2019 and
and the value of broadband access business was
accounting for 10.4% of operating revenues. The revenue
reshaped. Wireline broadband revenue ceased to decline
structure was continuously optimised.
and rebounded. Wireline broadband revenue for the year
was RMB71,872 million, representing an increase of 5.1%
Internet
from year 2019.
In 2020, revenue from Internet services was RMB208,019
million, representing an increase of 5.5% from year 2019,
accounting for 52.9% of operating revenues. The 5G
consumer service achieved a promising start, enabling
the Company to achieve a valuable scale expansion
in the mobile subscriber market. Mobile ARPU decline
continuously narrowed, data traffic revenue maintained
039
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial ReviewChina Telecom Corporation Limited Annual Report 2020 Information and Application Services
Others
In 2020, the Company sped up the integration and
In 2020, other revenues were RMB25,168 million,
i n n o v a t i o n o f e m e r g i n g t e c h n o l o g i e s . I n d u s t r i a l
representing an increase of 6.0% from year 2019 and
Digitalisation service was developed at a quicker speed.
accounting for 6.4% of operating revenues. The increase
Revenue from information and application services was
was mainly due to the increase in the scale of mobile
RMB96,885 million, representing an increase of 10.6%
terminals sold.
from year 2019 and accounting for 24.6% of operating
revenues which benefited from the rapid development
OPERATING EXPENSES
of emerging businesses such as IDC, Industry Cloud,
e-Surfing HD and Internet Finance.
The Company seized the opportunity of 5G scale
development, accelerated digital transformation
Telecommunications Network Resource and
development, and continued to increase investment
Equipment Services
in government and enterprise business and research
In 2020, revenue from telecommunications network
and development system. Concurrently, the Company
resource and equipment services was RMB22,623 million,
internally strengthened the deployment of the digital
representing an increase of 2.9% from year 2019 and
platform, took various measures to continue to strengthen
accounting for 5.7% of operating revenues. The growth
precision cost control, further carried out multi-dimensional
was mainly due to favourable growth in revenues from
subdivision, and effectively improved the effectiveness of
cloud dedicated lines and IP-VPN service.
resource utilisation. In 2020, operating expenses were
RMB364,921 million, representing an increase of 5.3%
from year 2019. Operating expenses accounted for 92.7%
of operating revenues, representing an increase of 0.4
percentage point from year 2019.
The following table sets forth a breakdown of the operating expenses in 2019 and 2020 and their respective rates of
change:
(RMB millions, except percentage data)
Depreciation and amortisation
Network operations and support
Selling, general and administrative
Personnel expenses
Other operating expenses
Impairment loss on property, plant and equipment
For the year ended
31 December
2020
90,240
119,517
55,059
65,989
29,074
5,042
2019
88,145
109,799
57,361
63,567
27,792
Rates of
change
2.4%
8.9%
-4.0%
3.8%
4.6%
–
Not Applicable
Total operating expenses
364,921
346,664
5.3%
040
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial ReviewChina Telecom Corporation Limited Annual Report 2020 Depreciation and Amortisation
Personnel Expenses
In 2020, depreciation and amortisation amounted to
In 2020, personnel expenses amounted to RMB65,989
RMB90,240 million, representing an increase of 2.4%
million, representing an increase of 3.8% from year 2019
from year 2019 and accounting for 22.9% of operating
and accounting for 16.8% of operating revenues. The
revenues. The main reason for the increase was that
increase was mainly due to the Company’s continued
the Company increased its capital expenditure in order
introduction of high-tech talents and increased incentives
to support the scale construction of 5G network and
for front-line employees and high performance team,
constantly strengthen its competitive advantages in
so as to enhance employees’ vitality. Investments in
network.
personnel expenses are in line with the transformation
of the Company towards a sci-tech company in the
Network Operations and Support
future. Details of the number of employees, remuneration
In 2020, network operations and support expenses
policies and training programs have been included in
amounted to RMB119,517 million, representing an
the Environmental, Social and Governance report in this
increase of 8.9% from year 2019 and accounting for
annual report.
30.4% of operating revenues. The main reason for the
increase was because the Company’s continuously
Other Operating Expenses
optimisation in network quality while improving user
In 2020, other operating expenses amounted to
perception, actively supporting the development of 5G
RMB29,074 million, representing an increase of 4.6%
and Industrial Digitalisation service, and appropriately
from year 2019 and accounting for 7.4% of operating
increasing the deployment in network operation
revenues. The increase was mainly due to the increase in
expenditures.
the scale of mobile terminals sold.
Selling, General and Administrative
Impairment loss on property, plant and equipment
In 2020, selling, general and administrative expenses
Following the network evolution and the full coverage of
amounted to RMB55,059 million, representing a
4G and 5G scale deployment, the data traffic carried by
decrease of 4.0% from year 2019 and accounting for
the Company’s 3G network is rapidly shrinking and the
14.0% of operating revenues. Selling expenses were
cash flow from the continual use of 3G specific network
RMB45,447 million, representing a decrease of 6.2%
assets is expected to be so small and even become
from year 2019, which was mainly due to the Company
negligible. In accordance with the relevant requirements
seizing the development opportunities of Internet online
of International Financial Reporting Standard, the Group
business, accelerating the transformation of sales model
conducted an impairment test on the assets such as 3G
and the online and offline synergistic development, as
specific network assets and recognised an impairment
well as enhancing its big data online precision marketing
loss of RMB5,042 million at the end of 2020.
capabilities and continuously improving the input efficiency
of marketing resources. General and administrative
expenses amounted to RMB9,612 million, representing
an increase of 8.1% from year 2019, which was mainly
because of the Company’s active promotion of sci-
tech innovation, accelerated transformation to a sci-tech
company and increase in the investment in research and
development.
Selling expenses
6.2%
041
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial ReviewChina Telecom Corporation Limited Annual Report 2020 Net Finance Costs
Profit Attributable to Equity Holders of the Company
Seizing favourable market opportunities, the Company
The Company closely followed the digital transformation
implemented low-cost financing and reduced financing
progress of the economy and society, deepened reform
costs, continued to improve the capability of funds
and innovation, and strived to improve quality and increase
management, carried out sophisticated management
efficiency. In 2020, profit attributable to equity holders of
on financing, and competently controlled the scale of
the Company was RMB20,850 million, representing an
indebtedness. In 2020, net finance costs amounted to
increase of 1.6% from 2019.
RMB3,014 million, representing a decrease of 17.2%
from year 2019. Net exchange loss amounted to RMB163
million in year 2020 which was mainly due to change in
the exchange rate of RMB against USD.
PROFITABILITY LEVEL
Income Tax
CAPITAL EXPENDITURE AND CASH
FLOWS
Capital Expenditure
I n 2 0 2 0 , t h e C o m p a n y c o n t i n u a l l y p r o m o t e d
t h e 5 G n e t w o r k c o - b u i l d i n g a n d c o - s h a r i n g ,
sped up investment in 5G network construction, and
The Company’s statutory income tax rate is 25%. In
continuously improved 5G network coverage. Meanwhile,
2020, income tax expenses were RMB6,307 million while
the Company accelerated the construction of e-Surfing
the effective income tax rate was 23.0%. The difference
Cloud and IDC. In 2020, capital expenditure was
between the effective income tax rate and the statutory
RMB84,800 million, representing an increase of 9.3%
income tax rate was mainly due to the low tax rates
from year 2019.
enjoyed by some subsidiaries and some branches located
in the western region of China and the preferential tax
Cash Flows
policies enjoyed by the Company such as additional tax
The net increase in cash and cash equivalents for year
deduction on expenses for research and development
2020 was RMB3,076 million and the net increase in
proactively implemented by the Company. Meanwhile,
cash and cash equivalents for year 2019 was RMB4,098
income from investment in the associate company, China
million.
Tower Corporation Limited (“China Tower”), was not
subject to tax during the period of the investment held.
Net finance costs
17.2%
042
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial ReviewChina Telecom Corporation Limited Annual Report 2020 The following table sets forth the cash flow position in 2020 and 2019:
(RMB millions)
Net cash flow from operating activities
Net cash flow used in investing activities
Net cash flow used in financing activities
Net increase in cash and cash equivalents
For the year ended
31 December
2020
132,260
(87,077)
(42,107)
3,076
2019
112,600
(77,214)
(31,288)
4,098
In 2020, the net cash inflow from operating activities was
Working Capital
RMB132,260 million, representing an increase of 17.5%
The Company consistently upheld stable and prudent
from year 2019. This was mainly because the Company
financial principles and stringent fund management
strengthened the management of accounts receivable and
policies. At the end of 2020, the working capital (total
more subscribers applied the pre-paid method, so as to
current assets minus total current liabilities) deficit was
increase the net cash inflow from operating activities.
RMB187,126 million, representing a decrease in deficit
of RMB4,353 million from year 2019. The liquidity of the
In 2020, the net cash outflow used in investing activities
Company continuously improved. As at 31 December
was RMB87,077 million, representing an increase of
2020, the unutilised credit facilities were RMB244,326
12.8% from year 2019. The increase was mainly because
million (2019: RMB245,847 million). Given the stable net
of the increase in capital expenditure on supporting the
cash inflow from operating activities and sound credit
development of 5G and Industrial Digitalisation service.
record, the Company has sufficient working capital to
In 2020, the net cash outflow in financing activities was
and cash equivalents amounted to RMB23,684 million,
RMB42,107 million, representing an increase of 34.6%
among which cash and cash equivalents denominated in
from year 2019. The main reason was that the Company
Renminbi accounted for 73.0% (2019: 78.0%).
satisfy operational needs. At the end of 2020, cash
controlled the scale of indebtedness within a reasonable
level, resulting in decline in the cash inflow from loans.
043
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial ReviewChina Telecom Corporation Limited Annual Report 2020 ASSETS AND LIABILITIES
In 2020, the Company continued to maintain a solid financial position. At the end of 2020, the total assets increased
by 1.7% from RMB703,131 million at the end of 2019 to RMB715,096 million. Total indebtedness5 decreased to
RMB53,342 million from RMB79,022 million at the end of 2019. Gearing ratio6 decreased to 12.8% from 18.3% at the
end of 2019.
Indebtedness
The indebtedness analysis as at the end of 2020 and 2019 is as follows:
(RMB millions)
Short-term debt
Long-term debt maturing within one year
Long-term debt
Total indebtedness
For the year ended
31 December
2020
27,994
1,126
24,222
53,342
2019
42,527
4,444
32,051
79,022
As of the end of 2020, the total indebtedness was
As at 31 December 2020, neither the Company nor any of
RMB53,342 million, representing a decrease of
its subsidiaries pledged any assets as collateral for debt
RMB25,680 million from the end of 2019, which
(2019: Nil).
was mainly due to the continuous enhancement of
funds management, improving the centralised funds
Most of the revenues received and expenses paid in the
management and appropriately controlling the scale
course of our business were denominated in Renminbi,
of indebtedness. Of the total indebtedness, loans
therefore there were no significant risk exposures arising
denominated in Renminbi, US Dollars and Euro accounted
from foreign exchange fluctuations.
for 99.3% (2019: 99.4%), 0.4% (2019: 0.4%) and 0.3%
(2019: 0.2%), respectively. 90.1% (2019: 82.9%) of the
indebtedness are loans with fixed interest rates while the
remaining portion of the indebtedness represented loans
with floating interest rates.
Gearing ratio
5.5 p.p.
5
6
Total indebtedness refers to interest-bearing debts excluding lease liabilities.
Gearing ratio is calculated based on total indebtedness divided by total capital, while total capital is calculated based on total equity attributable to
equity holders of the Company plus total indebtedness.
044
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial ReviewChina Telecom Corporation Limited Annual Report 2020 Significant Investment
As at 31 December 2020, the Company’s external investments included interests in associates and equity instruments
at fair value through other comprehensive income, with carrying amounts of RMB40,303 million and RMB1,073 million,
respectively. The Company’s investment in China Tower, an associate of the Company, constituted its significant
investment. Details of such investment are set out below:
Company name
Stock code
Principal
businesses
As at 31 December 2020
Place of
incorporation
Investment
cost
(RMB millions)
Number of
shares held
Percentage of
shares held
Carrying
amount
(RMB millions)
Fair value
(RMB millions)
Size of fair
value relative
to total assets
of the Group
36,087 36,087,147,592
20.50%
37,463
34,625
4.8%
China Tower
0788.HK
China
Include the tower business and indoor
Distributed Antenna System (DAS)
business for telecommunications
industry, and the Trans-sector Site
Application and Information (TSSAI)
business and energy operation business
for customers from various industries
across wider society
As at 31 December 2020, the carrying amount of the Group’s interests in China Tower, an associate of the Company,
was RMB37,463 million, accounting for 5.2% of the Group’s total assets. In 2020, share of unrealised profits of China
Tower recognised by the Company amounted to RMB1,466 million, and dividends received amounted to RMB525
million. In the future, the Company can enjoy more fundamental network resources through China Tower. As one of the
shareholders of China Tower, it is expected that the Company can benefit from the long-term enhancement of profits
and values from China Tower.
Contractual Obligations
Contractual obligations as at 31 December 2020 are as follows:
(RMB millions)
Short-term debt
Long-term debt
Lease liabilities
Capital commitments
Total contractual obligations
Within
Between
Between
Total
1 year
1 to 2 years
2 to 5 years
Thereafter
28,417
27,805
43,896
20,199
120,317
28,417
1,410
14,449
20,199
64,475
–
17,838
13,363
–
–
5,609
12,110
–
–
2,948
3,974
–
31,201
17,719
6,922
Note: Amounts of short-term debt, long-term debt and lease liabilities include recognised and unrecognised interest payable, and are not discounted.
045
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial ReviewChina Telecom Corporation Limited Annual Report 2020 1
0
0
1
0
1
0
1
0
1
0
1
9
80
3
0
0
1
Data-driven
2
0
The Board of Directors (the “Board”) of China Telecom
DIVIDEND POLICY
Corporation Limited (the “Company”) hereby presents
its report together with the audited consolidated
financial statements of the Company and its subsidiaries
(collectively, the “Group”) prepared in accordance with the
International Financial Reporting Standards for the year
ended 31 December 2020.
PRINCIPAL BUSINESS
The principal business of the Company and the Group is the
provision of fundamental telecommunications businesses
including comprehensive wireline telecommunications
services, mobile telecommunications services, value-
added telecommunications businesses such as Internet
access services, information services and other related
services within the service area of the Group.
RESULTS
Results of the Group for the year ended 31 December
2020 and the financial position of the Group as at that
date are set out in the audited consolidated financial
statements on pages 164 to 244 of this annual report.
The Company attaches great importance to the
investment returns of shareholders, strives to maintain the
continuity and stability of the dividend policy taking into
the consideration the long-term interest and sustainable
development of the Company. The following factors will
be considered by the Company when formulating the
dividend distribution plan:
1.
the operating results and cash flow level of the
Company;
2.
the Company’s future business development
position and the capital expenditure requirements;
3.
capital needs and gearing ratio;
4.
the expectation from shareholders and investors;
and
5.
other factors that the Board deems appropriate.
The Board is responsible for formulating the dividend
distribution plan and will execute the relevant approval
procedures in accordance with relevant laws, rules,
regulations and articles of association of the Company
(the “Articles of Association”) before proceeding with
the distribution. In the future, the Company will strive for
improvement on profitability and at the same time continue
to deliver favourable dividend return for the shareholders.
048
China Telecom Corporation Limited Annual Report 2020REPORT OF THE DIRECTORS DIVIDEND
The Board proposes a final dividend in the amount
equivalent to HK$0.125 per share (pre-tax), totalling
approximately RMB8,403 million for the year ended
31 December 2020. The dividend proposal will be
submitted for consideration at the annual general meeting
to be held on Friday, 7 May 2021(the “2020 Annual
General Meeting”). Dividends will be denominated and
declared in Renminbi.
Dividends for holders of domestic shares and the investors
of the Shanghai Stock Exchange and Shenzhen Stock
Exchange (including enterprises and individuals) investing
in the H shares of the Company listed on the Hong
Kong Stock Exchange (the “Southbound Trading Link”)
(the “Southbound Investors”) will be paid in Renminbi,
whereas dividends for H share shareholders other than
Southbound Investors will be paid in Hong Kong dollars.
The relevant exchange rate will be the average median
rate of Renminbi to Hong Kong dollars as announced by
the People’s Bank of China for the week prior to the date
of declaration of dividends at the 2020 Annual General
Meeting. The proposed final dividends are expected to be
paid on Tuesday, 1 June 2021 upon approval at the 2020
Annual General Meeting.
Pursuant to the “Enterprise Income Tax Law of the
People’s Republic of China”, the “Implementation Rules
of the Enterprise Income Tax Law of the People’s
Republic of China” in 2008 and Guo Shui Han [2008]
No. 897, the Company shall be obliged to withhold and
pay 10% enterprise income tax when it distributes the
proposed 2020 final dividends to non-resident enterprise
A c c o r d i n g t o r e g u l a t i o n s b y t h e S t a t e T a x a t i o n
Administration (Guo Shui Han [2011] No. 348) and
relevant laws and regulations, if the individual H share
shareholders who are Hong Kong or Macau residents and
those whose country of domicile is a country which has
entered into a tax treaty with PRC stipulating a dividend
tax rate of 10%, the Company will finally withhold and
pay individual income tax at the rate of 10% on behalf
of the individual H share shareholders. If the individual H
share shareholders whose country of domicile is a country
which has entered into a tax treaty with PRC stipulating
a dividend tax rate of less than 10%, the Company will
finally withhold and pay individual income tax at the rate
of 10% on behalf of the individual H share shareholders.
If the individual H share shareholders whose country of
domicile is a country which has entered into a tax treaty
with PRC stipulating a dividend tax rate of more than 10%
but less than 20%, the Company will withhold and pay
individual income tax at the actual tax rate stipulated in the
relevant tax treaty. If the individual H share shareholders
whose country of domicile is a country which has entered
into a tax treaty with PRC stipulating a dividend tax rate
of 20%, or a country which has not entered into any tax
treaties with PRC, or under any other circumstances,
the Company will withhold and pay individual income
tax at the rate of 20% on behalf of the individual H share
shareholders. If those shareholders need to request
a refund of tax overpaid from the PRC tax authorities
through the Company in accordance with the relevant
requirements of the Announcement [2019] No. 35 of the
State Taxation Administration, they shall submit reports
and information as stipulated in the Announcement [2019]
No. 35 of the State Taxation Administration, and provide
supplemental information on their entitlements under the
shareholders of overseas H shares (including HKSCC
relevant treaties.
Nominees Limited, other corporate nominees or trustees,
and other entities or organisations) whose names appear
on the Company’s H share register of members on
Tuesday, 18 May 2021.
049
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 The Company will determine the country of domicile of the
Kong Stock Connect Pilot Programme (Cai Shui [2014]
individual H share shareholders based on the registered
No. 81)” and “Notice on Taxation Policies for Shenzhen-
address as recorded in the H share register of members of
Hong Kong Stock Connect Pilot Programme (Cai Shui
the Company on Tuesday, 18 May 2021 (the “Registered
[2016] No. 127)”, the Company shall withhold and pay
Address”). If the country of domicile of an individual H
individual income tax at the rate of 20% with respect to
share shareholder is not the same as the Registered
dividends received by the Mainland individual investors
Address or if the individual H share shareholder would like
for investing in the H shares of the Company listed on the
to apply for a refund of the additional amount of tax finally
Hong Kong Stock Exchange through the Southbound
withheld and paid, the individual H share shareholder shall
Trading Link. In respect of the dividends received by
notify and provide relevant supporting documents to the
Mainland securities investment funds investing in the
Company on or before Wednesday, 12 May 2021. Upon
H shares of the Company listed on Hong Kong Stock
examination of the supporting documents by the relevant
Exchange through the Southbound Trading Link, the
tax authorities, the Company will follow the guidance given
tax levied shall be ascertained by reference to the rules
by the tax authorities to implement relevant tax withholding
applicable to individual investors. The Company is not
and payment provisions and arrangements. Individual
required to withhold and pay income tax on dividends
H share shareholders may either personally attend or
derived by the Mainland enterprise investors under the
appoint a representative to attend to the procedures in
Southbound Trading Link, and such enterprises shall
accordance with the requirements under the tax treaties
report the income and make tax payment by themselves.
notice if they do not provide the relevant supporting
The record date for entitlement to the shareholders’ rights
documents to the Company within the time period stated
and the relevant arrangements of dividend distribution for
above.
the Southbound Investors are the same as those for the
Company’s H share shareholders.
For Southbound Investors (including enterprises and
individuals), the Shanghai branch of China Securities
The Company assumes no responsibility and disclaims
Depository and Clearing Corporation Limited and the
all liabilities whatsoever in relation to the tax status or
Shenzhen branch of China Securities Depository and
tax treatment of the individual H share shareholders and
Clearing Corporation Limited, as the nominees of the
for any claims arising from any delay in or inaccurate
investors of the Southbound Trading Link, will receive
determination of the tax status or tax treatment of the
all dividends distributed by the Company and will
individual H share shareholders or any disputes relating
distribute the dividends to the relevant investors under
to the tax withholding and payment mechanism or
the Southbound Trading Link through its depositary and
arrangements.
clearing system. According to the relevant provisions
under the “Notice on Taxation Policies for Shanghai-Hong
050
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 DIRECTORS AND SENIOR MANAGEMENT OF THE COMPANY
The following table sets out certain information of the Directors and senior management of the Company as at the date
of this report:
Name
Ke Ruiwen
Li Zhengmao
Shao Guanglu
Zhang Zhiyong
Liu Guiqing
Zhu Min
Chen Shengguang
Tse Hau Yin, Aloysius
Xu Erming
Wang Hsuehming
Yeung Chi Wai, Jason
Age
57
58
57
55
54
56
57
73
71
71
66
Position in the Company
Date of Appointment
Executive Director, Chairman and
30 May 2012*
Chief Executive Officer
Executive Director, President and
26 May 2020*
Chief Operating Officer
Executive Director
Executive Vice President
26 May 2020*
10 July 2018**
Executive Director and Executive Vice President
19 August 2019*
Executive Director, Executive Vice President,
26 October 2018*
Chief Financial Officer and Secretary of the Board
Non-Executive Director
23 May 2017*
Independent Non-Executive Director
9 September 2005*
Independent Non-Executive Director
9 September 2005*
Independent Non-Executive Director
29 May 2014*
Independent Non-Executive Director
26 October 2018*
*
**
Date of appointment as Director
Date of appointment as Senior Management
051
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 References are made to the announcements in relation
were re-elected as Directors of the seventh session of the
to the changes of Directors and senior management
Board at the 2019 Annual General Meeting; Mr. Tse Hau
published by the Company on the following dates: On
Yin, Aloysius, Mr. Xu Erming, Madam Wang Hsuehming
17 January 2020, Mr. Gao Tongqing resigned from
and Mr. Yeung Chi Wai, Jason (all as Independent Non-
his positions as an Executive Director and Executive
Executive Directors) were re-elected as Independent
Vice President of the Company due to change in work
Directors of the seventh session of the Board at the 2019
arrangement. On 23 March 2020, Mr. Li Zhengmao was
Annual General Meeting. Meanwhile, Mr. Li Zhengmao
appointed as the President and Chief Operating Officer of
and Mr. Shao Guanglu were elected as Directors of the
the Company and on the same date, Mr. Ke Ruiwen, an
seventh session of the Board at the 2019 Annual General
Executive Director, Chairman and Chief Executive Officer
Meeting. The appointment of the seventh session of the
of the Company ceased to act as the President and Chief
members of the Board lasts for a term of three years
Operating Officer of the Company. On 26 May 2020, the
from 26 May 2020 until the annual general meeting of
term of office of the sixth session of the members of the
the Company for the year 2022 to be held in year 2023.
Board of the Company expired on the date of the 2019
On 4 December 2020, Mr. Wang Guoquan resigned
Annual General Meeting of the Company (the “2019
from his positions as an Executive Director and Executive
Annual General Meeting”). The members of the sixth
Vice President of the Company due to change in work
session of the Board of the Company, namely, Mr. Ke
arrangement. On 19 January 2021, Mr. Chen Zhongyue
Ruiwen, Mr. Chen Zhongyue, Mr. Liu Guiqing, Madam Zhu
resigned from his positions as an Executive Director and
Min, Mr. Wang Guoquan (all as Executive Directors) and
Executive Vice President of the Company due to change
Mr. Chen Shengguang (as the Non-Executive Director)
in work arrangement.
052
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 SUPERVISORS OF THE COMPANY
The following table sets out certain information of the Supervisors of the Company as at the date of this report:
Name
Sui Yixun
Zhang Jianbin
Dai Bin
Xu Shiguang
You Minqiang
Age
57
55
52
41
47
Position in the Company
Date of Appointment
Chairman of the Supervisory Committee and
27 May 2015
Shareholder Representative Supervisor
Employee Representative Supervisor
16 October 2012
Employee Representative Supervisor
26 May 2020
Shareholder Representative Supervisor
26 October 2018
Shareholder Representative Supervisor
26 May 2020
The term of office of the sixth session of the members of the Supervisory Committee of the Company expired on the
date of the 2019 Annual General Meeting. Due to their age, Mr. Yang Jianqing, an Employee Representative Supervisor,
and Mr. Ye Zhong, a Shareholder Representative Supervisor, of the sixth session of the Supervisory Committee retired
from their positions as Supervisors of the Company upon the expiry of their term of office on the date of the 2019 Annual
General Meeting. Mr. Sui Yixun and Mr. Xu Shiguang, the Shareholder Representative Supervisors of the sixth session
of the Supervisory Committee, were re-elected as the Shareholder Representative Supervisors of the seventh session
of the Supervisory Committee at the 2019 Annual General Meeting. Mr. You Minqiang was elected as a Shareholder
Representative Supervisor of the seventh session of the Supervisory Committee at the 2019 Annual General Meeting.
Meanwhile, Mr. Zhang Jianbin and Mr. Dai Bin have been elected by the employees of the Company democratically as
the Employee Representative Supervisors of the seventh session of the Supervisory Committee. The appointment of the
seventh session of the members of the Supervisory Committee lasts for a term of three years from 26 May 2020 until the
annual general meeting of the Company for the year 2022 to be held in year 2023.
053
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 SHARE CAPITAL
The share capital of the Company as at 31 December 2020 was RMB80,932,368,321, divided into 80,932,368,321
shares of RMB1.00 each. As at 31 December 2020, the share capital of the Company comprised:
Class of Shares
Total number of Domestic shares
(held by the companies as follows):
China Telecommunications Corporation
Guangdong Rising Holdings Group Co., Ltd.
Zhejiang Provincial Financial Development Co., Ltd.
Fujian Investment & Development Group Co., Ltd
Jiangsu Guoxin Group Limited
Total number of H shares (including ADSs)
Total
Percentage (%)
of the total
number of shares
Number of shares as at
in issue as at
31 December 2020
31 December 2020
67,054,958,321
57,377,053,317
5,614,082,653
2,137,473,626
969,317,182
957,031,543
13,877,410,000
80,932,368,321
82.85
70.89
6.94
2.64
1.20
1.18
17.15
100.00
054
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 MATERIAL INTERESTS AND SHORT POSITIONS IN SHARES AND
UNDERLYING SHARES OF THE COMPANY
As at 31 December 2020, the interests or short position of persons who are entitled to exercise or control the exercise
of 5% or more of the voting power at the shareholders’ class meetings of the Company (excluding the Directors and
Supervisors) in the shares and underlying shares of the Company as recorded in the register required to be maintained
under Section 336 of the Securities and Futures Ordinance (the “SFO”) are as follows:
Approximate
Approximate
percentage of
percentage of
the total
the respective
number of
class of shares
shares
Number of
Name of shareholders
shares
Class of shares
China Telecommunications
57,377,053,317
Domestic shares
in issue
85.57%
in issue
Capacity
70.89% Beneficial owner
Corporation
(Long Position)
Guangdong Rising Holdings
5,614,082,653
Domestic shares
8.37%
6.94% Beneficial owner
Group Co., Ltd.
GIC Private Limited
(Long Position)
1,394,433,475
H shares
10.05%
1.72% Investment manager
(Long Position)
BlackRock, Inc.
976,141,887
H shares
7.03%
1.20% Interest of controlled corporation
(Long Position)
178,000
H shares
0.00%
0.00% Interest of controlled corporation
(Short Position)
The Bank of New York Mellon
955,258,598
H shares
6.88%
1.18% Interest of controlled corporation
Corporation
(Long Position)
499,924,300
H shares
3.60%
0.61% Interest of controlled corporation
(Short Position)
434,849,906
H shares
3.13%
0.53% Interest of controlled corporation
(Shares available
for lending)
Save as disclosed above, as at 31 December 2020, in the register required to be maintained under Section 336 of the
SFO, no other persons were recorded to hold any interests or short positions in the shares and underlying shares of the
Company.
055
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 DIRECTORS’ AND SUPERVISORS’
INTERESTS AND SHORT POSITIONS
IN SHARES, UNDERLYING SHARES
AND DEBENTURES
SERVICE CONTRACTS
None of the Directors or Supervisors of the Company has
entered into any service contract which is not determinable
by the Company within one year without payment of
As at 31 December 2020, none of the Directors and
compensation (other than statutory compensation).
Supervisors of the Company had any interests or short
positions in the shares, underlying shares or debentures
of the Company or its associated corporations (as
defined in Part XV of the SFO) as recorded in the register
EMOLUMENTS OF THE DIRECTORS
AND SUPERVISORS
required to be maintained under Section 352 of the SFO
Please refer to note 35 of the audited consolidated
or as otherwise notified to the Company and the Hong
financial statements for details of the emoluments of all
Kong Stock Exchange pursuant to the Model Code for
Directors and Supervisors of the Company in 2020.
Securities Transactions by Directors of Listed Issuers as
set out in Appendix 10 of the Listing Rules.
During the year 2020, the Company has not granted its
EMPLOYEES AND EMOLUMENT
POLICY
Directors or Supervisors, or their respective spouses or
The details of the Group’s remuneration policy are set
any of their respective minor child (natural or adopted)
out in the Human Resources Development Report in this
or on their behalf any rights to subscribe for the shares
annual report (pages 112 to 119 of this annual report).
or debentures of the Company or any of its associated
The details of share appreciation rights are set out in note
corporations and none of them has ever exercised any
47 of the audited consolidated financial statements.
such right to subscribe for the shares or debentures.
DIRECTORS’ AND SUPERVISORS’
INTERESTS IN TRANSACTIONS,
ARRANGEMENTS OR CONTRACTS
PURCHASE, SALE OR REDEMPTION
OF LISTED SECURITIES OF THE
COMPANY
In 2020, neither the Company nor any of its subsidiaries
Save for the service agreements entered into between the
has purchased, sold or redeemed any of the Company’s
Company and the Directors and Supervisors, for the year
listed securities.
ended 31 December 2020, the Directors and Supervisors
of the Company or their connected entities did not have
any material interest, whether directly or indirectly, in
any transactions, arrangements or contracts which was
significant to the Company’s business and which was
entered into by the Company, its parent company or any
of its subsidiaries or fellow subsidiaries.
056
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 ISSUE OF DEBENTURES
SUMMARY OF FINANCIAL
INFORMATION
In 2020, the Company successfully issued (i) one tranche
of company bonds to qualified investors with an aggregate
Please refer to pages 245 to 246 of this annual report for
principal amount of RMB2,000 million with a term of three
a summary of the operating results, assets and liabilities
years at an annual interest rate of 2.9% on the Shanghai
of the Group for each of the years in the five-year period
Stock Exchange on 10 March 2020; and (ii) 19 tranches
ended 31 December 2020.
of super short-term commercial papers with an aggregate
principal amount of RMB60.5 billion. The proceeds
were used to repay debt financing instruments due and
BANK LOANS AND OTHER
BORROWINGS
replenish the Company’s working capital in the course of
business operations. Please refer to note 20 of the audited
Please refer to note 20 of the audited consolidated
consolidated financial statements for details.
financial statements for details of bank loans and other
MATERIAL ACQUISITIONS AND
DISPOSALS
borrowings of the Group.
CHARGE ON ASSETS
For the year ended 31 December 2020, the Company had
As at 31 December 2020, no fixed assets was pledged to
no material acquisitions and disposals.
banks as loan security (31 December 2019: Nil).
PUBLIC FLOAT
CAPITALISED INTEREST
As at the date of this report, based on the information
Please refer to note 33 of the audited consolidated
that is publicly available to the Company and within the
financial statements for details of the Group’s capitalised
knowledge of the Directors, the Company has maintained
interest for the year ended 31 December 2020.
the prescribed public float under the Listing Rules and as
agreed with the Hong Kong Stock Exchange.
FIXED ASSETS
Please refer to note 4 of the audited consolidated financial
statements for movements in the fixed assets of the
Group for the year ended 31 December 2020.
057
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 RESERVES
SUBSIDIARIES AND ASSOCIATED
COMPANIES
Pursuant to Article 149 of the Articles of Association,
where the financial statements prepared in accordance
Please refer to note 9 and note 10 of the audited
with the China Accounting Standards for Business
consolidated financial statements for details of the
Enterprises and regulations materially differ from those
Company’s subsidiaries and the Group’s interests in
prepared in accordance with either the International
associated companies as at 31 December 2020.
Financial Reporting Standards or accounting standards
at a place outside the PRC where the Company’s shares
PERMITTED INDEMNITY
are listed, the distributable profit for the relevant fiscal year
shall be deemed to be the lesser of the amounts shown
For the year ended 31 December 2020 and as at the date
in those respective financial statements. Distributable
of approval of this report, the Company has arranged
reserves of the Company as at 31 December 2020,
appropriate insurance cover in respect of legal actions
calculated on the above basis and before deducting
against the directors of the Group.
the proposed final dividends for 2020, amounted to
RMB145,351 million.
CHANGES IN EQUITY
Please refer to note 27 of the audited consolidated
Please refer to the consolidated statement of changes in
financial statements for details of the movements in the
equity as contained in the audited consolidated financial
reserves of the Company and the Group for the year
statements of the year (page 168 of this annual report).
ended 31 December 2020.
EQUITY-LINKED AGREEMENTS
RETIREMENT BENEFITS
The Company did not enter into any equity-linked
financial statements for details of the retirement benefits
Please refer to note 46 of the audited consolidated
agreement, nor did any equity-linked agreement exist
provided by the Group.
during the year ended 31 December 2020.
PRE-EMPTIVE RIGHTS
DONATIONS
For the year ended 31 December 2020, the Group made
Articles of Association requiring the Company to offer new
charitable and other donations with a total amount of
shares to the existing shareholders in proportion to their
RMB13 million.
shareholdings.
There are no provisions for pre-emptive rights in the
058
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 MAJOR CUSTOMERS AND
SUPPLIERS
For the year ended 31 December 2020, revenue
generated from the five largest customers of the Group
accounted for an amount of less than 30% of the total
operating revenues of the Group.
For the year ended 31 December 2020, purchases from
the five largest suppliers of the Group accounted for an
amount of less than 30% of the total annual purchases of
the Group.
SHARE APPRECIATION RIGHTS
At the extraordinary general meeting held by the
Company on 26 October 2018, the adoption of the share
appreciation rights scheme (the “Scheme”) was approved
by the shareholders of the Company who also authorised
the Board to grant share appreciation rights to certain
instructed by the State-owned Assets Supervision
and Administration Commission of the State Council
of China (“SASAC”)) (the “Proposal”). According to the
Proposal, the Company proposed to grant a maximum
of approximately 2,412 million share appreciation rights
to a maximum of approximately 8,300 Key Personnel
(excluding the Executive Directors, Non-Executive
Director, Independent Directors, Supervisors and senior
management of the Company). The Proposal has been
submitted to SASAC for approval and was amended as
requested by SASAC. SASAC has approved the Proposal
on 3 March 2021.
Please refer to the circular published by the Company on
4 October 2018 and the announcements published by the
Company on 26 October 2018 and 9 February 2021 and
subsequently in this regard for further details.
Please refer to note 47 of the audited consolidated
financial statements for details of the share appreciation
key personnel of the Company (the “Key Personnel”) and
rights scheme of the Company.
to formulate implementation rules for each grant of share
appreciation rights in accordance with the Scheme and
COMPETING BUSINESS
relevant legal requirements.
None of the Directors of the Company had any interest
in any business which competes or may compete, either
directly or indirectly, with the business of the Group.
MANAGEMENT CONTRACTS
During the reporting period, the Company had not entered
into any management contracts with respect to the entire
or principal business of the Company.
The Scheme does not involve the grant of options over
new shares or other new securities that may be issued by
the Company (or any of its subsidiaries) and therefore, it
does not fall within the ambit of, and is not subject to, the
requirements under Chapter 17 of the Listing Rules.
On 9 February 2021, the Board has considered and
approved the resolution in relation to “2021 Share
Appreciation Rights Grant Proposal for Key Personnel of
China Telecom Corporation Limited” (now renamed as
“The Phase II Incentive Scheme for Share Appreciation
Rights of China Telecom Corporation Limited” as
059
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 CONTINUING CONNECTED TRANSACTIONS
The following table sets out the amounts of the Group’s continuing connected transactions for the year ended 31
December 2020:
Annual monetary
cap for continuing
connected
transactions
Transaction amounts
Transactions
(RMB millions)
(RMB millions)
(1)
CONTINUING CONNECTED TRANSACTIONS ENTERED INTO BETWEEN THE GROUP AND
CHINA TELECOMMUNICATIONS1 AND/OR ITS ASSOCIATES (EXCLUDING THE GROUP)
Net transaction amount of centralised services
Net expenses for interconnection settlement
Mutual leasing of properties
Provision of IT services by China Telecommunications and/or its associates
Provision of IT services by the Group
Provision of community services by China Telecommunications and/or its associates
Provision of supplies procurement services by China Telecommunications and/or its
associates
Provision of supplies procurement services by the Group
Provision of engineering services by China Telecommunications and/or its associates
Provision of ancillary telecommunications services by China Telecommunications
and/or its associates
Provision of Internet applications channel services by the Group
268
69
977
2,653
556
3,682
3,567
2,070
15,046
18,903
73
1,400
400
1,400
4,000
1,600
4,500
6,200
6,800
30,000
24,000
2,500
(2)
CONTINUING CONNECTED TRANSACTIONS ENTERED INTO BETWEEN CHINA TELECOM GROUP FINANCE CO., LTD.
(“CHINA TELECOM FINANCE”) AND THE GROUP, THE PARENT GROUP2 AND THE CCS GROUP3 RESPECTIVELY
Provision of deposit services by China Telecom Finance to the Group
(maximum daily balance of deposits, including accrued interest)
Provision of loan services by China Telecom Finance to the Parent Group
(maximum daily loan balance, including accrued interest)
Provision of loan services by China Telecom Finance to the CCS Group
(maximum daily loan balance, including accrued interest)
22,530
55,000
–
–
1,000
1,000
China Telecommunications refers to China Telecommunications Corporation, the Company’s controlling shareholder which holds approximately
70.89% of the issued share capital of the Company.
The Parent Group refers to China Telecommunications Corporation, its associates and its commonly held entity held with the Group, excluding the
Group and the CCS Group.
The CCS Group refers to China Communications Services Corporation Limited and its subsidiaries.
Notes:
1.
2.
3.
060
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 (1)
CONTINUING CONNECTED TRANSACTIONS
As certain applicable percentage ratios (excluding the
ENTERED INTO AMONG THE GROUP AND
profits ratio) of the renewed annual caps for the transactions
CHINA TELECOMMUNICATIONS AND/OR ITS
contemplated under the Engineering Framework Agreement
ASSOCIATES (EXCLUDING THE GROUP)
and the Ancillary Telecommunications Services Framework
On 20 August 2018, the Company and China Tele-
Agreement for each of the years ending 31 December 2019,
communications Corporation (“China Telecommunications”)
2020 and 2021 exceeds 5%, such continuing connected
entered into supplemental agreements and renewed
transactions are subject to the reporting, announcement,
the Engineering Framework Agreement, the Ancillary
annual review and independent shareholders’ approval
Telecommunications Services Framework Agreement, the
requirements under Chapter 14A of the Listing Rules. The
Interconnection Settlement Agreement, the Community
independent shareholders of the Company considered
Services Framework Agreement, the Centralised Services
and approved the renewal of the Engineering Framework
Agreement, the Property Leasing Framework Agreement,
Agreement and the Ancillary Telecommunications Services
the IT Services Framework Agreement, the Supplies
Framework Agreement and the renewed annual caps
Procurement Services Framework Agreement and the
applicable thereto at the extraordinary general meeting
Internet Applications Channel Services Framework
of the Company held on 26 October 2018. As each of
Agreement for a further term of 3 years expiring on 31
the applicable percentage ratios (excluding the profits
December 2021. China Telecommunications is the
ratio) of the renewed annual caps for the transactions
controlling shareholder of the Company. Accordingly,
contemplated under other continuing connected
pursuant to Chapter 14A of the Listing Rules, China
transactions agreements for each of the years ending
Telecommunications is a connected person of the
31 December 2019, 2020 and 2021 exceeds 0.1% but is
Company and the transactions contemplated under
less than 5%, such continuing connected transactions are
each of the agreements constitute continuing connected
only subject to the reporting, announcement and annual
transactions of the Company.
review requirements and are exempt from the independent
shareholders’ approval requirement under Chapter 14A of
the Listing Rules. Details of the respective agreements are
shown below:
061
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 Centralised Services Agreement
regions, Hong Kong, Macau and Taiwan originating from
Pursuant to the centralised services agreement signed
each party divided by the proportion of the aggregate
between the Company and China Telecommunications
volume of the inbound and outbound voice calls to and
on 10 September 2002 and the related supplemental
from international regions, Hong Kong, Macau and Taiwan
agreements subsequently entered into between the
originating from both parties. When the two parties use
two parties (collectively, the “Centralised Services
international telecommunications facilities provided by
Agreement”), centralised services include centralised
a third party and accept restoration maintenance costs,
business management and operational services provided
such fees shall be determined according to the actual
by the Group to China Telecommunications in relation
utilisation fee each year. The utilisation fee associated with
to key corporate customers, its network management
the shared use of the international telecommunications
centre and business support centre. Centralised services
facilities provided by China Telecommunications shall be
also include the provision of certain premises by China
determined through negotiation between the two parties
Telecommunications to the Group and the common use
based on market rates. Market rates shall mean the rates
of international telecommunications facilities by both
at which the same or similar type of products or services
parties. The aggregate costs incurred by the Group
are provided by independent third parties in the ordinary
and China Telecommunications for the provision of
course of business and under normal commercial terms.
management and operation services will be apportioned
When determining whether the transaction price for any
between the Group and China Telecommunications on
transaction under the agreement represents market rates,
a pro rata basis according to the revenues generated by
to the extent practicable, management of the Company
each party. Where the Group uses the premises provided
shall take into account the rates of at least two similar
by China Telecommunications, the Group will pay
and comparable transactions entered into with or carried
premises usage fees to China Telecommunications on a
out by independent third parties in the ordinary course of
pro rata basis according to the apportioned actual area
business in the corresponding period for reference.
allocated to the Group. The premises usage fees shall be
determined through negotiation between the two parties
The Company and China Telecommunications have
based on comparable market rates. When both parties
entered into a supplemental agreement on 20 August
use international telecommunications facilities provided
2018 and renewed the Centralised Services Agreement in
by third parties and accept services by such third parties
accordance with its provisions for a further term of 3 years
(for example, restoration maintenance costs, the annual
expiring on 31 December 2021. No later than 30 days
utilisation fee and related service costs) and when both
prior to the expiry of the Centralised Services Agreement,
parties use the international telecommunications facilities
the Company is entitled to serve a written notice to China
of China Telecommunications, the associated costs shall
Telecommunications to renew the Centralised Services
be shared on a pro rata basis according to volume of the
Agreement, and the parties shall consult and decide on
inbound and outbound voice calls to and from international
matters relating to such renewal.
062
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 Interconnection Settlement Agreement
The Company and China Telecommunications have
P u r s u a n t t o t h e i n t e r c o n n e c t i o n s e t t l e m e n t
entered into a supplemental agreement on 20 August
agreement signed between the Company and China
2018 and renewed the Interconnection Settlement
Telecommunications on 10 September 2002 and
Agreement in accordance with its provisions for a further
the related supplemental agreements subsequently
term of 3 years expiring on 31 December 2021. No later
entered into between the two parties (collectively, the
than 30 days prior to the expiry of the Interconnection
“Interconnection Settlement Agreement”), the telephone
Settlement Agreement, the Company is entitled to serve a
operator connecting a telephone call made to its local
written notice to China Telecommunications to renew the
access network shall be entitled to receive from the
Interconnection Settlement Agreement, and the parties
operator from which the telephone call originated a fee
shall consult and decide on matters relating to such
prescribed by the Ministry of Industry and Information
renewal.
Technology of the PRC (the “Ministry of Industry
and Information Technology”) from time to time.
Property Leasing Framework Agreement
Interconnection charges are currently RMB0.06 per
P u r s u a n t t o t h e p r o p e r t y l e a s i n g f r a m e w o r k
minute for local calls originated from the Group to China
agreement signed between the Company and China
Telecommunications. The interconnection settlement
Telecommunications on 30 August 2006 and the related
charges will be calculated according to the “Notice
supplemental agreement subsequently entered into
Concerning the Issue of the Measures on Interconnection
between the two parties (collectively, the “Property
Settlement between Public Telecommunications Networks
Leasing Framework Agreement”), the Group and China
and Sharing of Relaying Fees (Xin Bu Dian [2003]
Telecommunications and/or its associates can lease
No. 454)” promulgated by the Ministry of Information
properties from the other party for use as business
Industry. The Ministry of Industry and Information
premises, offices, equipment storage facilities and sites
Technology may, from time to time, take into account
for network equipment installation. The rental charges
the relevant regulatory rules and market conditions,
under the Property Leasing Framework Agreement shall
amend or promulgate new rules or regulations in respect
be determined according to comparable market rates.
of interconnection settlement which will be announced
Market rates shall mean the rental charges at which the
on its official website at www.miit.gov.cn. If the Ministry
same or similar type of properties or adjacent properties
of Industry and Information Technology amends the
are leased by independent third parties in the ordinary
existing, or promulgates new rules or regulations in
course of business and on normal commercial terms.
respect of interconnection settlement, the parties shall
When determining the rental charges for any property
apply such amended or new rules and regulations as
under the agreement represents market rates, to the
acknowledged by both parties. The settlement regions
extent practicable, management of the Company shall
include Beijing Municipality, Tianjin Municipality, Hebei
take into account the rental charges of at least two similar
Province, Heilongjiang Province, Jilin Province, Liaoning
and comparable transactions entered into with or carried
Province, Shanxi Province, Henan Province, Shandong
out by independent third parties in the ordinary course of
Province, Inner Mongolia Autonomous Region and Xizang
business in the corresponding period for reference. The
Autonomous Region.
rental charges are subject to review every 3 years.
063
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 The Company and China Telecommunications have
transaction under the agreement represents market rates,
entered into a supplemental agreement on 20 August
to the extent practicable, management of the Company
2018 and renewed the Property Leasing Framework
shall take into account the rates of at least two similar
Agreement in accordance with its provisions for a further
and comparable transactions entered into with or carried
term of 3 years expiring on 31 December 2021. No later
out by independent third parties in the ordinary course of
than 30 days prior to the expiry of the Property Leasing
business in the corresponding period for reference.
Framework Agreement, the Company is entitled to serve a
written notice to China Telecommunications to renew the
In the circumstances where the relevant laws or
Property Leasing Framework Agreement, and the parties
regulations in the PRC specify that the prices and/or
shall consult and decide on matters relating to such
the fee standards for particular services to be provided
renewal.
pursuant to such agreement are to be determined by a
tender process, the charges payable for such services
IT Services Framework Agreement
shall be finally determined in accordance with the
Pursuant to the IT services framework agreement signed
“Bidding Law of the PRC” and the “Regulations on the
between the Company and China Telecommunications on
Implementation of the Bidding Law of the PRC” or the
30 August 2006 and the related supplemental agreements
relevant tender procedures. The Group shall solicit at least
subsequently entered into between the two parties
three tenderers for the tender process. If the terms offered
(collectively, the “IT Services Framework Agreement”),
by the Group or China Telecommunications and/or its
the Group and China Telecommunications and/or its
associates are no less favourable than those offered by
associates can provide the other party with information
an independent third party provider, the Group or China
technology services, including office automation
Telecommunications and/or its associates may award the
and software testing. Each of the Group and China
tender to the other party.
Telecommunications and/or its associates is entitled to
participate in bidding for the right to provide information
The Company and China Telecommunications have
technology services to the other party in accordance
entered into a supplemental agreement on 20 August
with the IT Services Framework Agreement. The charges
2018 and renewed the IT Services Framework Agreement
payable for such services shall be determined by reference
in accordance with its provisions for a further term of 3
to the market rates. Market rates shall mean the rates at
years expiring on 31 December 2021. No later than 30
which the same or similar type of products or services
days prior to the expiry of the IT Services Framework
are provided by independent third parties in the ordinary
Agreement, the Company is entitled to serve a written
course of business and on normal commercial terms.
notice to China Telecommunications to renew the IT
When determining whether the transaction price for any
Services Framework Agreement, and the parties shall
consult and decide on matters relating to such renewal.
064
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 Community Services Framework Agreement
(2)
where there is no or it is not possible to determine
P u r s u a n t t o t h e c o m m u n i t y s e r v i c e s f r a m e w o r k
the market prices, the prices are to be agreed
agreement signed between the Company and China
between the parties based on the reasonable costs
Telecommunications on 30 August 2006 and the
incurred in providing the services plus the amount
r e l a t e d s u p p l e m e n t a l a g r e e m e n t s s u b s e q u e n t l y
of the relevant taxes and reasonable profit margin.
entered into between the two parties (collectively, the
For this purpose, “reasonable profit margin” is to
“Community Services Framework Agreement”), China
be fairly determined by negotiations between the
Telecommunications and/or its associates provide
parties in accordance with the internal policies
the Group with community services such as culture,
of the Group. When determining the “reasonable
education, property management, vehicle service,
profit margin” for any transaction under the
health and medical care, hotel and conference service,
agreement, to the extent practicable, management
community and sanitary service. The community services
of the Company shall take into account the profit
under the Community Services Framework Agreement are
margin of at least two similar and comparable
provided in accordance with the following pricing terms:
transactions entered into with independent third
parties in the corresponding period or the relevant
(1)
market prices, which shall mean the prices at
industry profit margin for reference.
which the same or similar type of products or
services are provided by independent third parties
The Company and China Telecommunications have
in the ordinary course of business and on normal
entered into a supplemental agreement on 20 August
commercial terms. When determining whether
2018 and renewed the Community Services Framework
the transaction price for any transaction under the
Agreement in accordance with its provisions for a further
agreement represents market prices, to the extent
term of 3 years expiring on 31 December 2021. No
practicable, management of the Company shall
later than 30 days prior to the expiry of the Community
take into account the prices of at least two similar
Services Framework Agreement, the Company is entitled
and comparable transactions entered into with
to serve a written notice to China Telecommunications to
or carried out by independent third parties in the
renew the Community Services Framework Agreement,
ordinary course of business over the corresponding
and the parties shall consult and decide on matters
period for reference;
relating to such renewal.
065
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 Supplies Procurement Services Framework
The Company and China Telecommunications have
Agreement
entered into a supplemental agreement on 20 August
Pursuant to the supplies procurement services framework
2018 and renewed the Supplies Procurement Services
agreement signed between the Company and China
Framework Agreement on the same terms in accordance
Telecommunications on 30 August 2006 and the related
with its provisions for a further term of 3 years expiring
supplemental agreements subsequently entered into
on 31 December 2021. No later than 30 days prior to the
between the two parties (collectively, the “Supplies
expiry of the Supplies Procurement Services Framework
Procurement Services Framework Agreement”), China
Agreement, the Company is entitled to serve a written
Telecommunications and/or its associates and the Group
notice to China Telecommunications to renew the
provide each other with supplies procurement services,
Supplies Procurement Services Framework Agreement,
including comprehensive procurement services, the sale of
and the parties shall consult and decide on matters
proprietary telecommunications equipment, resale of third-
relating to such renewal.
party equipment, management of tenders, verification
of technical specifications, storage, transportation and
Engineering Framework Agreement
installation services.
Pursuant to the engineering framework agreement signed
between the Company and China Telecommunications on
Where the procurement services are provided on an
30 August 2006 and the related supplemental agreements
agency basis, the maximum commission for such
subsequently entered into between the two parties
procurement services shall be calculated at:
(collectively, the “Engineering Framework Agreement”),
China Telecommunications and/or its associates through
(1)
not more than 1% of the contract value for
bids provides to the Group services such as construction,
procurement of imported telecommunications
design, equipment installation and testing and/or
supplies; or
engineering project supervision services. The charges
payable for such engineering services shall be determined
(2)
not more than 3% of the contract value for the
by reference to market rates. Market rates shall mean
procurement of domestic telecommunications
the rates at which the same or similar type of products or
supplies and domestic non-telecommunications
services are provided by independent third parties in the
supplies.
ordinary course of business and on normal commercial
terms. When determining whether the transaction price
The pricing basis of the services for the provision of
for any transaction under the agreement represents
supplies procurement other than on an agency basis
market rates, to the extent practicable, management of
under the Supplies Procurement Services Framework
the Company shall take into account the rates of at least
Agreement is the same as those set out in the Community
two similar and comparable transactions entered into
Services Framework Agreement.
with or carried out by independent third parties in the
ordinary course of business in the corresponding period
066
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 for reference. The charges payable for the design or
Ancillary Telecommunications Services Framework
supervision of engineering projects with a value of over
Agreement
RMB1 million or engineering construction projects with
Pursuant to the ancillary telecommunications services
a value of over RMB4 million shall be determined by the
framework agreement signed between the Company and
tender award price, which is determined in accordance
China Telecommunications on 30 August 2006 and the
with the “Bidding Law of the PRC” and the “Regulations
related supplemental agreements subsequently entered
on the Implementation of the Bidding Law of the PRC” or
into between the two parties (collectively, the “Ancillary
the final confirmed price in the relevant tender process.
Telecommunications Services Framework Agreement”),
The Group shall solicit at least three tenderers for the
China Telecommunications and/or its associates provide
tender process. In the circumstances there are amended
the Group with certain repair and maintenance services,
rules or regulations in respect of tender scope and scale
including repair of telecommunications equipment,
of the engineering construction projects promulgated
maintenance of fire equipment and telephone booths,
by PRC laws and regulations during the term of the
as well as other customer services. The pricing terms
agreement, both parties agreed to apply such amended
for such services are the same as those set out in the
rules and regulations and no amendment to the
Community Services Framework Agreement.
supplemental agreement is required.
The Company and China Telecommunications have
The Group does not accord any priority to China
entered into a supplemental agreement on 20 August
Telecommunications and/or its associates to provide
2018 and renewed the Ancillary Telecommunications
such services, and the tender may be awarded to an
Services Framework Agreement in accordance with
independent third party. However, if the terms of an offer
its provisions for a further term of 3 years expiring on
from China Telecommunications and/or its associates
31 December 2021. No later than 30 days prior to the
are at least as favourable as those offered by other
expiry of the Ancillary Telecommunications Services
tenderers, the Group may award the tender to China
Framework Agreement, the Company is entitled to serve
Telecommunications and/or its associates.
a written notice to China Telecommunications to renew
The Company and China Telecommunications have
Agreement, and the parties shall consult and decide on
entered into a supplemental agreement on 20 August
matters relating to such renewal.
the Ancillary Telecommunications Services Framework
2018 and renewed the Engineering Framework Agreement
on the same terms (except the pricing terms) for a further
term of 3 years expiring on 31 December 2021. No
later than 30 days prior to the expiry of the Engineering
Framework Agreement, the Company is entitled to serve a
written notice to China Telecommunications to renew the
Engineering Framework Agreement, and the parties shall
consult and decide on matters relating to such renewal.
067
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 Internet Applications Channel Services Framework
(2)
CONTINUING CONNECTED TRANSACTIONS
Agreement
ENTERED INTO BETWEEN CHINA
Pursuant to the Internet applications channel services
TELECOM FINANCE AND THE GROUP, THE
framework agreement signed between the Company
PARENT GROUP AND THE CCS GROUP
and China Telecommunications on 16 December 2013
RESPECTIVELY
and the related supplemental agreement subsequently
On 1 February 2019, China Telecom Finance entered
entered into between the two parties (collectively, the
into the financial services framework agreement with
“Internet Applications Channel Services Framework
each of the Company, China Telecommunications
Agreement”), the Company provides Internet applications
(together with its associates and its commonly held entity
channel services to China Telecommunications and/
held with the Group, excluding the Group and the CCS
or its associates. The channel services mainly include
Group, the “Parent Group”) and CCS (together with its
the provision of telecommunications channel and
subsidiaries, “CCS Group”). China Telecommunications,
applications support platform, provision of billing and
the controlling shareholder of the Company, holds
deduction services, coordination of sales promotion and
approximately 51.39% of the issued share capital of CCS
development of customers services, etc. The pricing
and CCS is a subsidiary of China Telecommunications.
terms for such services are the same as those set out in
Pursuant to Chapter 14A of the Listing Rules, China
the Community Services Framework Agreement.
Telecommunications and CCS and their associates are
connected persons of the Company. As the Company
The Company and China Telecommunications have
holds 70% of the issued share capital of China Telecom
entered into a supplemental agreement on 20 August
Finance, China Telecom Finance is a subsidiary of the
2018 and renewed the Internet Applications Channel
Company. Meanwhile, China Telecommunications and
Services Framework Agreement in accordance with
CCS each respectively holds 15% of the issued share
its provisions for a further term of 3 years expiring on
capital of China Telecom Finance. Pursuant to Chapter
31 December 2021. No later than 30 days prior to the
14A of the Listing Rules, China Telecom Finance is a
expiry of the Internet Applications Channel Services
connected subsidiary of the Company and an associate
Framework Agreement, the Company is entitled to serve
of the China Telecommunications and CCS, which is
a written notice to China Telecommunications to renew
also a connected person of the Company. Accordingly,
the Internet Applications Channel Services Framework
the transactions under the China Telecom Financial
Agreement, and the parties shall consult and decide on
Services Framework Agreement entered into between
matters relating to such renewal.
the Company and China Telecom Finance, the China
Telecommunications Corporation Financial Services
Framework Agreement entered into between China
Telecom Finance and China Telecommunications and the
CCS Financial Services Framework Agreement entered
into between China Telecom Finance and CCS constitute
continuing connected transactions of the Company
pursuant to Chapter 14A of the Listing Rules.
068
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 China Telecom Financial Services Framework
As each of the applicable percentage ratios of the
Agreement entered into between the Company and
annual caps for the service fees of other financial
China Telecom Finance
services provided by China Telecom Finance to the
Pursuant to the financial services framework agreement
Group under the China Telecom Financial Services
entered into between the Company and China Telecom
Framework Agreement for each of the years ending 31
Finance on 1 February 2019 (“China Telecom Financial
December 2019, 2020 and 2021 is less than 0.1%, such
Services Framework Agreement”), China Telecom Finance
other financial services are exempt from all reporting,
agreed to provide financial services, including deposit
a n n o u n c e m e n t , a n n u a l r e v i e w a n d i n d e p e n d e n t
services, loan services and other financial services to the
shareholders’ approval requirements under Chapter 14A
Group. As each of the applicable percentage ratios of the
of the Listing Rules.
annual caps for the deposit services provided by China
Telecom Finance to the Group under the China Telecom
Pricing Policy:
Financial Services Framework Agreement for each of the
years ending 31 December 2019, 2020 and 2021 exceeds
(i)
Deposit Services
5% but is less than 25%, such continuing connected
transaction is subject to the reporting, announcement,
The deposit interest rates offered by China
annual review and independent shareholders’ approval
Telecom Finance to the Group shall comply with
requirements under Chapters 14A of the Listing
the relevant requirements of the People’s Bank
Rules. The independent shareholders of the Company
of China and be with reference to the deposit
considered and approved the deposit services and the
benchmark interest rates promulgated by the
applicable annual caps under the China Telecom Financial
People’s Bank of China from time to time (if any)
Services Framework Agreement at the extraordinary
and the deposit interest rates of the same type of
general meeting of the Company held on 18 April 2019.
deposit services for the same period offered by the
major cooperative commercial banks of the Group
As the loan services provided by China Telecom Finance
and are conducted on normal commercial terms or
to the Group under the China Telecom Financial Services
better. The deposit interest rates offered shall be
Framework Agreement are conducted on normal
equivalent to or higher than those offered by the
commercial terms or better and the relevant loan services
major cooperative commercial banks of the Group.
will not be secured by the assets of the Group, such loan
Under the same conditions, the interest rates and
services are exempt from all reporting, announcement,
terms for the deposit services offered by China
annual review and independent shareholders’ approval
Telecom Finance to the Group shall be the same
requirements pursuant to Rule 14A.90 of the Listing Rules.
as those interest rates and terms of the same type
of deposit services for the same period offered by
China Telecom Finance to other member units.
069
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 (ii)
Loan Services
other financial services provided by China Telecom
Finance to the Group mentioned above shall
The loan interest rates offered by China Telecom
comply with the fees standard promulgated by
Finance to the Group shall comply with the relevant
regulatory departments including the People’s
requirements of the People’s Bank of China and be
Bank of China or China Banking and Insurance
with reference to the loan benchmark interest rates
Regulatory Commission (including its designated
promulgated by the People’s Bank of China from
institution) (“CBIRC”) (if applicable), and be with
time to time (if any) and the loan interest rates of
reference to the handling fees standard for the
the same type of loan services for the same period
same type of other financial services charged by
offered by the major cooperative commercial
the major cooperative commercial banks of the
banks of the Group and are conducted on normal
Group and are conducted on normal commercial
commercial terms or better. The loan interest
terms or better. The handling fees standard shall
rates offered shall be equivalent to or lower than
be equivalent to or lower than those charged
those offered by the major cooperative commercial
by the major cooperative commercial banks of
banks of the Group. Under the same conditions,
the Group. Under the same conditions, the fees
the interest rates and terms for the loan services
standard charged to the Group by China Telecom
offered by China Telecom Finance to the Group
Finance shall be the same as those fees standard
shall be the same as those interest rates and terms
for the same type of other financial services
of the same type of loan services for the same
charged by China Telecom Finance to other
period offered by China Telecom Finance to other
member units.
member units. The above loan services provided
by China Telecom Finance to the Group do not
For the respective specific transactions under the China
require the Group to pledge any security over its
Telecom Financial Services Framework Agreement, under
assets or make other arrangements for the loan
the same conditions, the Group should, in principle,
services as guarantee.
choose the services provided by China Telecom Finance.
If the Group considers it is appropriate and beneficial to
(iii)
Other Financial Services
the Group, the Group has the discretion to engage one or
more major cooperative commercial banks of the Group as
China Telecom Finance provides other financial
its financial services providers.
services (other than deposit and loan services)
including financial and financing advice, credit
The China Telecom Financial Services Framework
authentication, guarantees, acceptance of bills
Agreement became effective from 1 February 2019
and discounted bills, internal fund transfer and
and will expire on 31 December 2021. Subject to the
settlement and designs of relevant settlement and
compliance of relevant laws and regulations and relevant
clearance arrangement proposals to the Group
regulatory requirements, both parties will negotiate and
under the China Telecom Financial Services
agree on the renewal arrangement.
Framework Agreement. The fees charged for
070
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 China Telecommunications Corporation Financial
As each of the applicable percentage ratios of the annual
Services Framework Agreement entered into
caps for the service fees of other financial services
b e t w e e n C h i n a T e l e c o m F i n a n c e a n d C h i n a
provided by China Telecom Finance to the Parent Group
Telecommunications
under the China Telecommunications Corporation
Pursuant to the financial services framework agreement
Financial Services Framework Agreement for each of
entered into between China Telecom Finance and
the years ending 31 December 2019, 2020 and 2021 is
China Telecommunications on 1 February 2019 (“China
less than 0.1%, such other financial services are exempt
Telecommunications Corporation Financial Services
from all reporting, announcement, annual review and
Framework Agreement”), China Telecom Finance
independent shareholders’ approval requirements under
agreed to provide financial services, including deposit
Chapter 14A of the Listing Rules.
services, loan services and other financial services to
the Parent Group. As the deposit services provided
Pricing Policy:
by China Telecom Finance to the Parent Group under
the China Telecommunications Corporation Financial
(i)
Deposit Services
Services Framework Agreement are conducted on
normal commercial terms or better and the relevant
The deposit interest rates offered by China
deposit services will not be secured by the assets of
Telecom Finance to the Parent Group shall comply
the Group, such deposit services are exempt from all
with the relevant requirements of the People’s
reporting, announcement, annual review and independent
Bank of China and be with reference to the deposit
shareholders’ approval requirements pursuant to Rule
benchmark interest rates promulgated by the
14A.90 of the Listing Rules.
People’s Bank of China from time to time (if any)
and the deposit interest rates of the same type of
As each of the applicable percentage ratios of the
deposit services for the same period offered by the
annual caps for the loan services provided by China
major cooperative commercial banks of the Parent
Telecom Finance to the Parent Group under the China
Group and are conducted on normal commercial
Telecommunications Corporation Financial Services
terms or better. The deposit interest rates offered
Framework Agreement for each of the years ending
shall be equivalent to or higher than those offered
31 December 2019, 2020 and 2021 exceeds 0.1% but is
by the major cooperative commercial banks of
less than 5%, such loan services are only subject to the
the Parent Group. Under the same conditions, the
reporting, announcement and annual review requirements
interest rates and terms for the deposit services
but are exempt from the independent shareholders’
offered by China Telecom Finance to the Parent
approval requirement under Chapter 14A of the Listing
Group shall be the same as those interest rates
Rules.
and terms of the same type of deposit services for
the same period offered by China Telecom Finance
to other member units.
071
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 (ii)
Loan Services
The fees charged for other financial services
provided by China Telecom Finance to the Parent
The loan interest rates offered by China Telecom
Group mentioned above shall comply with the fees
Finance to the Parent Group shall comply with
standard promulgated by regulatory departments
the relevant requirements of the People’s Bank
including the People’s Bank of China or the
of China and be with reference to the loan
CBIRC (if applicable), and be with reference to the
benchmark interest rates promulgated by the
handling fees standard for the same type of other
People’s Bank of China from time to time (if any)
financial services charged by the major cooperative
and the loan interest rates of the same type of
commercial banks of the Parent Group and are
loan services for the same period offered by the
conducted on normal commercial terms or better.
major cooperative commercial banks of the Parent
The handling fees standard shall be equivalent to or
Group and are conducted on normal commercial
lower than those charged by the major cooperative
terms or better. The loan interest rates offered shall
commercial banks of the Parent Group. Under the
be equivalent to or lower than those offered by the
same conditions, the fees standard charged to
major cooperative commercial banks of the Parent
the Parent Group by China Telecom Finance shall
Group. Under the same conditions, the interest
be the same as those fees standard for the same
rates and terms for the loan services offered by
type of other financial services charged by China
China Telecom Finance to the Parent Group shall
Telecom Finance to other member units.
be the same as those interest rates and terms
of the same type of loan services for the same
For the respective specific transactions under the China
period offered by China Telecom Finance to other
Telecommunications Corporation Financial Services
member units.
Framework Agreement, under the same conditions, the
Parent Group should, in principle, choose the services
The above loan services provided by China
provided by China Telecom Finance. If the Parent Group
Telecom Finance to the Parent Group do not
considers it is appropriate and beneficial to the Parent
require the Parent Group to pledge any security
Group, the Parent Group has the discretion to engage
over its assets or make other arrangements for the
one or more major cooperative commercial banks of the
loan services as guarantee.
Parent Group as its financial services providers.
(iii)
Other Financial Services
The China Telecommunications Corporation Financial
Services Framework Agreement became effective from
China Telecom Finance provides other financial
1 February 2019 and will expire on 31 December 2021.
services (other than deposit and loan services)
Subject to the compliance of relevant laws and regulations
including financial and financing advice, credit
and relevant regulatory requirements, both parties will
authentication, guarantees, acceptance of bills
negotiate and agree on the renewal arrangement.
and discounted bills, internal fund transfer and
settlement and designs of relevant settlement and
clearance arrangement proposals to the Parent
Group under the China Telecommunications
Corporation Financial Services Framework
Agreement.
072
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 CCS Financial Services Framework Agreement
As each of the applicable percentage ratios of the annual
entered into between China Telecom Finance and
caps for the service fees of other financial services
CCS
provided by China Telecom Finance to the CCS Group
Pursuant to the financial services framework agreement
under the CCS Financial Services Framework Agreement
entered into between China Telecom Finance and CCS
for each of the years ending 31 December 2019,
on 1 February 2019 (“CCS Financial Services Framework
2020 and 2021 is less than 0.1%, such other financial
Agreement”), China Telecom Finance agreed to provide
services are exempt from all reporting, announcement,
financial services, including deposit services, loan
annual review and independent shareholders’ approval
services and other financial services to the CCS Group.
requirements under Chapter 14A of the Listing Rules.
As the deposit services provided by China Telecom
Finance to the CCS Group under the CCS Financial
Pricing Policy:
Services Framework Agreement are conducted on
normal commercial terms or better and the relevant
(i)
Deposit Services
deposit services will not be secured by the assets of
the Group, such deposit services are exempt from all
The deposit interest rates offered by China
reporting, announcement, annual review and independent
Telecom Finance to the CCS Group shall comply
shareholders’ approval requirements pursuant to Rule
with the relevant requirements of the People’s
14A.90 of the Listing Rules.
Bank of China and be with reference to the deposit
benchmark interest rates promulgated by the
As each of the applicable percentage ratios of the annual
People’s Bank of China from time to time (if any)
caps for loan services provided by China Telecom
and the deposit interest rates of the same type of
Finance to CCS Group under the CCS Financial Services
deposit services for the same period offered by the
Framework Agreement for each of the years ending 31
major cooperative commercial banks of the CCS
December 2019, 2020 and 2021 exceeds 0.1% but is
Group and are conducted on normal commercial
less than 5%, such loan services are only subject to the
terms or better. The deposit interest rates offered
reporting, announcement and annual review requirements
shall be equivalent to or higher than those offered
but are exempt from the independent shareholders’
by the major cooperative commercial banks of
approval requirement under Chapter 14A of the Listing
the CCS Group. Under the same conditions, the
Rules.
interest rates and terms for the deposit services
offered by China Telecom Finance to the CCS
Group shall be the same as those interest rates
and terms of the same type of deposit services for
the same period offered by China Telecom Finance
to other member units.
073
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 (ii)
Loan Services
The fees charged for other financial services
provided by China Telecom Finance to the CCS
The loan interest rates offered by China Telecom
Group mentioned above shall comply with the fees
Finance to the CCS Group shall comply with
standard promulgated by regulatory departments
the relevant requirements of the People’s Bank
including the People’s Bank of China or the
of China and be with reference to the loan
CBIRC (if applicable), and be with reference to the
benchmark interest rates promulgated by the
handling fees standard for the same type of other
People’s Bank of China from time to time (if any)
financial services charged by the major cooperative
and the loan interest rates of the same type of loan
commercial banks of the CCS Group and are
services for the same period offered by the major
conducted on normal commercial terms or better.
cooperative commercial banks of the CCS Group
The handling fees standard shall be equivalent to or
and are conducted on normal commercial terms
lower than those charged by the major cooperative
or better. The loan interest rates offered shall be
commercial banks of the CCS Group. Under the
equivalent to or lower than those offered by the
same conditions, the fees standard charged to the
major cooperative commercial banks of the CCS
CCS Group by China Telecom Finance shall be the
Group. Under the same conditions, the interest
same as those fees standard for the same type of
rates and terms for the loan services offered by
other financial services charged by China Telecom
China Telecom Finance to the CCS Group shall
Finance to other member units.
be the same as those interest rates and terms
of the same type of loan services for the same
For the respective specific transactions under the CCS
period offered by China Telecom Finance to other
Financial Services Framework Agreement, provided that
member units. The above loan services provided
it is in compliance with the terms and conditions of the
by China Telecom Finance to the CCS Group do
CCS Financial Services Framework Agreement, China
not require the CCS Group to pledge any security
Telecom Finance was appointed as one of the financial
over its assets or make other arrangements for the
institutions providing financial services to the CCS Group.
loan services as guarantee.
Prior to the signing of any specific agreement with China
Telecom Finance in respect of respective transactions
(iii)
Other Financial Services
under the CCS Financial Services Framework Agreement,
the CCS Group will compare the interest rates and terms
China Telecom Finance provides other financial
or fees charged and other relevant transactions terms
services (other than deposit and loan services)
offered by China Telecom Finance with those interest
including financial and financing advice, credit
rates and terms of the same type of deposit or loan
authentication, guarantees, acceptance of bills
services for the same period or fees charged and other
and discounted bills, internal fund transfer and
relevant transaction terms for the same type of financial
settlement and designs of relevant settlement
services offered by the major cooperative commercial
and clearance arrangement proposals to the
banks of the CCS Group. Only when the interest rates
CCS Group under the CCS Financial Services
and terms or fees charged or other relevant transactions
Framework Agreement.
074
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 terms offered by China Telecom Finance are equivalent
The auditors of the Group have reviewed the continuing
to or better than those interest rates and terms offered
connected transactions of the Group for the year ended
or fees charged or other relevant transactions terms (e.g.
31 December 2020 and have confirmed to the Board
transaction approval terms, procedures or time limit, etc.)
that nothing has come to their attention that causes
offered by the major cooperative commercial banks of
them to believe that the relevant continuing connected
the CCS Group, the CCS Group has the discretion to
transactions:
enter into the transactions with China Telecom Finance.
Under the circumstances which the CCS Group considers
(1)
have not been approved by the Board of the
appropriate, the CCS Group may engage additional or
Company;
other financial institutions other than China Telecom
Finance to provide financial services.
(2)
(for transactions involving the provision of goods or
The CCS Financial Services Framework Agreement
material respects, in accordance with the pricing
services by the Group) were not entered into, in all
became effective from 1 February 2019 and will expire on
policies of the Group;
31 December 2021. Subject to the compliance of relevant
laws and regulations and relevant regulatory requirements,
(3)
were not entered into, in all material respects, in
both parties will negotiate and agree on the renewal
accordance with the terms of the agreements
arrangement.
governing such transactions; and
Review of Continuing Connected Transactions
(4)
have exceeded the annual caps as set by the
The Company confirms that it has complied with the
Company.
disclosure requirements in accordance with Chapter
14A of the Listing Rules in respect of the connected
A copy of the auditors’ letter in relation to the continuing
transactions the Company conducted in the year 2020.
connected transactions has been provided by the
Company to the Hong Kong Stock Exchange.
The Company’s external auditor was engaged to report
on the Group’s continuing connected transactions for the
year ended 31 December 2020 in accordance with the
Hong Kong Standard on Assurance Engagements 3000
“Assurance Engagements Other Than Audits or Reviews
of Historical Financial Information” and with reference
to Practice Note 740 “Auditor’s Letter on Continuing
Connected Transactions under the Hong Kong Listing
Rules” issued by the Hong Kong Institute of Certified
Public Accountants.
075
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 The Independent Non-Executive Directors of the Company
RELATED PARTY TRANSACTIONS
have confirmed that all continuing connected transactions
for the year ended 31 December 2020 to which the Group
was a party:
(1)
had been entered into, and the agreements
governing those transactions were entered into,
by the Group in the ordinary and usual course of
business;
(2)
had been entered into either:
(i)
on normal commercial terms or better; or
Details of the related party transactions of the Group
(“Related Party Transactions”) are set out in note 44 of the
consolidated financial statements. Only the Related Party
Transactions set out in note 44(a) of the consolidated
financial statements constitute continuing connected
transactions under Chapter 14A of the Listing Rules,
the details of which (except for fully exempt continuing
connected transactions) have been disclosed in the above
section “Continuing Connected Transactions”. Other
Related Party Transactions do not constitute connected
transactions or continuing connected transactions under
Chapter 14A of the Listing Rules.
(ii)
if there are not sufficient comparable
transactions to judge whether they are
BUSINESS REVIEW
on normal commercial terms, on terms
no less favourable to the Company than
those available to or (if applicable) from
independent third parties; and
(3)
had been entered into in accordance with the
relevant agreements governing those transactions
on terms that are fair and reasonable and in the
interests of the shareholders of the Company as a
whole.
The Independent Non-Executive Directors have further
confirmed that:
The continuing connected transactions for the year ended
31 December 2020 entered into between the Group and
its connected persons which are subject to annual caps
have not exceeded their respective annual caps.
Relating to the details of the material development of
the Group in 2020, a fair review of the business and a
discussion and analysis of the Group’s performance
during the year and the material factors underlying
its results and financial position are provided in the
Chairman’s Statement on pages 8 to 18, Business
Review on pages 30 to 37 and Financial Review on
pages 38 to 45 of this annual report. Description of the
principal risks and uncertainties faced the Group can be
found throughout this annual report, particularly in the
Environmental, Social and Governance Report on pages
86 to 157 of this annual report. Particulars of important
events affecting the Group that have occurred after
31 December 2020, if any, can also be found in the Notes
to the Consolidated Financial Statements. The outlook
of the Group’s business is discussed throughout this
annual report including in the Chairman’s Statement and
Business Review.
076
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 Description of the Group’s key relationships with its
employees, customers, suppliers and others that have
a significant impact on the Company and on which the
Company’s success depends can be found throughout
this annual report, particularly in the Environmental,
Social and Governance Report on pages 86 to 157 of
this annual report. In addition, more details regarding
the Group’s performance by reference to financial key
performance indicators and environmental policies, as well
as compliance with relevant laws and regulations which
have a significant impact on the Group, are provided in
the Chairman’s Statement, Business Review, Financial
Review, Environmental, Social and Governance Report of
this annual report. Each of the above-mentioned relevant
contents form an integral part of this Report of the
Directors.
COMPLIANCE WITH THE
CORPORATE GOVERNANCE CODE
Please refer to the Environmental, Social and Governance
Report set out on pages 86 to 157 of this 2020 annual
report of the Company for details of our compliance with
the Corporate Governance Code.
PROPOSED A SHARE OFFERING
AND RELATED MATTERS
In order to seize the opportunities of digitalised
development, improve the corporate governance and
broaden financing channels, accelerate reform and
development, promote the implementation of strategies
and achieve high-quality development, the Company
proposed to apply for the offering and listing of A Shares
on the Main Board of the Shanghai Stock Exchange, to
amend the Article of Association, the Rules of Procedures
of the Meeting of the Board of Directors and the Rules of
Procedures of the Meeting of the Supervisory Committee,
and to adopt the Rules of Procedures of the Shareholders’
General Meeting, in each case in accordance with relevant
laws, administrative regulations, departmental regulations
and regulatory documents. The relevant proposals were
considered and approved by the Board on 9 March 2021
and will be proposed for shareholders’ consideration
and approval at the Extraordinary General Meeting,
the Domestic Shareholders’ Class Meeting and the H
Shareholders’ Class Meeting to be held on 9 April 2021.
Please refer to the announcements published by the
Company on 9 March 2021 and the relevant circular for
further details.
077
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 NYSE HAS COMMENCED
DELISTING PROCEEDINGS OF
AMERICAN DEPOSITARY SHARES
T h e P r e s i d e n t o f t h e U n i t e d S t a t e s o f A m e r i c a
issued an executive order on 12 November 2020
( U S E a s t e r n s t a n d a r d t i m e ) ( a s a m e n d e d o n
13 January 2021 (US Eastern standard time), the
“Executive Order”) to prohibit any transaction in publicly
traded securities, or any securities that are derivative
of, or are designed to provide investment exposure to
such securities, of the companies concerned which
include the Company’s ultimate holding company (being
China Telecommunications Corporation), by any United
States person (the “Prohibitions”). The Prohibitions
would become effective beginning 9:30 a.m. on 11
January 2021 (US Eastern standard time), and are
subject to certain divestiture and other exemptions. On
31 December 2020 (US Eastern standard time), The
New York Stock Exchange LLC (the “NYSE”) announced
that the staff of NYSE Regulation had determined to
commence proceedings to delist the securities of three
Regulation had determined to re-commence proceedings
to delist the ADSs to comply with the Executive Order (the
“Determination”). This latest decision is based on the new
specific guidance that the US Department of Treasury’s
Office of Foreign Assets Control (“OFAC”) provided to the
NYSE. On 20 January 2021 (US Eastern standard time),
the Company filed with the NYSE a written request for a
review of the Determination by a Committee of the Board
of Directors of the NYSE (the “Committee”). The Company
requested that the Committee reverse the Determination
and stay the trading suspension of the ADSs pending
review of the Determination. On 27 January 2021 (US
Eastern standard time), OFAC published General License
No. 1A in relation to the Executive Order (“GL 1A”),
dated 26 January 2021 (US Eastern standard time)
and guidance relating to two related frequently asked
questions (respectively, “FAQ 878” and “FAQ 879”). GL
1A and FAQ 879 provide, among others, that, pursuant to
the Executive Order, the Prohibitions with respect to the
Company take effect on the date that is 60 days after the
Company was added to the Restricted List, or 9 March
2021 (US Eastern standard time) (instead of 11 January
issuers, including the American Depositary Shares (NYSE
2021 (US Eastern standard time)).
stock ticker: CHA, the “ADSs”) of the Company, on the
basis that the Company is no longer suitable for listing
pursuant to the NYSE Listed Company Manual Section
802.01D in light of the Executive Order. The NYSE will
Please refer to the announcements published by the
Company on 13 November 2020, 4 January 2021,
5 January 2021, 7 January 2021, 21 January 2021 and
apply to the SEC to delist the ADSs upon completion
28 January 2021 for further details.
of all applicable procedures. On 4 January 2021 (US
Eastern standard time), NYSE announced that NYSE
Regulation no longer intended to move forward with the
delisting action in relation to the securities of three issuers,
including the ADSs of the Company. On 6 January 2021
(US Eastern standard time), NYSE announced that it
had once again reversed its earlier decision in that NYSE
MATERIAL LEGAL PROCEEDINGS
As at 31 December 2020, the Company was not involved
in any material litigation or arbitration, and as far as the
Company is aware, no material litigation or claims were
pending or threatened or made against the Company.
078
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 AUDITORS
Deloitte Touche Tohmatsu and Deloitte Touche Tohmatsu
Certified Public Accountants LLP were appointed as the
international and domestic auditors of the Company,
respectively for the year ended 31 December 2020.
Deloitte Touche Tohmatsu has audited the consolidated
financial statements set out in this report, which have been
prepared in accordance with the International Financial
Reporting Standards.
Pursuant to the relevant regulations issued by the Ministry
of Finance of the People’s Republic of China and SASAC,
the service terms of Deloitte Touche Tohmatsu and
Deloitte Touche Tohmatsu Certified Public Accountants
LLP will expire soon. They will retire as the international
Deloitte Touche Tohmatsu and Deloitte Touche Tohmatsu
Certified Public Accountants LLP have confirmed in
writing that there are no matters in relation to their
retirement which should be brought to the attention
of the shareholders of the Company. The Board is not
aware of any matters in relation to the proposed change
of auditors that need to be brought to the attention of
the shareholders of the Company. The Board and the
Audit Committee have also confirmed that there are
no disagreement or outstanding matters between the
Company and Deloitte Touche Tohmatsu and Deloitte
Touche Tohmatsu Certified Public Accountants LLP.
The proposed appointment of auditors is subject to
the approval of the shareholders of the Company at
the 2020 Annual General Meeting. Please refer to the
announcement published by the Company on 9 March
auditor and domestic auditor of the Company effective
2021 for further details.
upon the close of the 2020 Annual General Meeting
and will not be re-appointed. Pursuant to the open
selection process, and as recommended by the Audit
Committee of the Company (the “Audit Committee”),
the Board has resolved to propose to the shareholders
of the Company at the 2020 Annual General Meeting to
approve the appointments of PricewaterhouseCoopers
and PricewaterhouseCoopers Zhong Tian LLP as
By Order of the Board
Ke Ruiwen
Chairman and Chief Executive Officer
the Company’s external auditors for the year ending
31 December 2021 and to authorise the Board to fix the
Beijing, China
9 March 2021
remuneration of the auditors.
079
REPORT OF THE DIRECTORSChina Telecom Corporation Limited Annual Report 2020 During the reporting period, all members of the
and passed the relevant resolutions. Regarding the
Supervisory Committee acted in accordance with the
Company’s operating results, 5G construction, etc.,
Company Law of the People’s Republic of China and
the Supervisory Committee communicated with the
the Articles of Association of the Company, followed
Finance Department and external auditors and raised
the principles of integrity and diligently carried out their
certain recommendations. During the reporting period,
supervisory function to safeguard the interests of the
members of the Supervisory Committee supervised the
shareholders, the Company and the employees.
major decision-making process of the Company and the
I.
THE WORK STATUS OF THE
SUPERVISORY COMMITTEE
OF THE COMPANY
performance of duties of the members of the Board and
the senior management through their attendance at the
2019 Annual General Meeting, Board meetings and Audit
Committee meetings.
During the reporting period, the Supervisory Committee
II. THE OVERALL ASSESSMENT
held two meetings. At the sixth meeting of the sixth
session of the Supervisory Committee held on 19 March
2020, the Supervisory Committee reviewed and approved
six agenda items, including the financial statements for
the year 2019, the auditor’s report issued by the external
auditors, the profit distribution and dividend proposal,
the Supervisory Committee’s report for the year 2019,
the work plan of the Supervisory Committee for the year
2020, election of members to the seventh session of
the Supervisory Committee, and passed the relevant
OF THE OPERATION
MANAGEMENT AND
PERFORMANCE DURING THE
REPORTING PERIOD
The Supervisory Committee believed that during the
reporting period, all members of the Board and the
senior management have complied with rules and
regulations, upheld the principles of diligence and integrity,
resolutions. Regarding the impact of the Epidemic on the
safeguarded the interests of shareholders, fully fulfilled
Company’s business development and the improvement
their responsibilities in accordance with the Articles of
of resource efficiency, etc., the Supervisory Committee
Association of the Company, diligently implemented
communicated with the Finance Department and external
the resolutions of shareholders’ meetings and the
auditors and raised certain recommendations. At the
Board meetings, and strictly complied with the relevant
first meeting of the seventh session of the Supervisory
Committee held on 13 August 2020, the Supervisory
Committee reviewed and approved the interim financial
statements of the Company for the interim report of
2020 and the review report of the external auditors,
regulations governing listed companies. The Supervisory
Committee has not observed any behaviours that
breached the laws, rules and Articles of Association of the
Company, or damaged the interests of shareholders.
080
China Telecom Corporation Limited Annual Report 2020REPORT OF THE SUPERVISORY COMMITTEE During the reporting period, The Company coordinated its
amounted to RMB118.9 billion, representing an increase
efforts in Epidemic prevention and control with operation
of 1.4% over last year. Net profit4 amounted to RMB20.9
and development, firmly seized opportunities emerging
billion, representing an increase of 1.6% over last year,
from the digital transformation of the economy and
while basic earnings per share were RMB0.26. Capital
society, and promoted the “Cloudification and Digital
expenditure was RMB84.8 billion and free cash flow5
Transformation” strategy on all fronts. The Company
was RMB14.3 billion. The Company’s financial position
also strengthened its sci-tech innovation capabilities and
remained robust.
deepened corporate reforms, achieving steady growth
of its operating results, while continuing to share the
O v e r a l l , t h e C o m p a n y b u i l t u p n e w i n f o r m a t i o n
high-quality development results of the Company with
infrastructure with 5G and cloud as the core, and
its shareholders and the society. In 2020, operating
stimulated increasing and diversified customer demand
revenues of the Company amounted to RMB393.6 billion,
for integrated intelligent information services, sped up
representing an increase of 4.7% over last year. Service
its Cloudification reform as well as digital transformation,
revenues1 amounted to RMB373.8 billion, representing an
established the new development pattern from an all-
increase of 4.5% over last year, surpassing the industry’s
round perspective and strived to enhance its market
average growth rate2 over several consecutive years. Of
competitiveness and corporate vitality. In addition, while
which, mobile service revenues amounted to RMB181.7
diligently fulfilling its responsibilities to shareholders, the
billion, representing an increase of 3.5% over last year.
Company persisted in integrating social responsibilities
Wireline service revenues amounted to RMB192.1 billion,
into its own development, and fulfilled its corporate social
representing an increase of 5.5% over last year. EBITDA3
responsibilities excellently.
1
2
3
4
5
Service revenues are calculated based on operating revenues minus sales of mobile terminals, sales of wireline equipment and other non-service
revenues.
MIIT’s statistical communique of the communications industry in 2020: telecommunications revenue grew by 3.6% year-on-year in 2020.
EBITDA is calculated based on operating revenues minus operating expenses plus depreciation and amortisation.
Net profit represents profit attributable to equity holders of the Company.
Free cash flow is calculated based on EBITDA minus capital expenditure, income tax and depreciation charge for right-of-use assets other than
land-use-rights.
081
REPORT OF THE SUPERVISORY COMMITTEEChina Telecom Corporation Limited Annual Report 2020 III. THE INDEPENDENT OPINION
ON THE RELEVANT MATTERS
DURING THE REPORTING
PERIOD
1.
The opinion concluded by the Supervisory
C o m m i t t e e o n t h e c o m p l i a n c e o f t h e
operation of the Company with laws and
regulations
Pursuant to the relevant laws and regulations of PRC,
the shareholders as a whole, especially those of the
minority shareholders, actively promoted the regulated
operation of the Company, enhanced the level of
corporate governance of the Company, followed lawful
procedures in their decision-making, and implemented
resolutions approved at the shareholders’ meetings. The
Supervisory Committee was not aware of any behaviours
of the Directors or the senior management which violated
the laws, regulations, the Articles of Association of the
Company or were detrimental to the interests of the
the Supervisory Committee monitored the convening
Company.
procedures and resolutions resolved at the meetings of the
Board, the implementation by the Board of the resolutions
approved by the shareholders’ meetings, the performance
of duties by the Company’s senior management, and
the Company’s management policies. The Supervisory
Committee is of the view that the Directors and the senior
management, in performing their duties, strictly complied
with the relevant rules and regulations, safeguarded
the legitimate rights and interests of the Company and
2.
The opinion concluded by the Supervisory
Committee on the financial implementations
of the Company
Through the supervision and inspection of the Company’s
financial policies and financial condition, the Supervisory
Committee is of the view that the Company is able to
strictly comply with the regulatory requirements such as
section 404 of the US Sarbanes-Oxley Act and to continue
082
REPORT OF THE SUPERVISORY COMMITTEEChina Telecom Corporation Limited Annual Report 2020 to enhance its internal controls over financial reporting,
Committee will focus on the Company’s implementation
while effectively controlling and managing the Company
of important measures in the process of comprehensively
in accordance with rules and regulations. The Supervisory
and deeply promoting “Cloudification and Digital
Committee advised the Company to strengthen risk
Transformation” strategy, strengthening sci-tech
control as well as investment efficiency assessment in
innovation, accelerating the integration and development
the area of emerging businesses. Upon reviewing the
of 5G, cloud and artificial intelligence, empowering
financial statements for the year 2020 with unqualified
internal and external digital transformation, deepening
audit opinion and other relevant information to be tabled
and expanding ecological cooperation, and promoting
by the Board at the 2020 Annual General Meeting, which
corporate high-quality development, and will further
were prepared in accordance with the China Accounting
broaden the work plan of the Supervisory Committee and
Standards for Business Enterprises and the International
strengthen its efforts in monitoring so as to protect the
Financial Reporting Standards as audited by PRC certified
interests of all investors.
accountants and international auditors of the Company
respectively, the Supervisory Committee is of the opinion
that the financial statements truly and fairly reflect the
Company’s financial condition, operating results and cash
flows.
In 2021, the Supervisory Committee will continue to strictly
By Order of the Supervisory Committee
adhere to the Articles of Association of the Company and
Sui Yixun
relevant regulations, assume its responsibility to protect
Chairman of the Supervisory Committee
the interests of the shareholders and the Company,
and lay emphasis on monitoring the Company to fulfill
Beijing, China
its commitment to its shareholders. The Supervisory
9 March 2021
083
REPORT OF THE SUPERVISORY COMMITTEEChina Telecom Corporation Limited Annual Report 2020 Our Achievements
Soar to new height
084
085
RECOGNITION AND AWARDSChina Telecom Corporation Limited Annual Report 2020China Telecom Corporation Limited Annual Report 2020RECOGNITION AND AWARDS 086
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORT As a large-scale and leading integrated information services operator in the world, China
Telecom has always insisted on incorporating environmental, social and governance (“ESG”)
responsibilities into corporate operation and management, and has established and continues
to optimise effective risk management and internal control systems in relation to ESG. With rapid
development of mobile Internet and swift upgrade of information consumption, the Company
continues to promote corporate transformation and accelerates business upgrade, endeavouring
to provide premium network information services for subscribers and striving to be a leading
integrated intelligent information services operator.
The Company has strictly complied with the provisions of the Environmental, Social and
Governance Reporting Guide as set out in Appendix 27 (“ESG Reporting Guide”) of
the Listing Rules of the Hong Kong Stock Exchange in 2020, and
considered the concerns of stakeholders and the ESG issues
identified by the Company in the course of operations
as a basis for reporting. In 2020, the Company further
refined its own System of Environmental, Social
and Governance (ESG) Indicators,
improved the internal process for
collecting and monitoring the data on
ESG performance and strengthened procedures
on ESG data collection, review and application to
ensure detailed information on how the Company fulfils
its responsibility in the aspect of ESG as required has
been disclosed.
This report is a yearly report which covers the
Company and its subsidiaries (branches) for the
period from 1 January 2020 to 31 December 2020.
For details of compliance with ESG Reporting Guide,
please see the ESG Reporting Guide Index in this
report. There are no significant changes in the scope
of this report from the ESG Report published in the
2019 annual report.
This report has been reviewed and approved by the
Board for publication.
087
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTChina Telecom Corporation Limited Annual Report 2020 Adhering to the core values of “Comprehensive
effective ESG risk management and internal control
Innovation, Pursuing Truth and Pragmatism, Respecting
systems are in place. The Board and the Audit Committee
People and Creating Value All Together”, China Telecom
also regularly receive briefings from the Company on ESG
has since long incorporated the Environmental, Social
issues, conduct the performance review on the Company,
and Governance (“ESG”) responsibilities into its corporate
present advices and instructions to the management
development strategy, routine production and business
and relevant departments on ESG issues and review
operation and management activities, actively fulfilled its
and approve the disclosure of ESG reports to ensure the
responsibility toward stakeholders, and followed the path
Company’s performance in fulfilling ESG responsibility is
of responsible development, seeking to continuously build
continuously improving. We reported the work plan to the
on its overall value.
Board during the preparation stage of this report and also
reported to the Board upon the finalisation of this report.
I. PROMOTING RESPONSIBILITY
This report was reviewed and approved by the Board.
MANAGEMENT
The Company establishes an ESG working group
The Company strictly complies with the provisions of the
which is managed by senior management, while the
Environmental, Social and Governance Reporting Guide
Corporate Strategy Department coordinates with relevant
as set out in Appendix 27 of the Listing Rules of the Hong
departments in the headquarters, provincial branches,
Kong Stock Exchange. The Board of Directors of the
professional companies and units directly under the
Company attaches great importance to the supervision
headquarters participating in ESG reporting work.
and control over ESG, and is responsible for developing
ESG working group is authorised to be responsible for
ESG-related policies and strategies, including evaluating,
implementing the Company’s ESG strategies, promoting
prioritizing and managing ESG issues to guarantee that
E S G p e r f o r m a n c e m a n a g e m e n t a n d m o n i t o r i n g
information disclosure and relevant fundamental work.
Board of Directors
Senior Management
Corporate Strategy Department coordinates
with Related Functional Departments
Provincial Branches, Professional Companies,
Units directly under the Headquarters
ESG working group
088
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility Report The Company established its own system of ESG
The Company promotes communication with its investors,
Indicators, set up the information statistics system for
customers, employees, government and regulatory
ESG performance and refined procedures on ESG data’s
institutions, communities and other stakeholders through
collection, review and application. In accordance with
various channels including announcements, reports,
A Step-By-Step Guide to ESG Reporting issued by the
meetings, seminars, visits, service hotlines, questionnaires
Hong Kong Stock Exchange, the Company perfected
and events. The Company earnestly listens to the
its information disclosure and regulated the disclosure
expectations and needs of the stakeholders, sorts out
of detailed information on how the Company fulfills its
the opinions and suggestions from all parties and actively
responsibility in the aspect of ESG governance.
responds to the concerns raised.
STAKEHOLDERS’ EXPECTATIONS ON THE COMPANY AND OUR RESPONSE
Stakeholders
Communication
Expectations on the
Our Response
Mechanism and
Company
Method
Investors
• Statements and
• Value retention and
• Operate steadily and continue to create
announcements
appreciation
value for shareholders
• Reports and visits
• Regulating corporate
•
Improve corporate governance level and
• Daily communication
governance
continuously improve internal control
•
Investor conferences
• Operational risk
system
prevention
• Protect the rights of investors, especially
• Regulating
small and medium investors, in
information disclosure
accordance with laws
• Strictly comply with the disclosure
requirements of corporate information
Customers
• Customer service
• Suitable and good
• Promote business and products
hotline
business products
innovation
• Account manager’s
• Enhancement of
• Promote transparent consumption
visits
service quality
• Set reasonable and preferential tariff
• Customer surveys
• Tariff charges
charges
• Customer
reduction
• Regulate value-added service
communication
• Harmful information
cooperation management
activities
prevention
• Protect customer information in
• Personal privacy
accordance with laws
protection
089
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 Stakeholders
Communication
Expectations on the
Our Response
Mechanism and
Company
Method
Employees
• Employee
• Legal rights
• Regulate labour management
representative
protection
• Optimise income distribution and
congress
• Realisation of
welfare protection mechanism
• Employee-
professional
• Reinforce employee training and
management
development
improve career development
conversations
• Management
• Count on the function of employee
• Employee opinion
participation
representative congress
surveys
• Caring for employees
•
Improve work conditions
• Complaints and
grievances
Government and
• Meetings
• Compliance with
• Govern the corporate in accordance
Regulatory Institutions
• Statements or reports
laws and regulations
with laws, and operate with integrity
• Reports and visits
• Government
• Pay taxes in accordance with laws, and
management
foster employment opportunities
requirement
• Provide innovative informatisation
implementation
products and services, promote high-
• Facilitation of industry
quality economic development
development
• Actively provide advice and suggestions
• Promotion of
employment
Supply Chain
• Business
• Equal and mutually
• Cooperate with integrity, create mutual
communication
beneficial cooperation
benefit and achieve win-win
• Business trainings
• Co-creation of value
• Actively create an industrial ecosphere
• Seminars or forums
• Promotion of industry
and promote industry development
development
Peers
• Forums or
• Lawful and fair
• Actively communicate and exchange
conferences
competition
experience
• Dispute coordination
• Reinforcement in
• Promote inter-connection and inter-
and resolution
communication and
communication
• Special topic working
cooperation and
• Actively engage in co-building and co-
groups
• Visits
promotion of healthy
sharing
development of the
industry
090
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 Stakeholders
Communication
Expectations on the
Our Response
Mechanism and
Company
Method
Community
• Community
• Environment
•
Implement energy conservation
communication
protection
and emission reduction as well as
activities
• Telecommunications
environmental protection measures
• Community co-build
universal services
• Actively fulfill universal services
activities
• Emergency
obligation
• Social welfare
communications
• Maintain smooth communication
activities
assurance
• Promote poverty alleviation and help the
• Assisting vulnerable
disabled and people in need
groups
In accordance with the ESG subject areas contained in the ESG Reporting Guide, while taking into consideration the
expectations and needs of stakeholders based on the characteristics of our business and the industry as well as the
impact of our business operations on the economy, environment and society, the Company assesses ESG issues
that are relevant and material to the Company’s business operations from the dual perspectives of its importance to
stakeholders and its impact on the Company’s business operations, and selects and establishes a materiality matrix (see
below) as the basis for the Company’s ESG report’s disclosure.
High
I
m
p
o
r
t
a
n
c
e
t
o
s
t
a
k
e
h
o
l
d
e
r
s
Maintaining network information security
Operating with integrity and
in compliance with laws
Integrity governance and anti-corruption
Assuring emergency
communications
Promoting the
co-building and
co-sharing of
communication
infrastructure
Safeguarding the rights of employees
in compliance with laws
Promoting energy conservation
and emission reduction
Caring for employees’ well-being
Protecting the rights of
customers in accordance
with laws
Devoting to fight against
COVID-19
Enhancing service
capabilities
Building new information
infrastructure of cloud-network
integration
Promoting employees’
development
Promoting universal
services
Promoting responsible
supply chain
Emphasising environmental
protection in engineering construction
Conservation of natural resources
Child and forced
labour prevention
Enhancing production safety and
health and safety management
Participation in social
welfare activities
Impact on the Company’s business operations
High
091
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020
The main issues of this report are presented in the following table:
Environmental, social and governance areas
listed in the Environmental, Social and Governance
Reporting Guide of the Hong Kong Stock Exchange
Main environmental, social and governance
issues for the Company
A Environmental
A1 Emissions
A2 Use of Resources
A3 The Environment and Natural Resources
Promoting energy conservation and emission reduction
Conservation of natural resources
Emphasising environmental protection in engineering
construction
Promoting the co-building and co-sharing of communication
infrastructure
A4 Climate Change
Promoting energy conservation and emission reduction
B Social
B1 Employment
B2 Health and Safety
Green purchasing
Assuring emergency communications
Safeguarding the rights of employees in compliance
with laws
Caring for employees’ well-being
Enhancing production safety and health and safety
management
Devoting to fight against COVID-19
B3 Development and Training
Promoting employees’ development
B4 Labour Standards
Child and forced labour prevention
B5 Supply Chain Management
Promoting responsible supply chain
B6 Product Responsibility
Building new information infrastructure of cloud-network
integration
Promoting universal services
Maintaining network information security
Assuring emergency communications
Protecting the rights of customers in accordance with laws
Enhancing service capabilities
B7 Anti-corruption
Operating with integrity and in compliance with laws
B8 Community Investment
Participation in social welfare activities
Integrity governance and anti-corruption
This report is a yearly report which covers the policies, measures and performance on the ESG-related issues of the
Company and its subsidiaries (branches) for the period from 1 January 2020 to 31 December 2020 (reporting period).
092
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 This report actively complies with the requirements of the
The Company set up the Legal Department (Compliance
ESG Reporting Guide of the Hong Kong Stock Exchange
Management Department), as a separate unit in 2020,
in relation to the reporting principles of “materiality”,
to further improve the compliance management system
“quantitative”, “balance” and “consistency”. Based on the
with three lines of defence consisting of the business
materiality principle, the Board of the Company determined
department, compliance management department and
the importance of ESG issues, and this report disclosed
audit supervision department, and collaborated with the
our communication with stakeholders, the identification
parent company to formulate the Compliance Management
process of the material issues and the materiality matrix.
Action Program of China Telecommunications Corporation
Based on the quantitative principle, the Company strived
(2021-2023). The Company has issued the China Telecom
to quantify its ESG performance indicators as much as
Compliance Initiative for standardising the operation and
possible. The statistical standards, methods, assumptions
management behaviors of the corporate and its employees,
and calculation tools, as well as the sources of conversion
actively fostering the compliance culture, and promoting
factors for quantifying the key performance indicators
the realisation of “compliance in everyone, everything and
are all disclosed in this report. Based on the balance
every moment”.
principle, this report strived to provide an unbiased picture
of the Company’s ESG performance during the reporting
In accordance with the Company Law of the People’s
period and avoided selection, omissions or presentation
Republic of China, Accounting Law of the People’s Republic
formats that may inappropriately influence the decision
of China, Contract Law of the People’s Republic of China,
or judgment of the readers. Based on the consistency
Cybersecurity Law of the People’s Republic of China, Anti-
principle, the Company kept the statistical methods used
Monopoly Law of the People’s Republic of China, Anti-
for the data disclosed in this report consistent, and if there
Unfair Competition Law of the People’s Republic of China,
was any inconsistency, explanations were made. For
Securities Law of the People’s Republic of China and Code
details of compliance with the ESG Reporting Guide of
of Corporate Governance for Listed Companies in China
the Hong Kong Stock Exchange, please refer to the ESG
published by the China Securities Regulatory Commission
Reporting Guide Index in this report.
and other laws and regulations and the regulatory
II. OPERATING WITH INTEGRITY
in capital markets such as the United States and Hong
requirements governing internal control of listed companies
AND IN COMPLIANCE WITH
LAWS
Kong, the Company established its Internal Control Manual
to ensure that the Company’s operation and management
is in compliance with laws and regulations, the assets are
China Telecom governs the corporate in accordance with
secured, and the financial reports and relevant information
laws and regulations, persists in operating in compliance
are accurate and complete. In 2020, the Company made
with laws and integrity through abidance by relevant
constant efforts in improving its Internal Control Manual
laws and regulations and industry regulations. We have
and authority list in accordance with relevant provisions of
established an all-rounded and seamless compliance
the laws and regulations and regulatory authorities, taking
system featuring, among others, internal control, audit
changes in business operations etc. into account. The
supervision, anti-corruption and comprehensive risk
Company has advanced the work of “smart finance”, “smart
management. The Company has established a sound,
legal affairs” and “smart audit”, and has exploited artificial
long-term and effective communication mechanism in
intelligence and other new technological means to improve
order to regulate the disclosure of corporate information,
its risk prevention capacity. No major violations occurred
and is open to government supervision and public scrutiny.
during the year.
093
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 In compliance with the Trademark Law of the People’s
its employees as well as relevant criticism, opinions and
Republic of China, Patent Law of the People’s Republic
recommendations on integrity construction and anti-
of China and other laws and regulations, the Company
corruption work. The Company strictly implemented
i m p l e m e n t e d s y s t e m s a n d m e a s u r e s i n c l u d i n g
the Work Rules for Discipline and Supervision Organs
Administrative Measures on Trademark Management
Investigation and Handling of Reports and Accusations,
of China Telecom Group and Measures for the Patent
handled related accusations and charges in accordance
Management of China Telecom Group. The Company
with the rules, disciplines and regulations and strictly
established a sound intellectual property management
put the confidentiality requirements into effect, so as to
system and strictly protected intellectual property
effectively safeguard the rights of accusers.
rights. Focusing on the risk of intellectual property
rights infringement, the Company issued risk alert in a
III. DEVOTING TO FIGHT AGAINST
timely manner and organised propaganda to promote
the protection and requirements of use of intellectual
COVID-19
property rights in respect of logos, pictures, fonts and
Since the beginning of 2020, the outbreak of the novel
audiovisual materials used in operation and management.
coronavirus (COVID-19) epidemic (the “Epidemic”)
The Company organises activities to promote the rule
significantly impacted not only the society, production
of law and governance, such as the “World Intellectual
and daily lives, but also the business development,
Property Day” and the “National Intellectual Property
customer service, and network construction and operation
Rights Promotion Week”, to raise the awareness on
of the Company. The management of the Company
intellectual property rights among all employees. In 2020,
strengthened overall planning and leadership. Based on
the Company continuously stepped up patent filing
local conditions, entities at all levels implemented the
and protection efforts concerning 5G, cloud-network
policies and measures for the Epidemic prevention and
integration, network and information security etc., and
control at each stage in accordance with the relevant
enhanced the protection of intellectual property rights of
laws and regulations, proactively fulfilled corporate social
popular technologies according to the law.
responsibilities.
The Company strictly executed the laws and regulations
The Company is devoted to provide support for Hubei
on integrity governance and anti-corruption and
Province and Wuhan as well as other areas which
strengthened the development of systems, mechanisms
were severely affected by the Epidemic. The Company
and culture and other aspects in order to strictly prohibit
immediately initiated Epidemic prevention and control
the occurrence of any forms of corruption such as bribery,
response mechanism, mobilised the manpower, allocated
extortion, fraud and money laundering. The Company
Epidemic prevention supplies and focused on assisting
established and optimised five major mechanisms
emergency support work for severely-affected regions
including anti-corruption education and prevention,
in Hubei and Wuhan. The Company’s Hubei branch
system monitoring, discipline and accountability, fault
strived to provide telecommunications assurance for
tolerance and correction, and inspection and check.
local governments and the medical and healthcare
We conducted integrity and discipline education,
industry, ensured the overall stable operation of the
formulated code of conduct such as integrity manual,
medical and healthcare dedicated network and cloud
and opened a public WeChat account called “China
platforms across the province, and ensured the smooth
Telecom with Integrity”. We set up a whistleblowing postal
operation of 12345 and 120 hotlines in order to strive to
mailbox, emails and hotline to address any report of
provide telecommunication guarantee for critical tasks
whistleblowing allegations and relevant complaints against
such as hospital telemedicine. We quickly launched
094
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 Ensured smooth running of network to support Epidemic prevention and control
5G communication for Wuhan Huoshenshan Hospital and
communication” and 11 specific categories of employees.
Leishenshan Hospital, and promptly completed the entire-
We set up ledgers for employees and family members
process delivery of the two hospitals’ core systems for
diagnosed with COVID-19, employees with suspected
cloud access. We rapidly completed the network coverage
virus infection, employees whose family members are
of newly-built hospitals in areas such as Huanggang and
among the front-line anti-Epidemic medical workers, and
Xiaogan. In addition, the Company’s Hubei branch strived
employees stranded in Hubei, and assigned the special
to enhance network coverage through various means to
personnel to be responsible for the work of contacting,
cater for the network access needs of vast majority of
care and sympathy. We established the ledgers for the
returning students in rural areas, offered sound support
care of the expatriate employees and their family members
for “suspending classes without suspending learning”. We
in China and the employees’ children studying abroad,
swiftly completed the bandwidth expansion of IPTV, cloud
and conveyed our sympathy to the family members in
platforms and Internet Data Centre in a timely manner
China of the expatriates over the phone. Enterprises
and offered free services such as cloud conference, cloud
at all levels provided Epidemic prevention materials to
office and cloud storage of course materials for education
domestic and overseas branches in an orderly manner,
authorities, universities, teachers and students.
raised sympathy allowance through multiple channels for
consolation related to the Epidemic, and actively solved
The Company strived to safeguard the health and safety
emergencies and difficulties for employees and their
and wellbeing of our employees. We set up a working
families in need. The Company set up a psychological
team for employee care and concern and provided
care hotline to help employees relieve their psychological
guidance for entities at all levels to strengthen care and
anxiety. Overseas branches developed Epidemic
concern for employees. We provided care for the front-line
prevention and control strategies based on the reality of
staff involved in the “fight against the Epidemic and ensure
the local situation and the specific projects, and calmly
responded to the Epidemic to ensure the personal safety
and health of their employees.
095
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 The Company made great efforts to help the society to
campus recruitment for the year, signing contracts with
resume work and production. Combining the needs of
more than 7,000 fresh graduates, and won the praise of
Epidemic prevention and control and the society’s new
“Top 100 Best Employers in 2020” by Zhaopin and “2020
demand for informatisation services, we fully leveraged
Chinese College Students’ Favorite Employers” by 51Job.
advantages of cloud-network integration, provided
a variety of informatisation applications and services
The Company strived to provide excellent customer
including e-Surfing Cloud, Cloud Conference, Cloud
services. In response to the Epidemic, the Company
Streaming, Cloud Classroom, Cloud Dam, e-Surfing
promptly launched more than 20 service initiatives such
Push-to-Talk, e-Surfing Webcam and e-Surfing Speaker,
as non-termination of services, public service and welfare
e-Surfing Monitoring Platform for Epidemic Prevention
messages, quick activation for key assurance functions
and long distance telemedicine counselling system, and
and caller display name cards in a timely manner. We also
promoted 5G informatisation applications such as 5G+VR,
strengthened service management and enhanced online
5G+ thermal imaging temperature measurement/intelligent
service capabilities through electronic channels. The
disinfection vehicle, so as to help Epidemic prevention and
customer service centre “Hotline 10000” implemented
control and the resumption of work, production business
a work-from-home policy and we steadily promoted the
and school. The informatisation applications such as
resumption of operation of physical stores on the basis of
e-Surfing Monitoring Platform for Epidemic Prevention and
implementing Epidemic prevention and control measures
long distance telemedicine counselling system provided
at differential regional and hierarchical levels, so as to
by China Telecom have played a significant role in helping
ensure customer services would not be interrupted and
fight against the Epidemic, and have been highly praised
customer perception is assured. We also strengthened
by the society, and the 5G “cloud supervision” has
network information security to protect users’ personal
won widespread praise. In response to the call of the
information.
government, the Company was actively stabilising and
expanding employment. The Company overfulfilled its
Provided effective communications assurance during the Epidemic for hospitals and other key locations
096
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 The Company commended the anti-Epidemic frontrunners
Building new type of information infrastructure of
and touching deeds of fighting the Epidemic. In the fight
cloud-network integration
against the Epidemic, cadres and employees were on
In order to fully implement the new development
the front-lines making due contributions to ensuring
philosophy, China Telecom carried out co-building and
the smooth operation of the national economy, social
co-sharing of 5G network nationwide with China Unicom,
stability and Epidemic prevention and control, leading to
the emergence of a large number of advanced groups
who have overcome difficulties, made innovations and
remarkable achievements, as well as advanced individuals
who have the courage to take on responsibility, fear no
difficulties and sacrifice. China Telecom received one
national group commendation and two national individual
commendations at Awards Ceremony for COVID-19
Fighters. The Company commended 24 groups and 34
individuals for their outstanding performance in Epidemic
prevention and control.
The Company made due efforts to ensure effective routine
Epidemic prevention and control. Thus far, the COVID-19
Epidemic is still spreading around the world, with cases
and local outbreaks in China from time to time. In
response to the Epidemic, the Company conscientiously
implements the requirements of governments at all
levels, coordinates Epidemic prevention and control in
the domestic and overseas, and resolutely “prevent the
coronavirus from re-entering the country to cause a new
accelerated the construction of 5G network capabilities
with the number of 5G base stations in use exceeding
380,000, achieved continuous outdoor coverage of 343
cities in China and completed the world’s largest 5G co-
building and sharing network. Adhering to SA as the lead,
the Company promoted the maturity of the SA industry
chain, took the lead in formulating and releasing the
“5G SA Implementation Guidelines” all over the world,
promoted the integrated development of 5G technology,
and pioneered in building the world’s largest 5G SA
network and commenced the commercial launch. With the
continuous promotion of fibre network construction, the
Company has practically and primarily achieved optical
network coverage in 21 provinces (autonomous regions
and municipalities directly under the central government)
in southern China, and deployed gigabit networks in
280 cities nationwide. In accelerating the pace of IDC
construction, the Company added 55,000 cabinets and
35,000 cloud resource pool servers. The Company has
completed the connection of all e-Surfing cloud resource
Epidemic”. The Company has coordinated the prevention
pools with CN2-DCI and government-enterprise OTN
and control of the Epidemic as well as the economic
networks, and established the shortest optical cable and
and social development to support the development of
transmission system between neighboring provinces and
various sectors and industries with high-quality integrated
cities in the Beijing-Tianjin-Hebei region and Yangtze River
information services.
IV. PROVIDING HIGH QUALITY
NETWORK ASSURANCE
China Telecom promoted the new infrastructure
construction including 5G, data center and Internet
of Things, promoted universal services, maintained
network information security and assured emergency
communications in order to provide high quality network
assurance for customers and economic and social
development.
Delta region. The average delay of ChinaNet decreased
by 2.2ms compared with that at the end of 2019. Among
them, the delay between neighboring provinces and cities
in the Beijing-Tianjin-Hebei region, Yangtze River Delta
region and other regions dropped to less than 3ms, so
as to provide ubiquitous, high-speed and low-delay basic
network guarantee for all kinds of customers access to
the cloud and inter-cloud business. The Company initiated
the construction of Mobile Edge Computing (MEC) and
promoted the “Cloud Edge” collaboration.
097
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 Promoting universal services
actively cooperate with government authorities to combat
The Company continuously promotes the construction of
cybercrimes and decontaminate the cyberspace.
communication networks in rural areas. The Company has
set up local services points for rural villages adapting to
During the year, the Company laid a solid security
local conditions and proactively promoted informatisation
foundation for cloud-network integration, built on security
applications and e-commerce development in rural areas
guarantee capabilities, expanded security products and
to promote the prosperity of rural villages. The Company
services, systematically sorted out more than 60 key
vigorously carries out network poverty alleviation by
security products and launched a batch of new products
accelerating the promotion of universal service projects
such as trusted call, security guarder, privacy sentry and
in remote and impoverished villages and improving the
5G encrypted call. We promoted the security converged
broadband access coverage in those areas. During
cloud, aligned e-Surfing Cloud and Group IT Cloud with
the year, the fifth batch of universal services and the
the national standards for network security protection,
construction of around 7,000 4G base stations were
and realised the security capability coverage of Content
completed; The Company has fulfilled the industrial goal
Delivery Network (CDN) edge nodes. We advanced the
of providing broadband access to more than 90% of the
synchronous development of 5G and security, accelerated
registered poverty-stricken villages in the “Three Regions
the cultivation of security capabilities, and acquired the
and Three Prefectures” (the “Three Regions” refer to the
ability to export security capabilities on demand. The
Tibet Autonomous Region, four prefectures in southern
Company improved the network information security
Xinjiang Uyghur Autonomous Region and Tibetan-
management and security capabilities, established
inhabited regions in Qinghai, Sichuan, Yunnan and Gansu
Chief Network Security Officer in the headquarters and
provinces, while the “Three Prefectures” refer to Linxia
subordinate units, and initially established an expert
Autonomous Prefecture in Gansu Province, Liangshan
technical team aimed to maintain the network information
Autonomous Prefecture in Sichuan Province and Nujiang
security. The Company strengthened the real-time
Autonomous Prefecture in Yunnan Province) as set by the
management of the Internet exposure, actively carried
Ministry of Industry and Information Technology ahead of
out special actions against pornography and illegal
schedule.
publications, and continued to step up the establishment
of the two-level dispatch and disposal system at the
Maintaining network information security
headquarters and provincial branches, in order to
The Company complies with the Cybersecurity Law
promptly respond and deal with illegal and undesirable
of the People’s Republic of China and other laws and
information. The Company strengthened the protection of
regulatory requirements, conscientiously implements the
personal data, and carried on the special governance and
requirements of the Ministry of Industry and Information
regular inspection of the illegal collection and use of users’
Technology, Ministry of Public Security and other
personal data by APP.
authorities on network and information security. We
098
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 5G emergency communications assurance
Assuring emergency communications
The Company is truly committed to the mission of
In accordance with the Code of Practice for Emergency
providing safe and smooth communications assurance
Communication Support Response of China Telecom and
and is devoted to fight against a number of severe natural
the Plan Template of Organising Communication Support
disasters such as earthquakes, typhoons, floods and
for Major Disasters of Provincial Companies of China
landslides and to safeguard important events. During
Telecom, the Company developed emergency plans for
the year, we made every effort to ensure emergency
handling natural disasters, organised emergency drills
communications in Hubei, Wuhan and other areas most
and pre-deployed emergency equipment, anti-disaster
affected by the Epidemic, and completed flood and
materials and emergency repair teams based on climate
typhoon-relief and other disaster relief in the provinces
conditions and the severity of the disaster, so as to ensure
such as Hubei, Jiangxi, Anhui, Yunnan, Chongqing,
that emergency support can be provided swiftly, timely
Sichuan and Zhejiang. We also successfully provided
and efficiently in case of disasters. Enterprises at all levels
telecommunications assurance for important events
established leading groups for dealing with disastrous
including the 3rd China International Import Expo, the
weather and major events, and, by graded responsibilities,
128th China Import and Export Fair (Online Canton Fair),
identified the responsible persons and contacts for
World Internet Conference and 5G+ Industrial Internet
assuring communications for flood control and drought-
Conference. During the year, more than 146,000 person-
relief efforts. Equipment and supplies were properly
times, 55,000 vehicle-times and 29,000 set-times of
prepared, and regularly inspected and maintained. Taking
communication equipment were deployed for emergency
the support demand within the entire network, solid efforts
communications.
were made in technical support, material maintenance
and inspection, resource consolidation, circuit testing and
other supports to ensure that the portable emergency
communication devices such as satellite phones in all
provinces could be available at any time.
099
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 V. PROVIDING HEARTFELT
SERVICES TO CUSTOMERS
China Telecom has a profound understanding of the
customers’ needs. While being dedicated to providing
customers with various communication and information
application businesses, the Company focuses on
protecting customer rights in accordance with the law,
continuously strengthens service awareness, enhances
the construction of service capability and comprehensively
fosters a brand image of “Trustworthy China Telecom”.
Protecting the rights of customers in accordance
with laws
The Company strictly conforms to the laws and regulations
regarding consumer rights and interests such as Law of
the People’s Republic of China on Protection of Consumer
Rights and Interests and Advertising Law of the People’s
Republic of China, dedicates to provide products and
services in compliance with laws and regulations, performs
compliance checks on advertisement campaigns and
continuously standardises business tariff management.
The Company listens to subscribers’ opinions via channels
like “Hotline 10000”, online and physical stores, etc., and
continuously carries out events such as “Customer Rights
Day”, “General Manager’s Service Day” and “Listen to
Hotline 10000”.
The Company strictly complies with the Cybersecurity
Law of the People’s Republic of China and other laws
and regulatory requirements, implements the relevant
perfects the users’ personal information protection
management system, and strengthens the protection
of users’ personal information. In 2020, the Company
thoroughly implemented the Administrative Measures
of China Telecom on Security Management of Personal
Information of Users and the Administrative Measures
of China Telecom on Information Security Management
of Users and other systems and supervised enterprises
at all levels to implement the division of responsibility on
protection of users’ personal information. We regulated
behaviours of collecting, storing, transmitting, using
and destroying user information and strictly controlled
the authorisation for sales staff to access and process
customers account information in order to “collect
information for a proper purpose, store and use the
information properly, record the use of information,
and investigate the abuse of power”. We thoroughly
implemented the systems including the Rules for the
Collection and Use of Personal Information for APP of
China Telecom and the Administrative Measures for the
Compliance Management on the Collection and Use of
Personal Information of APP for our Customers to tighten
up compliance management concerning the collection
and use of personal information by APP and continuously
improve the compliance level of APP. Taking a solid and
holistic governance approach, the Company kept a close
eye on the bottom line problems infringing users’ rights,
such as telecommunication fraud, crank calls and junk
short messages. Compared to the industry average, the
Company had a relatively low number of crank calls and
junk short messages reported by the Ministry of Industry
regulatory requirements of the government, continuously
and Information Technology.
100
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 In response to customers’ feedback on services, the
reflected in customer satisfaction surveys, customer
Company made serious analysis and research and
complaints, malfunction and complaints throughout
actively promoted problem solving. In each quarter
the year, and implemented policies and promoted the
of 2020, a detailed study was conducted on service-
rectification of broadband network in different provinces,
related complaints that affected user perception, and in-
such as home network, metropolitan and backbone
depth analysis was carried out on typical service cases,
network, content access and international network and
rectification was conducted based on thematic studies
other links of broadband network. As regards mobile
on key and difficult problems reported by customers,
network, the Company has carried out improvement and
such as remote service, cloud-network support and
upgrading actions for the benchmarking experience of
outbound marketing. The Company carried on tracking
critical scenes in key areas and communities with poor
and analysing the subscribers’ complaints in the process
communication quality to enhance user perception and
of mobile number portability service and made timely
experience, and the complaint rate of 5G subscribers has
standardisation and rectification in hoping for keeping
decreased significantly compared with the same period
the amount and rate of complaints of mobile number
last year. As regards cloud-network key perception,
portability service at a low level in the industry.
the Company has promoted standard optimisation,
Enhancing services capabilities
service capabilities, and increased the delivery satisfaction
Insisting on the customer-oriented principle, the
rate of government and enterprise customers to over
perception evaluation and targeted improvement of
Company continued to enhance service quality. In 2020,
93%.
the evaluation system of “whether service is good or
not, subscribers have the final say” was established.
Adhering to the principle of “wherever the subscriber
The Company applied indicators such as subscribers
is, the service is”, the Company continued to promote
satisfaction, product net promoter score and contact
the digital transformation of services and improve the
service satisfaction rate, and regarded customer
smart service capabilities. During the year, the Company
reputation as a service evaluation criterion to promote the
deployed and promoted the “home customer service”
improvement of service quality. The Company established
mode, taking the lead in launching remote counter video
a sound customer perception experience and evaluation
service by innovative means, to ensure that customers
mechanism to recognise problems in network, products
could process services easily and without leaving
and services from the perspective of subscribers.
home. The Company’s intelligent voice navigation has
Focusing on key products such as 5G and Smart Family,
achieved full coverage in 31 provinces, accounting for
and aiming at major issues such as broadband installation
54% of intelligent services. The Company established the
and maintenance, online channel services, the Company
operation system of new media customer service matrix,
performed 19 intensive experiences at the headquarters
with 167 million followers of new media accounts such as
and more than 300 experiences at provincial branches,
WeChat, Weibo and Douyin, and 200 million self-service
aimed at in-depth analysis of service shortcomings
volume per month, and was awarded the “2020 Most
and clarified optimisation and improvement measures
Influential Second-tier New Media Account of State-owned
by brainstorming. In terms of broadband network, the
Enterprises” by the State-owned Assets Supervision and
Company has closely tracked and analysed the problems
Administration Commission of the State Council.
101
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 VI. CARING FOR EMPLOYEES
China Telecom safeguards the interests of its employees
in accordance with laws, attaches great importance to
building harmonious labour relations, supports labour
unions in carrying out their functions, encourages
employees to participate in the management and actively
helps employees to improve their capabilities, so that the
Company and the employees can grow together.
Safeguarding the rights of employees in compliance
with laws
The Company strictly complies with and implements
the relevant laws and regulations regarding labour
and protection of the employees’ rights and interests
including the Labour Law of the People’s Republic of
clearly determines the employment form of each role,
standardises the designated agreements signed with
agency workers, checks and supervises these dispatch
units and dispatch workers to sign employment contracts,
and pays remuneration and social security insurances in a
timely manner in order to protect the rights and interests
of contract or agency workers. The Company adheres
to principles of gender equality and equal pay for equal
work, protects the privacy of employees in accordance
with laws and implements the paid annual leave system.
The Company prohibits child labour and forced labour in
accordance with laws. In 2020, no child labour or forced
labour was found. The Company supports the labour
unions in carrying out their functions in accordance with
laws, encourages employee participation in management
and continuously establishes stable and harmonious
China, the Labour Contract Law of the People’s Republic
relationship with the employees.
of China and the Trade Union Law of the People’s
Republic of China, and protects the rights and interests
of employees with respect to labour rights, democracy
rights and spiritual culture rights in accordance with
the laws. The Company strictly implements the Notice
on Standardisation of Labour Management in Strict
Compliance with the Labour Contract Law of the People’s
Republic of China, improves labour management, and
conducts workforce employment in accordance with
laws and regulations. The Company also ensures that
all contract employees have their labour contracts
signed and their remunerations and social security
insurances paid in full and in a timely manner. The
Company continually implements the Notice on Issues
concerning Labour Dispatch Management, improves the
business operation models and job role classification,
Promoting employees’ development
T h e C o m p a n y s t r e n g t h e n s t h e d e v e l o p m e n t o f
management talent team. The Company actively takes
measures to choose good cadres, allocate strong teams
and gather talents, adheres to performance orientation
and grassroots orientation, lays emphasis on identifying
and selecting cadres in urgent, difficult, dangerous and
important tasks, and vigorously select and train excellent
young cadres. The Company continues to improve the
management team structure at all levels to enhance the
vitality of the cadre talent team, organises specialised
training courses for cadres, increases exchanges and job
rotation among cadres, assists cadres in improving their
competence, strengthens oversight and management of
cadres and promotes anti-corruption practices.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 T h e C o m p a n y s t r e n g t h e n s t h e d e v e l o p m e n t o f
The Company strengthens employees’ training. In 2020,
professional talent team, and actively introduces well-
the Company continued to strengthen the development
established specialists in cloud-network integration, 5G
of internal trainers, more than 678 internal trainers at
MEC, network information security, Internet finance, etc.
the group level and more than 775 internal trainers on
through the formulation of special policies. The Company
probation at the group level were recruited and more
formulates the Guiding Opinions on the Construction of
than 210,000 hours of lectures were delivered by more
Government and Enterprise Industry Expert Team to meet
than 13,000 internal trainers at all levels. The Company
the needs of the reform and development of government
actively responded to the Epidemic, carried out online
and enterprise industry business groups. The Company
learning and training based on the Online College, and
accelerates the construction of expert talent team for
implemented well-targeted training courses to improve the
industrial informatisation application, Big Data, AI and
ability of employees at all levels and positions according
cloud-network operation, and cultivates professional and
to the training needs, so as to accurately empower
high-level talent through the constant implementation
frontline employees. More than 220,000 people studied
of programs such as “Spark Program” and “Prairie Fire
in the Online College and the average learning time per
Program”. In line with the development needs of overseas
employee exceeded 50 hours.
business, the Company cultivates international talents to
support Philippine Mobile Communication Operation and
The Company actively facilitates employees to develop
other relevant projects.
skills and increase their values. The Company makes
consistent efforts to build innovation workshop and
The Company strengthens the construction of front-line
vigorously encourages employees in job innovation.
skilled talents team. Taking into account the needs of the
Within the year, 29 group level demonstration innovation
grassroots, the Company launches a series of practical
w o r k s h o p s w e r e e s t a b l i s h e d a n d 3 5 i n n o v a t i o n
training programs, such as “comprehensively strengthen
workshops at and above the group level were rewarded.
the training of cloud-network integration talents at the
By the end of the year, the Company had established a
prefectural and municipal levels”, and vigorously conducts
total of more than 1,300 innovation workshops of various
training of skilled talents to empower front-line employees.
types, including 5 national-level Outstanding Innovation
The Company revises the administrative measures of skill
Workshops for the Model Workers and Craftsman, 4
certification and organises 41 kinds of skill certification and
industry-level innovation workshops, and more than 150
2 professional examinations, covering more than 100,000
innovation workshops named by provincial and prefectural
person-times, and carries out tests for Smart Family
labour unions. The Company won more than 700 national
engineers, service specialists and 5G specialists, covering
and provincial achievement awards, and applied for nearly
more than 470,000 person-times.
1,000 invention patents and utility model patents. Based
on the corporate strategies and business development,
the Company organised and launched 15 competition
activities to promote production and transformation
through competition, sourced innovative talents, and
promoted the rapid replication and implementation of
successful projects.
103
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 The Company vigorously promotes and encourages
and emergency prevention techniques. The Company
the spirit of model workers. In 2020, the Company won
strengthened the safety management of engineering
282 national, ministerial and provincial-level honors of a
projects, strictly implemented licences obtaining system
general and specialised nature, including 88 national-level
for special operation employees, perfected the accidents
honors and 194 ministerial and provincial-level honors.
emergency drill and strengthened emergency drills. In
27 employees won the honorary title of “National Model
2020, there was no occurrence of severe work-related
Worker” in 2020, setting a record high and fully attesting
casualties and accidents.
to the high recognition of China Telecom employees by
government at all levels and the society as a whole. The
The Company attaches great importance to occupational
Company publicises the deeds of model workers and tells
health and safety management of its employees and
the stories of model workers in an all-round way through
formulated the Interim Provisions on “Simultaneous
multiple channels, showing the elegant demeanour
Execution of Three Aspects” of Occupational Safety,
of China Telecom’s employees to the entire society,
Hygiene Facilities and Main Construction Projects
and motivating the majority of employees to vigorously
and the Interim Provisions on Personal Protective
promote the spirit of model workers.
Equipment for Employees, organising supervision and
inspections on the work sites of our employees regularly,
Enhancing production safety and health and safety
supervising the design and installation units to design
management
and install in accordance with the standards including
The Company conscientiously and strictly implements
for indoor lighting, noise, temperature and humidity
the Work Safety Law of the People’s Republic of
and continuously improving the workplace environment
China, coordinates the prevention and control of the
and work conditions, thus effectively eliminating the
Epidemic and production and work safety during
occurrences of occupational illness. The Company
the resumption of production, fully fulfills the core
conducts on-site inspections from time to time, urges
responsibilities for corporate safety production, develops
units to allocate necessary protective equipment for
sound accountability systems, implements safety
workers in accordance with the relevant requirements and
responsibilities at all levels, strictly implements safety
standards and supervises workers to wear and use the
production assessment and punishment system and
protective equipment properly. The Company attaches
continually solidifies the foundation of safety production
great importance to the physical and mental health of
management. The Company continually carries out
employees. Every year, the Company provides free
supervision and check on the safety production of the
medical examinations for all employees. The Company
units and professional categories, and prevents safety
continuously conducts counselling activities concerning
risks by class and level, so as to timely eliminate hazards.
mental health of the employees and assistance work, and
The Company widely promotes training and publicity of
proactively helps the employees reduce their stress and
production safety regulations and safety knowledge and
pressures.
persistently increases the employees’ awareness on safety
104
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 Caring for employees’ well-being
The Company perfects the closed-loop management
mechanism from gathering, analysing, processing and
giving feedback to understand employees’ needs and
establishes communication channels such as seminars,
surveys, visiting employees’ family, frontline visits, face-to-
face communication, reception visits, handling incoming
mail or email, striving to enhance communication and
to thoroughly understand the thoughts, working and
living conditions of employees as well as the hot topics
and problems that the employees most care about.
Enterprises at all levels actively helped the employees
solve practical problems or difficulties through regularising
visits, responding to hot issues, helping employees in need
and other measures. We provided convenient services
to employees and strengthened our care for outstanding
model workers, young employees and outsourced
employees. During the year, the Company tracked and
guided all 110 grassroots units at an elevation of 3,500
meters or above in five provinces including Tibet to
construct oxygen supply facilities, improving the working
and living conditions of employees in high altitude areas.
The Company continually optimised the operation of “Four-
Smalls”, namely small canteens, small bathrooms, small
washrooms and small activity rooms, in order to improve
service ability and enrich service contents in the catering
quality, working environment, activity conditions, quality
of life and other aspects. The Company continually built
infant rooms according to the special needs of female
employees, organised cultural and sports activities in
which the employees were interested, assisting employees
in achieving work-life balance and increasing their well-
being.
VII. PRACTICING GREEN
DEVELOPMENT
China Telecom complies with the Environmental Protection
Law of the People’s Republic of China, the Energy
Conservation Law of the People’s Republic of China
and other laws and regulations related to environmental
protection, practises the concept of green development
and proactively devotes itself to the establishment of
ecological civilisation. The Company endeavours to
build a green network, pushes forward green operation,
sets up environmental indicators, analyses and releases
collected performance data on a regular basis, proactively
communicates with the society of its environmental
protection actions and effectiveness and willingly opens
itself to public scrutiny. The Company carried out
publicity activities of energy conservation and emission
reduction in various forms to enhance the awareness
and consciousness of energy conservation and emission
reduction of its employees and the public. There was no
violation of environmental protection laws and regulations
as well as no incident having a material impact on the
environment caused by the Company during the year.
In response to the national requirements of “reaching a
peak on carbon dioxide emissions and carbon neutrality”,
the Company implements the dual control strategy of
energy consumption and puts total energy consumption
and energy intensity under strict control. In the future, the
Company will accelerate the pace of adjusting the energy
use structure, increase the use proportion of clean energy,
control the comprehensive energy consumption and the
comprehensive energy consumption per unit information
flow, in order to ensure the continuous decline of the
comprehensive energy consumption per unit information
flow, and strive to achieve the carbon emission peak by
2030 and carbon neutrality by 2060.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 Promoting energy conservation and emission
In 2020, against the backdrop of vigorous development
reduction
of “new infrastructure” and the rapid construction of
The Company implemented measures such as the
5G networks and with “dual control” on total energy
Administrative Measures of China Telecom on Energy
consumption and energy consumption intensity as the
Conservation and Emission Reduction. Through means
basic requirement, the company worked out a rolling
like rules and regulations, work plans, work deployment,
plan for energy conservation and emission reduction
communication and trainings, assessment and evaluation,
for the next three years to support the coordinated
energy saving promotion etc., the Company applies energy
development of various energy conservation and emission
conservation and emission reduction requirements to link
reduction tasks. The Company refined the evaluation,
through various operational activities such as network
reward and punishment system, strictly controlled the
planning, procurement, construction, operation and office
growth of total energy consumption and the PUE (power
administration. The Company strengthened its efforts
usage effectiveness) value of large– and super-large
in monitoring measurements on energy consumption,
data centers. While ensuring the orderly development
organised training and exchanges on energy conservation
of energy conservation and emission reduction using
and emission reduction, constantly raised the professional
its self-owned special funds, the Company actively
level of grassroots personnel, and continued to promote
introduced social capital and technology to realise the
innovation in energy conservation and emission reduction
technical transformation through the continuous use of
management. The Company insisted on preferring the use
the energy management contracting mode. The Company
of energy-efficient and environmental-friendly technology
vigorously promoted the energy-saving experience
and equipment, actively carried out research and
and best practices for intelligent shutdown technology
application of new technologies for energy conservation
of large 4G base stations, and improved the energy
and emission reduction and applied energy-saving
consumption efficiency of 4G wireless base stations, in
technologies in the facilities of machine rooms, base
order to actively explore energy-saving measures for 5G
stations and data centers, extended the coverage of the
base stations. The Company made constant efforts in
energy-saving technological application and promoted the
withdrawing inefficient equipment and machine room from
upgrade, transformation and withdrawal of old and high
the network, promoting the configuration optimisation of
energy-consuming equipment. The Company endeavours
basic supporting facilities of machine room, eliminating
to reduce energy consumptions of all kinds as well as
redundancy and reducing allocations, so as to minimise
greenhouse gas emission.
power consumption and improve power efficiency. In
2020, the unit energy consumption per information flow
was 4.61 kgce/TB, representing a decrease of 6.1% over
last year.
106
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 Conservation of natural resources
The Company enhances the recycling, disposal and
The Company promotes water conservation, strives to
utilisation of waste and used materials in order to conserve
reduce water consumption per unit operating revenue,
resources as much as possible and reduce environmental
actively promotes and advocates water conservation by
pollution. The Company strictly follows the Law on the
posting reminders regarding water conservation near
Prevention and Control of Environment Pollution Caused
water facilities and appliances. The Company continually
by Solid Wastes of the People’s Republic of China and
strengthens the management on water usage, carries
other laws and regulations regarding waste disposal and
out sewage disposal and treatment, promotes the reuse
utilisation and carries out waste disposal in accordance
of water, actively uses reclaimed water as an alternative
with regulatory requirements. The Company implemented
source of water in place of tap water while meeting the
the Administrative Measures of China Telecom on Reverse
requirements on use of water, promotes and popularise
Logistics and the Administrative Measures of China
the use of water-saving appliances and performs regular
Telecom on Waste and Idle Recycling and Disposal,
checks and repairs on each part of the water supply
specified the guidelines, division of responsibilities and
system to prevent occurrences of water leakage and
management of the recycling and disposal of waste
water wastage. In 2020, the total water consumption
materials and the qualifications of recyclers, standardised
decreased by 5.66 million tons over last year, representing
the forms and procedures of disposal, and refined the
a decrease of 13.6% compared to last year while the
approval authority and process of disposal decisions to
water consumption per unit operating revenue decreased
effectively prevent disposal risks. The Company formulated
by 17.5% over last year.
the incentive policy for cleaning up idle materials which
specified the incentive standards, and encouraged all
The Company encourages paper saving by actively
levels of enterprises to actively dispose, recycle and
promoting reduction of paper use in operation and office
utilise the waste and used materials based on actual
facilities sites. The Company promotes measurements
circumstances and relevant regulatory requirements. In
on its paper use. The amount of paper used in 2020
2020, the Company continually enhanced the professional
was approximately 5,000 tons. The Company, from
management of waste, promoted the recycling, utilisation
the perspectives of technology and regulations, actively
and harmless disposal of such waste and old materials
encourages paper saving and reduces paper use.
such as batteries, copper cable and devices. Since
We continually promoted electronic accounting files
traditional lead-acid batteries contain large amounts of
management, VAT electronic invoice, e-reimbursement
heavy metal, waste acid, waste alkali and other electrolyte
and filing of e-invoice and paperless operation, and
solutions, the batteries will pollute the environment if
promoted automatic process of tax declaration in order to
handled inappropriately. The Company, on the one hand,
reduce the use of paper.
conducted overall on-site inspection of environmental
protection practices of the battery suppliers, and
107
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 continually purchased green and energy-saving products
In the area of construction impact, areas such as mineral
such as lithium iron phosphate batteries; and on the other
reserves, forest, grasslands, wildlife habitats, natural and
hand, the Company established a management system
cultural relics, natural reserves and scenery areas are
for battery recycling and disposal to prevent pollution to
intentionally avoided when conducting routing roll-out
the environment. The Company arranged waste copper
deployment for fibre cables, so as to avoid changing the
cables to third parties for recycling and disposal. The
surrounding environment as much as possible.
Company implemented wireline terminals closed-loop
management and strengthened the recycling and reuse
In the area of electromagnetic radiation, the Company
of equipment through measures such as refurbishment
monitors and assesses the electromagnetic radiation
and cross provincial re-allocation, etc. Waste and used
around the base station, enhances communication with
materials without recoverable value were properly
the community, opens itself to public scrutiny, strictly
disposed of in strict accordance with national regulations
controls the quality of network equipment by imposing
after taking full account of the environmental impact. In
controls from the source and actively takes advanced
2020, the Company recycled and disposed of various
technical means to refine the layout of base station,
types of waste and used materials over 90,000 tons.
ensuring the emission standard is stricter than the national
Emphasising environmental protection in engineering
emission standards.
construction
Promoting co-building and co-sharing of communication
The Company has taken proactive environmental protection
infrastructure
measures regarding issues in telecommunications
The Company earnestly implemented the implementation
engineering construction responding to concerns
measures of promotion of co-building and co-sharing
of the government and the public, such as farmland
of telecommunications infrastructure promulgated by
protection, equipment pollution, construction impact and
the Ministry of Industry and Information Technology and
electromagnetic radiation to ensure compliance with the
the State-owned Assets Supervision and Administration
government’s regulatory requirements and to actively
Commission of the State Council. We closely worked with
communicate with the public.
other telecommunications operators and China Tower
In the area of farmland protection, the existing residence
and co-sharing of communication infrastructures such
and barren land will be preferred in site selection for base
as base stations, channels and pole lines, to effectively
stations, in order to minimise the occupation of additional
reduce repeated construction in order to protect the
farmland as much as possible.
natural environment and landscape, and to reduce the
Corporation Limited and actively promoted the co-building
In the area of equipment pollution, non-polluting
2020, while deepening the co-building and co-sharing
equipment with no noise and no electromagnetic radiation
of 5G networks with China Unicom, we fully leveraged
and free of pollutants is preferred.
the complementary advantages of both sides’ network
land use, energy, and raw materials consumption. In
resources, actively carried out the construction and
sharing of 4G network, and opened about 170,000 base
stations. In 2020, the Company provided more than
11,900 kilometres of co-shared pole line and more than
1,300 kilometres of co-shared pipeline.
108
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 VIII. PROMOTING RESPONSIBLE
SUPPLY CHAIN
The Company strictly follows the Bidding Law of the
People’s Republic of China and procurement-related
laws and regulations, implemented regulations such
as the Administrative Measures of China Telecom on
Procurement, consistently adhered to supply chain
management concepts focusing on value-added,
transparent and green procurement, committed to
a trusted relationship with suppliers to achieve win-
win situations and actively communicated with and
encouraged its suppliers to fulfill social responsibilities
together.
In 2020, the Company strictly complied with requirements
of regulations such as the Administrative Measures
of China Telecom on the Procurement Bidding and
Tendering, the Administrative Measures of China Telecom
on Tendering Agency and Administrative Measures of
China Telecom on Tender Evaluation Expert and the Pool
of Tender Evaluation Experts, and the Regulations on
the Participation of Suppliers in Procurement Activities of
China Telecom, and constantly promotes open bidding
and transparent procurement. The Company ensured
bidding process for 100% of the projects which it ought
to have used bidding process for as required by law.
The Company implemented the requirements such
as the Administrative Measures of China Telecom on
Quality of the Purchased Materials and the Administrative
Measures of China Telecom on Inspection for the
Quality of the Purchased Materials in order to improve
the mechanism for selecting and reviewing suppliers
including pre-purchase inspections by reviewing
suppliers’ qualifications, conducting site visits and product
evaluation reviews, and post-purchase inspections by
testing the quality of the products upon arrival, quality
checks, post-purchase review of suppliers and day-to-
day evaluation. The Company continuously enhanced the
application of procurement data from quality inspection
and evaluation of suppliers in procurement evaluation so as
to encourage the suppliers to improve their services and
performance. The Company carried out the information
sharing mechanism of illegal and discredited suppliers
with major domestic basic telecommunications operators,
and implemented the newly formulated Interim Provisions
on Supplier Misconduct of China Telecom and Interim
Provisions on Grading Management of Procurement
Suppliers of China Telecom. For outstanding suppliers,
the Company adopted incentive measures such as
publishing lists, increasing the upfront payment proportion
and prioritising payment. For unqualified suppliers, the
Company took disciplinary measures such as urging
improvement and restricting procurement. The Company
took disciplinary measures such as degradation,
adjustment of procurement amount, restrictions on
procurement, and ban on procurement against suppliers
with bad behaviors. Through the listing of management
methods, the objectification of identification standards
and the openness of processing rules, the Company has
gradually built a supplier management system integrating
positive incentive and negative punishment in order for
enhancing suppliers’ performance awareness of services,
and promoting suppliers’ good faith in cooperation.
The Company actively encourages the supply chain to
jointly respond to climate change, constantly promotes
the application of green procurement indicators in the
procurement process and preferentially purchases
resource saving and environmentally friendly products.
We included environmental impact factors into the
procurement evaluation and adopted environmental
assessment standards such as ISO14000 Environmental
Management System Certification, Environmental Impact
Assessment Report issued by the government and
the “Green Factory” list of the Ministry of Industry and
Information Technology, so as to identify and control
the products that may pose environmental risks during
the production process and encourage suppliers to
enhance their awareness and capability of environmental
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 protection. Regarding the investigation of suppliers,
whether the production wastes are treated in a green
way and are discharged as per standards, environmental
assessment report, environmental monitoring report
and other information are incorporated in the scope of
investigation; As for supplier evaluation, corporate social
responsibility (including energy conservation and emission
reduction) is included in the evaluation index system; In
the management of suppliers’ misconduct, the suppliers’
baneful influence caused by environmental problems are
included into “serious misconduct” for management, and
disciplinary measures such as degradation, reducing and
canceling procurement amount, restriction and ban on
Management proactively took part in poverty
alleviation work and conducted research in
remote areas
procurement are imposed as the case may be.
achieve the target of poverty eradication in all respects in
IX. PARTICIPATION IN SOCIAL
WELFARE ACTIVITIES
2020. China Telecom adhered to the two-step approach
of “poverty alleviation and fighting against Epidemic”,
continuously increased investment in talents, funds,
projects and other aspects and made solid progress in
The Company enthusiastically participates in social welfare
poverty alleviation tasks. Collaborating with the parent
activities. We implement the Welfare Donations Law of the
company, the Company further promoted the network
People’s Republic of China and other laws and regulations
poverty alleviation, and improved the broadband access
and the Administrative Measures on Donation of China
level of the severely impoverished areas and villages in the
Telecom Group under the principles of “voluntariness,
“Three Regions and Three Prefectures”; The Company
clear responsibility, action within capabilities, honesty and
implemented preferential packages and terminal policies
trustworthiness”, support the development of technology,
for targeted poverty alleviation, opened all kinds of
education, culture, sports and healthcare through various
informatisation cloud platforms free of charge, assisted
ways, and actively help the vulnerable, disabled and
in resumption of business and production activities
disadvantaged. The Company encourages its employees
and reopening of schools, and achieved a cumulative
to carry forward the spirit of volunteerism, and actively
reduction of communication costs of more than RMB1
participates in volunteering activities of different kinds.
billion; The Company innovatively created a sustainable
poverty alleviation model of “industry + employment +
The Company makes great efforts to fulfill the annual
consumption”, introduced free assistance funds to support
targets for poverty alleviation in 2020. Out of China
related projects, and advocated subscribers and cadres
Telecom’s 6 targeted counties for poverty alleviation and
to carry out poverty alleviation through consumption of
offer of support and assistance, five of them are located
more than RMB180 million. During the year, 4 targeted
in deeply impoverished areas in the “Three Regions and
counties for poverty alleviation and 2 targeted counties for
Three Prefectures”, which increased the difficulties in
offering of support and assistance of China Telecom, and
poverty alleviation due to the severe difficulty in natural
more than 1,400 targeted assisted villages of companies
conditions in these areas. China is in the final push to
at all levels were all lifted out of poverty and won the
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 Organisational Innovation Award of the 2020 National
Poverty Alleviation Award.
X. OUTLOOK
In 2021, the Company will thoroughly embrace new
development philosophies focusing on innovation,
coordination, green, openness and co-sharing. The
Company will continually increase communication with
stakeholders, deeply implement the “Cloudification
and Digital Transformation” strategy, and build new
information infrastructure with great efforts. The Company
will strengthen sci-tech innovation, promote the
Company’s technology advances, business upgrading
and operational innovation, strive to provide integrated
intelligent information services for all kinds of customers
in all occupations, and make new contributions to
the promotion of high-quality economic and social
development.
Helped subscribers in rural area to leverage
on China Telecom’s service to sell products
through live streaming
111
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Social Responsibility ReportChina Telecom Corporation Limited Annual Report 2020 In 2020, our work on human resources has closely
and enterprise business. The Company adopted fixed-
centered around the Company’s requirements for high-
term and contractual appointments at the management
quality development. We coordinated and promoted
level in reform project companies such as E-surfing Pay
the optimisation of leadership structure, team building
Co., Ltd and system integration company, and actively
and the development of human resources mechanism,
implemented the three-year action plan for reform of
strengthened fundamental management and implemented
state-owned enterprises.
the project of “Strengthening the Enterprise through
Talents” in order to continuously improve human
resources efficiency and provide sound organisational
assurance and support for our talents for the corporate’s
sustainable and healthy development.
STRENGTHEN SENIOR
MANAGEMENT AND EXECUTIVE
TEAM BUILDING
CONTINUOUSLY PROMOTE
AND IMPLEMENT THE
“STRENGTHENING THE
ENTERPRISE THROUGH TALENTS”
PROJECT
The management of the Company and its subsidiaries
at all levels continued to strengthen communication and
care for professional talents at all levels. The Company
Enhancing the building of the management teams at all-
implemented the “Hundred, Thousand, and Ten Thousand
corporate levels, we continued to promote the training
Professional Talent Project” and continued to build a team
of a team of outstanding young cadres and selected a
of high-level professional talents. Specific mechanisms
group of well-recognised cadres with superb qualities,
were implemented in the cloud computing branch of the
distinguished capabilities and outstanding performance. As
Company, which enabled mobility of the projects and its
a result, the proportion of young cadres has substantially
personnel and the flexibility of compensation. A “Talent
increased, the age structure and professional structure of
Zone” was established in the Cloud-network Security
the management teams have been significantly improved,
Technology Co., Ltd, which implemented a market-
and the vitality of the management teams has been
oriented mechanism where employee incentives can be
significantly boosted. We also strengthened the allocation
cashed in according to the performance of the business.
of the management of the business group serving
The Company further promoted its unified “talent cloud”
government and enterprise informatisation services,
platform, built a talent labelling system, developed a
the omni-channel operation centre, the cloud-network
talent vision, and enabled talent sharing and flexible
development department, the cloud-network operation
internal arrangement. We have set up cloud-network
department (Big Data and AI center), cloud computing,
integration talent workstations, industry application talent
system integration, Internet of Things, Smart Family and
workstations (including Internet of Thing substations),
other units, and strongly supported the “Cloudification
Smart Family workstations, etc., to achieve full access to
and Digital Transformation” strategy of the Company. The
the workstations cloud services. By leveraging the talent
Company took part in the national ten major industries
workstation, the Company initiated the company-wide
of government and enterprises joint leader selection and
talent arrangement, and fully leveraged the support from
recruitment, further clarified rights and obligations and
workstations mode for key projects of the Company such
assessment and withdrawal mechanisms, and strived to
as cloud-network integration, government and enterprise
mobilise the enthusiasm and initiative of the government
reform and others and the outsourcing talent to Xinjiang
and enterprise industry teams to stimulate new
and Ningxia.
breakthroughs during the development in the government
112
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTHuman Resources Development Report FURTHER STRENGTHEN HUMAN
RESOURCES MANAGEMENT AND
DATA FOUNDATION
In 2020, the Company continued to optimise and enhance
the function of centralised human resources system,
which focused on the maintenance of employees directly
managed by the Company, resume analysis, digitalisation
of labour contracts, mobilisation of income proof, and the
management of mentoring system for new employees. At
the same time, the new human resources and business
operation systems interface was built to provide user login
authority authentication services, and basic data support
Management communicated with outstanding
employees
for important business systems such as Bamboo Cloud
and emphasised on improving the efficiency of front-
System, Internal Control System, “Major Issues, Major
line teams. At the same time, for professional talents,
Personnel Appointments and Dismissals, Major Project
the Company promoted the “talent cloud” platform and
Investments and Large payments” System, MSS/Mobile
talent cloudification mechanism, to visualise, digitalise and
Portal, etc.
systematise the selection, training, use, and motivation
process of professional talents. By labelling the capabilities
I n 2 0 2 0 , t h e C o m p a n y c o n t i n u e d t o p r o m o t e
and quality of various talents and promoting flexible job
intelligent human resources projects, focused on the
assignments and on-job training, the Company created a
intelligentisation application of Smart Family engineers,
“system + data + mechanism” solution, so as to achieve
supported the analysis of human resources operations,
precise talent management and talent resources sharing
across the Company.
INFORMATION OF EMPLOYEES
As at the end of 2020, the Group had 281,192 employees. The number of employees working under each classification
and their respective proportions were as follows:
Management, Finance and Administration
Sales and Marketing
Operations and Maintenance
Research and Development
Total
Number of
Employees
Percentage
47,743
135,135
86,347
11,967
17.0%
48.1%
30.7%
4.2%
281,192
100.0%
113
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTHuman Resources Development ReportChina Telecom Corporation Limited Annual Report 2020 RELATIONSHIP BETWEEN THE
COMPANY AND EMPLOYEES
Corporate Democratic Management
During the COVID-19 Epidemic, we collected opinions
and suggestions for more than 100,000 person-times
through the “Voice of Employees Column”, which reflected
the employees’ thoughts and highlighted difficulties,
which served as important references for the Company
to adjust its focus and response measures according
to the specific circumstances. Labour unions at all
levels reached out to 11 specific groups of employees,
including those that were confirmed or suspected cases
of COVID-19 and those put under medical observation,
and visited and learned about the conditions of employees
for 22,500 person-times. A survey of new employees was
conducted through the Internet, sampling employees for
7,897 person-times from 19 provincial units (professional
companies). The provincial labour unions understood the
thoughts of employees based on annual key tasks and
reported to the provincial company management and
higher-level units.
122 employee representatives submitted 157 proposals
to the Company, which were all gradually handled and
implemented by 24 units, reflecting a feedback rate of
100%. The satisfaction rate of employee representatives
on the work of handling proposals reached 98%. The
Company organised and convened the fourth meeting of
the first session of the Employee Representative Congress,
during which the Company listened to and reviewed the
reports on the work of the Employee Representative
Congress, the report on the work of corporate strategy
reform and the performance of Employee Directors, the
report on the business expenditure of the Company’s
persons-in-charge in 2020 and the management and
operation of the Company’s official vehicles, and the
report on the interpretation of the Company’s human
resources-related policies. The 29 model workers who
received the commendation jointly issued the proposal of
“Striving to be a dedicator and fighting on a new journey”
114
Customer service through video call to reduce
social contact during the Epidemic
to all employees. Labour unions at all levels standardised
and implemented systems such as the rules of procedure
of Employee Representative Congress meeting and the
proposal collecting and handling systems. All provincial
companies have convened Employee Representative
Congress to enable the orderly participation of employee
representatives in corporate governance.
Competitions and Honours
In accordance with the deployment of “Cloudification and
Digital Transformation” strategy and the requirements
of Epidemic prevention and control, 15 competitions
were organised, including 6 skill competitions, 6 labour
competitions and 3 innovation competitions. The
competitions were closely integrated with the actual
operations, and promoted actual production and business
transformation, which effectively cultivated innovative
talents in “Cloudification and Digital Transformation”,
promoted the rapid replication and implementation of
successful projects, and achieved remarkable results.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTHuman Resources Development ReportChina Telecom Corporation Limited Annual Report 2020 In 2020, the Company received a total of 282 external
honours in comprehensive and specific categories at
national, provincial and ministerial levels, including 88
national honours and 194 provincial and ministerial
honours. 27 employees received the honour of “2020
National Model Worker”. The number reached historical
high, which fully reflected the high recognition of China
Telecom by government at all levels and the society
as a whole, and also demonstrated the cohesion and
combat power of the Company at all levels, fully proving
that the employees are the most dependable force
for the high-quality development of the Company. We
organised a symposium to study and implement the
spirit of the important speech of Mr. Xi Jinping, the
Strengthened personal protection for frontline
employees during the Epidemic
General Secretary, at the commendation conference of
CARING FOR EMPLOYEES
national model workers and advanced workers, and Mr.
Ke Ruiwen, our Chairman and Chief Executive Officer,
Since the outbreak of the COVID-19 Epidemic, the
attended the meeting and gave a speech, which stated
Company’s labour unions insisted on putting the
clear requirements for studying and promoting national
employees’ life safety and health first, and allocated RMB4
model workers. The Company organised activities to learn
million of special sympathy allowance to the 16 provinces
from the national model workers at the entire company
that were more seriously influenced by the Epidemic. The
by publicising the model workers’ deeds and stories
Company’s labour unions at all levels arranged more than
through multiple channels such as the People’s Post and
RMB67 million of special sympathy allowance for Epidemic
Telecommunications News, Learning Power, SASAC
prevention and control, which effectively enhanced every
website, CCTV, Douyin and Weibo, which showcased the
employee’s sense of security and provided a solid ground
contemporary style of China Telecom employees to the
for winning the battle against the COVID-19 Epidemic.
whole society and widely spread the good image of China
Telecom as a responsible state-owned enterprise.
The Company’s labour unions organised support work
Innovation Workshops
for 11 types of specific employee groups including front-
line employees who fought the Epidemic and secured
The Company has established more than 1,300 innovation
communications, and those that were confirmed or
workshops of various types, including 5 national-level
suspected cases of COVID-19 and those put under
innovation studios for model workers and craftsmen
medical observation, led the effort to establish a
talents and 4 industry-level innovation studios. More than
classification ledger, to assign specific contacting persons,
150 of them were named by provincial and municipal
and to provide timely consolation and care. The provincial
labour unions. The Company has been awarded more
companies and labour unions at each level carried out
than 700 national and provincial awards and applied for
caring activities for more than 2,000 model workers above
nearly 1,000 invention patents and utility model patents. In
C1 level, more than 3,200 exchange workers and poverty
2020, 29 model innovation studios at the company-level
alleviation cadres and their families, nearly 200,000 retired
were selected and promoted, and 35 innovation studios
staff, more than 17,000 pregnant or breastfeeding female
above the company-level were awarded.
115
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTHuman Resources Development ReportChina Telecom Corporation Limited Annual Report 2020 employees, etc., and helped provide protective supplies
Company organised provincial labour unions to do more
such as masks to show consolation and care. The
than 5 practical things for employees in the province,
Company established a ledger of 5,167 employees whose
continuously optimised ‘Four Smalls’ operations, improved
family members participated in the medical supporting
service capabilities, and expanded the range of services in
teams in Hubei province or fought in the front-line of
areas of catering, working environment, activity conditions
local Epidemic prevention and medical care works, and
and quality of life, etc.
conveyed corporate care by issuing sympathy allowance
or products and arranging field visits by Company leaders.
STRENGTHENING HUMAN CAPITAL
The labour unions of the Company took the lead in
Supporting National Key Training Programme
improving the care ledger of more than 1,200 expatriate
In 2020, China Telecom actively undertook the national
employees and their domestic family members, and
professional and technical talent knowledge upgrading
contacted each expatriate employee to assist with their
project. In October 2020, China Telecom held the Ministry
practical difficulties. The Company has established a
of Human Resources and Social Security knowledge
mechanism for handling “important matters” of expatriate
upgrading project workshop – “Smart Family Advanced
employees, and as a result, the relevant departments
Workshop”. More than 60 experts and technicians from
cooperated and quickly implemented solutions to
government agencies, research institutes, etc., attended
resolve 66 difficult cases for domestic family members of
the workshop.
expatriate employees, provided care for 178 employees
who had been dispatched to areas with serious Epidemic
Efficient Operations of Online College
situation or have been abroad for more than one year. The
In the context of normalised Epidemic prevention and
Company has improved the care ledger for employees’
control, the Company comprehensively coordinated the
children that were studying abroad, supplied information
enhancement of online learning and internet training, and
related to the overseas Epidemic prevention and control,
accelerated the improvement of the online training service
promoted the development of “China Telecom Health
system. Mainly relying on China Telecom Online College,
Consultation Program for Overseas Employees”, and
the Company expanded the scale of online training, and
provided remote medical services for overseas employees
provided in-depth personalised and tailored training in
and their children for 217 person-times.
combination with the ecology, so as to help enterprises to
resume work and production. Facing fast-growing digital
According to the survey statistics, the employees’
learning demand during the Epidemic, China Telecom
satisfaction rate for the Company’s Epidemic prevention
Online College completed the construction of an operation
and control reached 9.7 points, and the satisfaction rate
supporting system at the earliest time possible, and
for the Company’s employees’ care work reached 94%.
quickly launched various solutions such as live broadcast
and online thematic training courses for leading cadres,
The Company followed up and guided 110 grass-root
sci-tech innovation talents, highly skilled talents and young
units located in areas with an altitude of more than 3,500
employees, focusing on key business segments such as
meters in five provinces, including Tibet, to build oxygen
5G, cloud-network integration and Smart Family. Relying
supply facilities, which greatly improved the working
on various online learning tools, the Company also carried
and living conditions of employees in high-altitude
out various thematic learning programs such as “Leaders
areas and was praised by grass-root employees. The
and Cadres Learning Month”, “Cloud-Network Operation
116
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTHuman Resources Development ReportChina Telecom Corporation Limited Annual Report 2020 Lecture”, “Operation Warm Spring” and “Spotlight
with 1.11 million person-times attending. Two phases of
Platform”, which ensured “suspension of work but no
the “Dragon Programme” were held to train and exchange
suspension of learning” during the Epidemic and helped
the international talents.
the business development during the work resumption
period.
In 2020, China Telecom Online College had cumulatively
covered 52.59 million person-times in various types of
training, with 44,000 students logging in daily on average.
18,567 new courses were added, 1,916 thematic online
classes were organised, 1,341 live broadcasts were
conducted, 1,998 exams and certifications of various
kinds were organised covering 2.2 million person-times
through the intelligent learning platform for pushing
learning resources.
Building Employees’ Capacity
The first initiative of the Company is to carry out the
training of cloud-network integration talents at municipal
levels. The Company promoted talent training through
online learning, offline training, certification, practical
projects, professional coaching, hands-on training, labour
competitions, etc. The training coverage ratio for municipal
level cloud-network integration account managers
and solution managers reached 60%, and the training
coverage ratio for municipal level product maintenance
managers and customer engineers reached 50%.
Building up the Internal Training Team
In 2020, the Company continuously enhanced the
building of the internal training team. There were 13,000
internal trainers at all levels of the Company, and the
accumulated teaching time of all levels of internal trainers
reached 212,000 hours. During the year, the Company
recruited 678 company-level internal trainers and 775
company-level trial internal trainers. The Company held an
online training camp for internal trainers. A total of 1,335
The second initiative of the Company is to continuously
empower and promote the development of Smart Family
capabilities. Focusing on product standardisation and
service visualisation, the Company constantly improved
the professional capabilities of the front-line sales and
installation and maintenance team. The Company
prepared a Smart Family marketing manual, consisting
of a total of 150,000 words, and carried out 17 series
of live learnings and 2 supporting online classes, with a
total of 145,000 participants and the learners amounting
company-level internal trainers participated in community
to 880,000 person-times; the Company selected and
learning, spending a total of 19,500 learning hours.
hired the first batch of more than 90 company-level Smart
Cultivating Professional Talents
Family professional internal trainers on a trial basis, and
organised the first “Genius Cup” Smart Family scenario
We conducted large-scale talent trainings at each level
sales competition; the Company carried out more than 60
and grade. In 2020, the Company completed the second
sessions of Smart Family engineer skill level certifications,
phase of the “Spark Programme” for the cultivation of
covering 58,000 people in total; it optimised the design of
74 high-end leaders and the “Prairie Fire Programme”
the Smart Family Lecture zone, with a total of 48 courses
of cyber security training course for 50 people. The
updated and more than 2 million person-times took part in
Company organised a total of 40 online training sessions
the learning in 2020.
for backbone professionals at company-level and over
720,000 person-times attended the training courses.
The third initiative of the Company is to launch multi-level
During the year, 1,916 online training courses were held,
“Unit CEO” online learning through online empowerment.
with 29.67 million person-times attending. 1,341 live
In 2020 the “Unit CEOs” program used Online College
broadcasts were held, with 2.38 million person-times
Unit CEOs business school as the platform, perfected
attending. 31,000 face-to-face training courses were held,
the “Unit CEOs” online course system in different layers,
117
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTHuman Resources Development ReportChina Telecom Corporation Limited Annual Report 2020 updated more than 20 courses for the corresponding
application of “New Employee Tutoring Mechanism”,
positions of “Unit CEOs” online learning, and mostly used
which won the ATD Excellence in Practice Award,
the online learning channel to teach the standard general
throughout the Company, organised online special
courses. Using the Wings School as the channel, the
courses on career mentorship for new employees,
Company regularly carried out experience sharing live
launched and optimised the function of career mentorship
broadcasts for the key business issues, with a total of 45
live broadcasts and 256,000 person-times attending. The
company also held online training camps for Unit CEOs
internal trainers, which cultivated 316 internal trainers and
effectively supported the implementation of Unit CEOs
core courses in all provincial and municipal companies.
Cultivating and Attracting Outstanding Young
Talents
We continuously enhanced the mechanism for recruitment,
management, cultivation and evaluation of our trainees.
We organised spring internships, summer internships,
day-to-day internships and other activities to expand
the channels to attract outstanding young talents for
campus recruitment. We also continued to carry out the
Company’s top college graduate cultivation programme
and organised online special classes for outstanding
graduates, which were attended by 7,445 people. The
Company innovatively launched a live interactive sharing
platform for outstanding college graduates, the “Spotlight
Platform”, which was opened to all groups of outstanding
for new employees in the MSS human resources system,
and promoted the goal of equipping new employees
with corresponding professional mentors and counselling
throughout the process upon their onboarding. For the
recruitment of mature talents from the society, units at all
levels organised induction training in accordance with their
business development needs.
To pr ov ide oppor tunit ies f or e m plo y ee s ’ c a r eer
development, the Company developed a comprehensive
dual promotion channel. Promotion is based on the
principles of fairness, justice, openness and transparency.
The Company fully respects employees’ rights of choice,
knowledge and scrutiny.
In the recruitment and promotion processes, the Company
treats all candidates and employees equally regardless of
factors such as gender, age and race.
The Company strictly abides by the national regulations
trainee students and would invite industry experts and
relating to employees’ working hours and implemented
representatives of outstanding graduates to conduct
the Regulations on Paid Annual Leave for Employees
interactive live lectures.
promulgated by the State Council and formulated the
relevant policies in relation to employees’ vacations and
Recruitment
rest periods.
The Company recruits fresh university graduates and
mature talents from the society. We organised a unified
The Company strictly abides by the laws and regulations
platform, unified advertising and publicity and unified
such as the Labour Law of the People’s Republic of China
information sessions in key universities for recruiting fresh
and the Labour Contract Law of the People’s Republic of
graduates. In 2020, the Company recruited more than
China to regulate its employment and dismissal practices.
7,000 new graduates. We normally provide an induction
The Company adheres to offering equality of remuneration
training of one to two months to fresh graduates after
and work for male and female employees and implements
they join the Company in order to help them understand
special regulations to protect female employees’ rights
our corporate strategy, culture and business. In 2020,
and interests. There were no discriminatory policies
the Company continued to deepen the promotion and
or regulations, nor had there been any circumstance
118
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTHuman Resources Development ReportChina Telecom Corporation Limited Annual Report 2020 whereby child labour or forced labour was employed.
with project results and personal contributions, so as to
Taking into account the actual circumstances of the
ensure that key personnel with outstanding ability and
Company, the Company strictly abides by relevant labour
performance would be better compensated, and truly
laws and regulations in China, constantly improves the
developed a compensation system where salaries can be
relevant employee management systems, and formulates
increased or decreased.
relevant administrative measures which include detailed
provisions stipulated in accordance with the termination of
The Company actively promoted medium and long-
employment contract.
REMUNERATION AND
PERFORMANCE MANAGEMENT
Remuneration
term incentives. The Company further expanded the pilot
scope of sci-tech company equity and dividend incentive
program, promoted employee shareholding in mixed
ownership enterprises, directly linked the income of key
personnel with the development of company and personal
performance, established an incentive and restraint
The Company optimised and improved the labour cost
mechanism for interest and risk sharing, which enabled
allocation mechanism. The Company continued to adhere
the talents to share the benefits of the Company’s growth.
to value-driven principles, promoted improvement of
scale and efficiency, increased the incentive for efficiency
Performance management
contribution in labour cost allocation, and encouraged
The Company has established a comprehensive
revenue increase and efficiency improvement as well
performance management system and implemented
as cost reduction and efficiency improvement. Based
performance appraisal for all employees. Adhering to the
on the functional positioning and value contribution of
performance-oriented principle, the results of performance
each unit, the Company adopted various strategies,
appraisal were closely correlated to employees’
formulated policies based on actual circumstances and
remuneration. Branches at all levels have established
constantly optimised the total labour cost decision making
employees’ performance evaluation teams which are
mechanism, so as to ensure that incentives are in place
led by the respective general managers of the relevant
and constraints are effective.
branches, and have formulated appraisal methods for
deputies, functional departments, subordinate units
The Company promoted market-oriented incentives in
and employees. The Company improves its employee
key areas. The Company promoted the innovation of
evaluation and incentive mechanism and the related
incentive mechanism by combining the mechanisms
scrutiny and supervision system to ensure fair and reliable
and systems reform of the competence centre and the
performance evaluation results. At the same time, we
R&D system, and constantly promoted the distribution
further optimise and improve the performance evaluation
mechanism of “market evaluates contribution and
system and implement performance evaluation by
contribution determines reward”. The Company supported
categories of business units, deputies, mid-level cadres
the principle of “matching responsibilities, rights and
and employees at all levels, enhancing the specificity of
rewards”, and “reciprocity of incentives and constraints”
the performance evaluation.
in key projects and key areas, adopted market-oriented
benchmarking method for key personnel, provided
market-competitive salary, linked personal income closely
119
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTHuman Resources Development ReportChina Telecom Corporation Limited Annual Report 2020 Issues
Emissions
Name of Indicators
Scope 1: Direct greenhouse gas emissions1
Scope 2: Indirect greenhouse gas emissions1
Total greenhouse gas emissions1
Greenhouse gas emissions per unit
operating revenue1
Sewage emissions2
SO2 emissions3
Non-hazardous waste produced4
Non-hazardous waste produced per unit
operating revenue
Units
million tons CO2e
million tons CO2e
million tons CO2e
tCO2e/RMB million
million tons
tons
tons
tons/RMB million
Hazardous waste produced4
tons
Hazardous waste produced per unit
operating revenue
tons/RMB million
Electronic waste produced4
tons
Electronic waste produced per unit
operating revenue
tons/RMB million
Year 2020
Year 2019
0.21
13.55
13.76
34.96
30.57
55.75
28,717.77
0.07
18,378.93
0.05
71,872.84
0.18
0.21
13.34
13.55
36.07
35.38
68.01
–
–
–
–
–
–
Use of Resources
Electricity consumption
100 million kwh
228.33
195.01
Natural gas consumption
Coal consumption
Gasoline consumption
Diesel consumption
Purchased heat consumption amount
Overall energy consumption5
Overall energy consumption per unit of
information flow
Overall energy consumption per operating
revenue
Power consumption per carrier frequency
at base stations
Water consumption
million m3
10,000 tons
10,000 tons
10,000 tons
GJ
tce
kgce/TB
7.69
0.41
4.17
1.72
9.23
0.51
4.39
1.38
1,237,790.55
1,338,157.37
2,948,806.73
2,544,048.55
4.61
4.91
kgce/RMB million
7,492.63
6,770.88
kwh/carrier frequency
1,254.81
1,100.65
million tons
Water consumption per unit operating revenue
tons/RMB million
Coverage rate of energy-saving technology
at telecommunications equipment room
Reclaimed water consumption
%
tons
120
35.97
91.39
74.54
41.63
110.78
70.76
253,980.38
53,685.43
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTTable of the ESG Indicators Issues
Name of Indicators
The Environment and
Investment in energy saving and
Natural Resources
emission reduction
Units
RMB million
Year 2020
Year 2019
614.09
636.11
Times of video conferencing
times
Product Responsibility
Data international roaming countries and regions
–
Domestic administrative village fibre broadband
coverage
Domestic administrative village 4G network
coverage
Internet backbone network interconnection
bandwidth
International interconnection bandwidth
Call drop rate of mobile communication6
Call completing rate of mobile communication
network6
Call completing rate for access line
Packet loss rate of broadband Internet ChinaNet
backbone network
%
%
Gbps
Gbps
%
%
%
%
Degree of satisfaction of mobile Internet users7
points
Degree of satisfaction of mobile voice users7
Degree of satisfaction of fixed Internet users7
Degree of satisfaction of access line users7
Percentage of in-time response to international
customer repair reports
points
points
points
%
Degree of satisfaction of international customers
points
Number of newly acquired patent authorisation
Number of newly acquired invention patent
authorisation
Number of phishing and fraud websites blocked
–
–
–
Anti-corruption
Anti-corruption education programmes organised –
37,569
248
96
95
35,672
–
94
94
12,305.00
8,416.00
9,985.26
8,766.76
0.05
99.07
93.05
0.06
78.20
82.60
78.90
87.60
99.64
92.30
400
383
0.10
97.57
92.45
0.03
81.91
82.68
79.46
87.58
99.16
91.40
472
452
9,080
31,135
13,144
25,457
Attendance of anti-corruption education and
trainings
person-times
1,041,420
799,356
Supplier
Total number of suppliers8
Proportion of suppliers reviewed8
–
%
277
100
–
–
121
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTTable of the ESG IndicatorsChina Telecom Corporation Limited Annual Report 2020 Issues
Name of Indicators
Units
Year 2020
Year 2019
100
100
20.33
19.97
281,192
274,425
281,215
274,172
6,767
12.97
66.15
20.88
67.96
32.04
6.62
7,043
12.19
68.42
19.39
67.89
32.11
6.97
44
44
11,936
61.09
38.91
5.38
1.13
1.06
1.86
1.58
1.67
0.50
12,350
58.96
41.04
–
–
–
–
–
–
–
Employment
Percentage of employees participating in
labour union
Percentage of female employees at
management level
Total number of employees9
Total number of full-time employees9
Total number of part-time employees9
Percentage of employees aged 30 and below
Percentage of employees aged 30 to 49
Percentage of employees aged 50 and above
Percentage of male employees
Percentage of female employees
Percentage of employees of ethnic minorities
Percentage of local employees hired in
Hong Kong, Macau, Taiwan and
overseas branches
Total number of newly-hired employees
Percentage of newly-hired male employees
Percentage of newly-hired female employees
%
%
–
–
–
%
%
%
%
%
%
%
–
%
%
Turnover rate of employees aged 30 and below %
Turnover rate of employees aged 30 to 49
Turnover rate of employees 50 and above
Turnover rate of female employees
Turnover rate of male employees
Turnover rate of employees hired in
mainland China
Turnover rate of employees hired in Hong Kong,
Macau, Taiwan and overseas branches
%
%
%
%
%
%
122
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTTable of the ESG IndicatorsChina Telecom Corporation Limited Annual Report 2020 Issues
Name of Indicators
Units
Year 2020
Year 2019
Safety and Health
Death rate in accidents per 1,000 employees ‰
Injury rate in accidents per 1,000 employees
‰
Loss of working days due to work-related injury
–
0.0036
0.00
0.00
0
0
0
Number of participants in safety emergency drills person-times
261,087
272,542
Number of participants in health and safety
trainings
person-times
385,305
362,174
Participation rate of employee health checkup
%
Training and Development
Training expenses per employee
RMB/person
Number of internal trainers
–
Number of training participants
10,000 person-times
Number of senior management trained
person-times
Number of middle-level management trained
person-times
Number of general employees trained
Number of male employees trained
Number of female employees trained
Number of employees passed skill
certification exams
person-times
person-times
person-times
person-times
Number of employees enrolled in online college
10,000 persons
Average training time per employee
hours/person
Average training time per senior management
hours/person
Average training time per middle-level
management
hours/person
Average training time per general employee
hours/person
Average training time per male employee
hours/person
Average training time per female employee
hours/person
Average training time in online college per
employee
hours/person
Proportion of senior management participating
in training
Proportion of middle-level management
participating in training
Proportion of general employees participating
in training
Proportion of male employees participating
in training
Proportion of female employees participating in
training
%
%
%
%
%
89.82
2,242.15
13,054
46.53
487
58,999
405,835
297,180
168,141
100
3,076.81
8,844
55.76
564
82,842
474,193
361,199
196,400
26,680
26,668
22.12
29.49
58.30
43.40
27.75
28.97
30.59
50.18
80.21
58.44
51.44
51.35
54.77
13.24
29.12
52.15
44.63
27.28
29.03
29.31
18.42
–
–
–
–
–
123
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTTable of the ESG IndicatorsChina Telecom Corporation Limited Annual Report 2020 Issues
Community
Name of Indicators
Units
Year 2020
Year 2019
7.43
74.14
14.00
10,195
18.83
5,217
11,946
8,901
1,399
24,865
6.62
61.86
11.80
9,854
15.18
7,357
23,062
6,665
1,309
7,356
Number of registered employee volunteers
10,000 persons
Total service time of volunteers
10,000 hours
Number of participants in volunteering activities
10,000 person-times
Number of volunteering activities
sessions
Volunteer service activities input amount
RMB million
kilometres
kilometres
kilometres
kilometres
–
Number of participated pole line co-built
Number of provided pole line co-shared
Number of participated pipeline co-built
Number of provided pipeline co-shared
Number of participated indoor distribution
system co-built
Personnel involved in emergency
communication support
Number of emergency communication
equipment dispatched
Number of emergency communication
vehicles dispatched
Number of emergency public service
messages sent
person-times
146,397
69,817
set-times
29,342
17,979
vehicle-times
55,428
22,014
million pieces
2,489.73
79.09
Greenhouse gas is measured based on the Greenhouse Gas Protocol – Enterprise Accounting and Reporting Standards of World Resources
Institute (WRI) and World Business Council for Sustainable Development (WBCSD), the 2006 IPCC Guidelines for National Greenhouse Gas
Inventories of Intergovernmental Panel on Climate Change (IPCC) and the Fourth Assessment Report 2007 of Intergovernmental Panel on Climate
Change (IPCC), etc.
Scope I: direct greenhouse gas emission includes the greenhouse gas emission from use of natural gas, coal, gasoline and diesel;
Scope II: indirect greenhouse gas emission includes the greenhouse gas emission from purchased electricity and heating power, where
the electricity emission factors shall refer to the base line emission factors of regional power grids in China released by National
Development and Reform Commission, Department of Climate Change.
Total greenhouse gas emission shall be the sum of Scope I (direct greenhouse gas emission) and Scope II (indirect greenhouse gas emission).
The quantity of sewage emission is measured based on water consumption, and the wastewater discharge coefficient shall be based on
GB50318-2017 Code of Urban Wastewater Engineering Planning of the National Standards of the PRC and relevant documents of National
Bureau of Statistics of the PRC.
SO2 emissions are calculated with the method of the State-owned Assets Supervision and Administration Commission of the State Council of the
PRC.
Non-hazardous waste includes domestic waste and paper consumption. The quantity of domestic waste produced is measured based on the per
capita household waste output coefficient as specified in the guidance released by the State Council of the PRC. Hazardous waste includes waste
storage batteries. Electronic wastes include waste telecommunications equipment, waste cables, waste terminals and other wastes.
Overall energy consumption is calculated with the energy statistics calculation method applied by National Bureau of Statistics of the PRC.
VoLTE data was used for call drop rate of mobile communication and call completing rate of mobile communication network after the full
commercial launch of VoLTE (based on 4G network calls) business in 2019.
The “degree of satisfaction of mobile Internet users”, “degree of satisfaction of mobile voice users”, “degree of satisfaction of fixed Internet users”
and “degree of satisfaction of access line users” are the intensive evaluation data of China Telecom by using the Telecom Customer Satisfaction
Index (TCSI) model of the Ministry of Industry and Information Technology.
Suppliers refer to the group level centralised procurement suppliers of China Telecom.
The total number of employees includes the total number of contract workers, labour dispatch and re-employed employees, of which, contract
workers are counted as full-time employees, and labour dispatch and re-employed employees are counted as part-time employees.
Notes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
124
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTTable of the ESG IndicatorsChina Telecom Corporation Limited Annual Report 2020 125
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTIndependent Assurance Report No.
A1 Emissions
Description of Indicators
General Disclosure
Information on:
Page
105-108
(a)
(b)
the policies; and
compliance with relevant laws and regulations that have a
significant impact on the issuer
relating to air and greenhouse gas emissions, discharges into
water and land, and generation of hazardous and non-hazardous
waste.
Note: Air emissions include NOx, SOx, and other pollutants regulated under
national laws and regulations.
Greenhouse gases include carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.
Hazardous wastes are those defined by national regulations.
A1.1 The types of emissions and respective emissions data.
A1.2 Greenhouse gas emissions in total (in tons) and, where
appropriate, intensity (e.g. per unit of production volume,
120
120
per facility).
A1 Emissions
A1 Emissions
A1 Emissions
A1.3 Total hazardous waste produced (in tons) and, where
120
appropriate, intensity (e.g. per unit of production volume,
per facility).
A1 Emissions
A1.4 Total non-hazardous waste produced (in tons) and, where
120
appropriate, intensity (e.g. per unit of production volume,
per facility).
A1 Emissions
A1.5 Description of measures to mitigate emissions and results
105-108
achieved.
A1 Emissions
A1.6 Description of how hazardous and non-hazardous wastes
105-108
are handled, reduction initiatives and results achieved.
A2 Use of Resources
General Disclosure
105-107
Policies on the efficient use of resources, including energy, water
and other raw materials
Note: Resources may be used in production, in storage, transportation, in
buildings, electronic equipment, etc.
A2 Use of Resources
A2.1 Direct and/or indirect energy consumption by type (e.g.
120
electricity, gas or oil) in total (kWh in ’000s) and intensity (e.g.
per unit of production volume, per facility).
126
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTAppendix – ESG Reporting Guide Index
No.
Description of Indicators
Page
A2 Use of Resources
A2.2 Water consumption in total and intensity (e.g. per unit of
120
production volume, per facility).
A2 Use of Resources
A2.3 Description of energy use efficiency initiatives and results
106
achieved.
A2 Use of Resources
A2.4 Description of whether there is any issue in sourcing water
107-108
that is fit for purpose, water efficiency initiatives and results
achieved.
A2 Use of Resources
A2.5 Total packaging material used for finished products (in tons)
Not Applicable1
and, if applicable, with reference to per unit produced.
A3 The Environment and
General Disclosure
108
Natural Resources
Policies on minimising the issuer’s significant impact on the
environment and natural resources.
A3 The Environment and
A3.1 Description of the significant impacts of activities on the
108
Natural Resources
environment and natural resources and the actions taken
B1 Employment
to manage them.
General Disclosure
Information on:
102, 105, 118-119
(a)
(b)
the policies; and
compliance with relevant laws and regulations that have a
significant impact on the issuer
relating to compensation and dismissal, recruitment and
promotion, working hours, rest periods, equal opportunity,
diversity, anti-discrimination, and other benefits and welfare.
B1 Employment
B1.1 Total workforce by gender, employment type, age group
113, 122
and geographical region.
B1 Employment
B1.2 Employee turnover rate by gender, age group and
122
geographical region.
127
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTAppendix – ESG Reporting Guide IndexChina Telecom Corporation Limited Annual Report 2020 No.
Description of Indicators
B2 Health and Safety
General Disclosure
Information on:
(a)
(b)
the policies; and
compliance with relevant laws and regulations that have a
significant impact on the issuer
relating to providing a safe working environment and protecting
employees from occupational hazards.
B2 Health and Safety
B2.1 Number and rate of work-related fatalities.
B2 Health and Safety
B2.2 Lost days due to work injury.
B2 Health and Safety
B2.3 Description of occupational health and safety measures
adopted, how they are implemented and monitored.
Page
104
123
123
104
B3 Development and Training General Disclosure
102-104, 112-113, 116-119
Policies on improving employees’ knowledge and skills for
discharging duties at work. Description of training activities.
Note: Training refers to vocational training. It may include internal and
external courses paid by the employer.
B3 Development and Training B3.1 The percentage of employees trained by gender and
123
employee category (e.g. senior management, middle
management).
B3 Development and Training B3.2 The average training hours completed per employee by
123
gender and employee category.
B4 Labour Standards
General Disclosure
102
Information on:
(a)
(b)
the policies; and
compliance with relevant laws and regulations that have a
significant impact on the issuer
relating to preventing child and forced labour.
B4 Labour Standards
B4.1 Description of measures to review employment practices to
102
avoid child and forced labour.
B4 Labour Standards
B4.2 Description of steps taken to eliminate such practices when
102
discovered.
B5 Supply Chain Management General Disclosure
109-110
Policies on managing environmental and social risks of the supply
chains.
B5 Supply Chain Management B5.2 Description of practices relating to engaging suppliers,
109-110
number of suppliers where the practices are being
implemented, how they are implemented and monitored.
128
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTAppendix – ESG Reporting Guide IndexChina Telecom Corporation Limited Annual Report 2020 No.
Description of Indicators
B6 Product Responsibility
General Disclosure
Information on:
(a)
(b)
the policies; and
compliance with relevant laws and regulations that have a
significant impact on the issuer
relating to health and safety, advertising, labelling and privacy
matters relating to products and services provided and methods
of redress.
Page
97-101
B6 Product Responsibility
B6.1 Percentage of total products sold or shipped subject to
Not applicable2
recalls for safety and health reasons.
B6 Product Responsibility
B6.2 Number of products and service-related complaints
100-101
received and how they are dealt with.
B6 Product Responsibility
B6.3 Description of practices relating to observing and protecting
93-94
intellectual property rights.
B6 Product Responsibility
B6.4 Description of quality assurance process and recall
Not applicable2
procedures.
B6 Product Responsibility
B6.5 Description of consumer data protection and privacy
100-101
policies, how they are implemented and monitored.
B7 Anti-corruption
General Disclosure
Information on:
(a)
(b)
the policies; and
compliance with relevant laws and regulations that have a
significant impact on the issuer
relating to bribery, extortion, fraud and money laundering.
93-94
B7 Anti-corruption
B7.2 Description of preventive measures and whistle-blowing
procedures, how they are implemented and monitored.
93-94
B8 Community Investment
General Disclosure
Policies on community engagement to understand the needs
of the communities where the issuer operates and to ensure its
activities take into consideration the communities’ interests.
110-111
B8 Community Investment
B8.1 Focus areas of contribution (e.g. education, environmental
110-111
concerns, labour needs, health, culture, sport).
B8 Community Investment
B8.2 Resources contributed (e.g. money or time) to the focus
124
area.
Notes:
1.
2.
The indicator of “packaging materials used for the finished products” is not relevant to the business practice of the Company. Through the
identification of material issues, the Company mainly reported the recycling and reusing of the resources such as storage batteries, cables,
terminals that are mainly used in operations and services. For more details, please refer to “VII. Practicing green development” of Corporate Social
Responsibility Report.
The indicator of “recalling products” is not relevant to the practice of the Company. Through the identification of material issues, the Company
mainly reported on maintaining network information security, assuring emergency communications and protecting the rights of customers in
accordance with laws. For more details, please refer to “IV. Providing high quality network assurance” and “V. Providing heartfelt services to
customers” of Corporate Social Responsibility Report.
129
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTAppendix – ESG Reporting Guide IndexChina Telecom Corporation Limited Annual Report 2020 The Company persists in refining the basic system of its
corporate governance. As a company incorporated in the
People’s Republic of China (the “PRC”), the Company
adopts the Company Law of the People’s Republic of
China and other relevant laws and regulations as the basic
guidelines for the Company’s corporate governance.
As a company dual-listed in Hong Kong and the United
States, the Company strives to ensure compliance with
the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”)
and the regulatory requirements for non-US companies
listed in the United States. In addition, the Company
has regularly published statements relating to its internal
control in accordance with the US Sarbanes-Oxley Act
and the regulatory requirements of the SEC and the NYSE
to confirm its compliance with related financial reporting,
information disclosure, corporate internal control
requirements and other regulatory requirements.
AN OVERVIEW OF CORPORATE
GOVERNANCE
The Company strives to maintain high level of corporate
governance and has always adhered to excellent,
prudent and efficient corporate governance principles
and continuously improves its corporate governance
methodology, regulates its operations, improves its
internal control mechanism, implements sound corporate
governance and disclosure measures, and ensures that
the Company’s operations are in line with the long-term
interests of the Company and its shareholders as a whole.
In 2020, the shareholders’ meeting, the Board and the
Supervisory Committee operated soundly and efficiently.
The Company was dedicated to lean management while
ensuring stable and healthy operation, and elevated
its high-quality development to a new level, while
continuously optimising its internal control system and
comprehensive risk management in order to effectively
ensure steady operation of the corporate. The standard
of the Company’s corporate governance continued to
improve and is aligned with the long-term best interest
of the shareholders, ensuring that the interests of the
shareholders were effectively assured.
Shareholders’ Meeting
Board of Directors
Supervisory Committee
Audit Committee
Remuneration Committee
Nomination Committee
130
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL,SOCIAL AND GOVERNANCE REPORTCorporate Governance Report For the financial year ended 31 December 2020, the
Company in Asia” in the 2020 All-Asia-Executive-Team
roles of Chairman and Chief Executive Officer of the
poll organised by Institutional Investor, a prestigious
Company were performed by the same individual. In the
international financial magazine, for ten consecutive
Company’s opinion, through supervision by the Board
years. The Company also received “Best ESG”, “Best
of Directors (the “Board”) and the Independent Non-
IR Program” and other honours. The Company was
Executive Directors of the Company, with effective control
accredited with “Platinum Award – Excellence in
of the Company’s internal check and balance mechanism,
Environmental, Social and Governance” in the poll of ESG
the same individual performing the roles of Chairman
Corporate Awards 2020 by The Asset, and was the only
and Chief Executive Officer can enhance the Company’s
telecommunications company in the region which had
efficiency in decision-making and execution and effectively
received the Platinum recognition for 12 years in a row.
capture business opportunities. Many leading international
Mr. Ke Ruiwen, Chairman and CEO of the Company,
corporations around the world also have similar
was honoured with “Best CEO in Telecommunications”
arrangements. Save as stated above, the Company was
award while the Company was accredited “Best Investor
in compliance with all the code provisions under the
Relations Team”. In addition, the Company was awarded,
Corporate Governance Code as set out in Appendix 14
for the 13th time, “The Best of Asia – Icon on Corporate
of the Listing Rules (the “Corporate Governance Code”) in
Governance” by Corporate Governance Asia, a renowned
the year 2020.
regional journal on corporate governance. Mr. Ke Ruiwen,
Chairman of the Company, was honoured with “Asia’s
In 2020, the Company’s continuous efforts in corporate
Best CEO” and “Asian Corporate Director Recognition”
governance gained wide recognition from the capital
awards. The Company was also accredited “No.1 Best
market and the Company was accredited with a number of
Telecommunications Company in Asia” in Asia’s Best
awards. The Company was voted as the “Most Honoured
Managed Companies Poll 2020 by FinanceAsia.
Corporate
Governance Asia
Icon on Corporate Governance
The Asset
Platinum Award -
Excellence in Environmental,
Social and Governance
Institutional
Investor
Most Honoured Company in Asia
FinanceAsia
No.1 Best
Telecommunications
Company in Asia
131
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report OVERALL STRUCTURE OF THE
CORPORATE GOVERNANCE
A two-tier structure is adopted as the overall structure for
corporate governance: the Board and the Supervisory
Committee are established under the shareholders’
1.
To approve the consolidated financial statements
of the Company, the report of the Directors, the
report of the Supervisory Committee and the report
of the international auditor for the year ended 31
December 2019 and to authorise the Board to
prepare the budget of the Company for the year
meeting; the Audit Committee, Remuneration Committee
2020;
and Nomination Committee are established under
the Board. The Board is authorised by the articles of
association of the Company (the “Articles of Association”)
to make major operational decisions of the Company
and to oversee the daily management and operations of
the senior management. The Supervisory Committee is
mainly responsible for the supervision of the performance
of duties of the Board and the senior management.
Each of the Board and the Supervisory Committee is
independently accountable to the shareholders’ meeting.
2.
To approve the profit distribution proposal and the
declaration and payment of a final dividend for the
year ended 31 December 2019;
3.
To approve the re-appointment of Deloitte Touche
Tohmatsu and Deloitte Touche Tohmatsu Certified
Public Accountants LLP as the international auditor
and domestic auditor of the Company respectively
for the year ending on 31 December 2020 and to
authorise the Board to fix the remuneration of the
SHAREHOLDERS’ MEETING
auditors;
In 2020, the Company convened one shareholders’
meeting which was the annual general meeting for the
year 2019 (the “2019 Annual General Meeting”).
On 26 May 2020, the Company held the 2019 Annual
General Meeting in Hong Kong to approve the following
resolutions, all of which were duly passed and approved
by the shareholders of the Company.
4.
To approve the election or re-election of the
Directors and Independent Directors of the
seventh session of the Board and to authorise any
Director of the Company to sign the Directors’
service contracts on behalf of the Company with
them and to authorise the Board to determine their
remuneration;
Management presented at AGM held in Hong Kong and communicated with shareholders through video conferencing
due to the Epidemic
132
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report 5.
To approve the election or re-election of the
Since the Company’s listing in 2002, at each of the
Shareholder Representative Supervisors of the
shareholders’ meetings, a separate shareholders’
seventh session of the Supervisory Committee
resolution was proposed by the Company in respect of
and to authorise any Director of the Company to
each independent item. The circulars to shareholders
sign the Supervisors’ service contracts on behalf
also provided details of the resolutions. All votes on
of the Company with them and to authorise
resolutions tabled at the shareholders’ meetings of the
the Supervisory Committee to determine their
Company were conducted by poll and all voting results
remuneration;
were published on the websites of the Company and the
Hong Kong Stock Exchange. The Company attaches
6.
To approve the amendments to the Articles of
great importance to the shareholders’ meetings and the
Association and to authorise any Director of the
communication between Directors and shareholders. The
Company to complete registration or filing of the
Directors provided detailed and sufficient answers to the
amendments to the Articles of Association;
questions raised by shareholders at the shareholders’
meetings. The Board implemented the Shareholders
7.
To approve the issue of debentures by the
Communication Policy to ensure that the shareholders are
Company, to authorise the Board to issue
provided with comprehensive, equal, understandable and
debentures and determine the specific terms,
public information of the Company on a timely basis and
conditions and other matters of the debentures
to facilitate the communication amongst the Company,
and to approve the centralised registration of
the shareholders and investors.
debentures by the Company;
8.
To approve the issue of company bonds in the
PRC and to authorise the Board to issue company
bonds and determine the specific terms, conditions
COMPOSITION OF BOARD
OF DIRECTORS AND BOARD
DIVERSITY POLICY
and other matters of the company bonds in the
As at 31 December 2020, the Board consisted of 11
PRC;
Directors with 6 Executive Directors, 1 Non-Executive
Director and 4 Independent Non-Executive Directors.
9.
To grant a general mandate to the Board to
There is no relationship (including financial, business,
issue, allot and deal with additional shares in
family or other material or relevant relationship) among the
the Company not exceeding 20% of each of the
Board members. The Audit Committee, Remuneration
existing domestic shares and H shares in issue and
Committee and Nomination Committee under the Board
to authorise the Board to increase the registered
consist solely of Independent Non-Executive Directors,
capital of the Company and to amend the Articles
which ensures that the Committees are able to provide
of Association of the Company to reflect such
sufficient checks and balances and make independent
increase in the registered capital of the Company
judgements to protect the interests of the shareholders
under the general mandate.
and the Company as a whole. The number of Independent
Non-Executive Directors exceeds one-third of the
members of the Board. Mr. Tse Hau Yin, Aloysius, the
133
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report Chairman of the Audit Committee, is an internationally
on each candidate’s attributes and the consideration
renowned financial expert with extensive expertise in
for his/her value contributions to be made to the Board.
accounting and financial management. As at the date of
The Nomination Committee oversees the implementation
this report, the Board comprised 10 Directors, including
of Board Diversity Policy, reviews the existing policy as
5 Executive Directors, 1 Non-Executive Director and 4
and when appropriate, and recommends proposals for
Independent Non-Executive Directors. The term of office
revisions for the Board’s approval.
for the seventh session of the Board (including the Non-
Executive Directors) lasts for 3 years, starting from 26 May
Biographical details of existing Directors are set out in the
2020 until the day of the Company’s 2022 annual general
“Biographical details of Directors, Senior Management
meeting to be held in 2023, upon which the eighth session
and Supervisors” section of this annual report. There
of the Board will be elected.
are currently two female Directors on the Board. The
Board currently comprises experts from diversified
In August 2013, the Company implemented the Board
professions such as telecommunications, accounting,
Diversity Policy. The Company strongly believes that board
finance, law, banking, regulatory, compliance and
diversity will contribute significantly to the enhancement of
management with diversification in terms of gender, age,
the overall performance of the Company. The Company
duration of service, etc., advancing the enhancement of
views board diversity as the key element for accomplishing
management standard and the further standardisation
its strategic goals and sustainable development. In
of corporate governance practices, which results in a
determining the composition of the Board, the Company
more comprehensive and balanced Board structure
takes into account diversity of the Board from a number
and decision-making process. Each Director brings to
of perspectives, including but not limited to gender, age,
the Board different views and perspectives. Both the
educational background, professional experience, skills,
Nomination Committee and the Board believe that the
knowledge, duration of service and time commitment,
gender, age, educational background, professional
etc. All appointments made or to be made by the Board
experience, skills, knowledge and the duration of service
are merit-based, and candidates are selected based
of the Board members are in alignment with the Board
on objective criteria taking full consideration of board
Diversity Policy.
diversity. Final decisions are comprehensively made based
The below chart sets out the analysis of the Board composition as at the date of this report:
2
2
Female
8
8
Male
5
5
1
1
4
4
Executive
Directors
4
4
61-75
Years Old
Non-Executive
Director
Independent
Non-Executive
Directors
6
6
51-60
Years Old
Gender
Designation
Age Group
2
2
2
2
6
6
10 Years or
Above
5 Years to
10 Years
5 Years or
Below
Duration of
Service
(years)
134
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report The Company strictly complies with the Corporate
maintain highly efficient operations, as well as flexibility
Governance Code to rigorously regulate the operating
and swiftness in operational decision-making, the Board
procedures of the Board and its Committees, and to
may delegate its management and administrative powers
ensure that the procedures of the Board meetings are
to the management when necessary, and shall provide
in compliance with related rules in terms of organisation,
clear guidance regarding such delegation so as to avoid
regulations and personnel. The Board responsibly
impeding or undermining the capabilities of the Board
and earnestly supervises the preparation of financial
when exercising its powers as a whole.
statements for each financial period, so that such financial
statements truly and fairly reflect the financial condition,
All members of the Board and Committees are informed
the operating results and cash flows of the Company for
of the meeting schedule for the Board and Committees
such period. In preparing the financial statements for the
for the year at the beginning of each year. In addition,
year ended 31 December 2020, the Directors adopted
all Directors will receive meeting notice at least 14 days
appropriate accounting policies and made prudent, fair
prior to the meeting under normal circumstances. The
and reasonable judgements and estimates, and prepared
Company Secretary is responsible for ensuring that the
the financial statements on a going concern basis.
Board meetings comply with all procedures, related rules
The Articles of Association clearly defines the respective
to the Company Secretary for details to ensure that they
duties of the Board and the management. The Board
have received sufficient information on various matters set
and regulations while all Directors can make enquiries
is accountable to the shareholders’ meetings, and
out in the meeting agendas.
its duties mainly include the execution of resolutions,
formulation of major operational decisions, financial
The Board holds at least 4 meetings in each year.
proposals and policies, formulation of the Company’s
Additional Board meetings will be held in accordance
basic management system and the appointment of
with practical needs. In 2020, the Company convened
senior management. The management is responsible for
4 Board meetings in total and completed various written
leading the production, operation and management of
resolutions; the Chairman held a meeting to independently
the Company, the implementation of Board resolutions
communicate with the Independent Non-Executive
and the annual operation plans and investment proposals
Directors without the presence of any other Directors to
of the Company, formulating the proposal of the
ensure their opinions can be fully expressed, which further
Company’s internal administrative organisations and sub-
facilitated the exchange of different views within the Board.
organisations, and performing other duties as authorised
In 2020, the Board played a pivotal role in the Company’s
by the Articles of Association and the Board. In order to
operation, supervision, internal control, risk management
135
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report DIRECTORS’ TRAINING AND
CONTINUOUS PROFESSIONAL
DEVELOPMENT
The Company provides guidelines including on directors’
duties, continuing obligations, relevant laws and regulations,
operation and business of the Company to newly appointed
Directors so that they are provided with tailored induction
relating to their appointment. To ensure that the Directors are
familiar with the Company’s latest operations for decision-
making, the Company arranges for key financial data
and operational data to be provided to the Directors on a
monthly basis. Meanwhile, through regular Board meetings
and reports from management, the Directors are able to
have clearer understanding of the operations, business
strategy, and the latest development of the Company and
the industry. In addition, the Company reminds the Directors
of their functions and duties by continuously providing them
with information regarding the latest development of the
Listing Rules and other applicable regulations, and arranging
internal training on topics related to the latest development
of the industry and operational focus of the Company for
mutual exchange of ideas and discussion. The Directors
actively participate in training and continuous professional
development to develop and refresh their knowledge and
skills in order to contribute to the Company.
and other significant decisions and corporate governance.
Specifically, the Board reviewed matters including, but
not limited to, the Company’s annual and interim financial
statements, quarterly financial results, risk management
and internal control implementation and assessment
report, annual proposal for profit distribution, amendments
to the Articles of Association, approval and authorisation
of the issuance of debentures, the budget of the Company
for the years 2020 and 2021, review of the structure and
operations of the Board, proposal for directors and senior
management liabilities insurance, proposal for election or
re-election of the Directors of the seventh session of the
Board, election or re-election of the senior management,
chairman and members of the Board Committees,
remuneration proposal for the Directors of the seventh
session of the Board, report on relevant situations under
the global Epidemic environment, re-appointment and
remuneration of auditors, and the progress report on the
preparation of the Environmental, Social and Governance
Report.
The Company determines the Directors’ remuneration
with reference to factors such as their respective duties
and responsibilities in the Company, as well as their
experience and market conditions at the relevant time.
The Board formulates and reviews the Company’s
policies and practices on corporate governance; reviews
and monitors the training and continuous professional
development of Directors and senior management;
reviews and monitors the Company’s policies and
practices on compliance with legal and regulatory
requirements; formulates, reviews and monitors the code
of conduct for employees; and reviews the Company’s
compliance with the Corporate Governance Code and
disclosure in the Corporate Governance Report.
136
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report During the year, the Directors have participated in training and continuous professional development activities, and the
summary is as follows:
Directors
Executive Directors
Ke Ruiwen
Li Zhengmao*
Shao Guanglu*
Liu Guiqing
Zhu Min
Chen Zhongyue*
Wang Guoquan*
Gao Tongqing*
Non-Executive Director
Chen Shengguang
Independent Non-Executive Directors
Tse Hau Yin, Aloysius
Xu Erming
Wang Hsuehming
Yeung Chi Wai, Jason
Types of training
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A:
B:
*
attending relevant seminars and/or conferences and/or forums; or delivering speeches at relevant seminars and/or conferences and/or forums
reading or writing relevant newspapers, journals and articles relating to economy, general business, telecommunications, corporate governance or
directors’ duties
On 17 January 2020, Mr. Gao Tongqing resigned from his positions as an Executive Director and Executive Vice President of the Company due to
change in work arrangement. On 26 May 2020, Mr. Li Zhengmao and Mr. Shao Guanglu were appointed as Directors at the 2019 Annual General
Meeting. On 4 December 2020, Mr. Wang Guoquan resigned from his positions as an Executive Director and Executive Vice President of the
Company due to change in work arrangement. On 19 January 2021, Mr. Chen Zhongyue resigned from his positions as an Executive Director and
Executive Vice President of the Company due to change in work arrangement.
137
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report COMPLIANCE WITH THE
MODEL CODE FOR SECURITIES
TRANSACTIONS BY DIRECTORS
AND SUPERVISORS AND
CONFIRMATION OF INDEPENDENCE
BY THE INDEPENDENT NON-
EXECUTIVE DIRECTORS
The Company has adopted the Model Code for Securities
Transactions by Directors of Listed Issuers as set out
in Appendix 10 of the Listing Rules to govern securities
transactions by the Directors and Supervisors. Based
on the written confirmation from the Directors and
Supervisors, the Company’s Directors and Supervisors
have strictly complied with the Model Code for Securities
Transactions by Directors of Listed Issuers in Appendix
10 of the Listing Rules regarding the requirements
in conducting securities transactions for the year
2020. Meanwhile, the Company has received annual
independence confirmation from each of the Independent
Non-Executive Directors and considered them to be
independent.
AUDIT COMMITTEE
As at 31 December 2020, the Audit Committee comprised
4 Independent Non-Executive Directors, Mr. Tse Hau Yin,
Aloysius as the Chairman and Mr. Xu Erming, Madam
Wang Hsuehming and Mr. Yeung Chi Wai, Jason as the
members. The Audit Committee is responsible to the
Board. The Charter of the Audit Committee clearly defines
the status, structure and qualifications, work procedures,
duties and responsibilities, funding and remuneration, etc.
of the Audit Committee. The Audit Committee’s principal
duties include the supervision of the truthfulness and
completeness of the Company’s financial statements,
the effectiveness and completeness of the Company’s
internal control and risk management systems as well as
the work of the Company’s Internal Audit Department. It
is also responsible for the supervision and review of the
qualifications, selection and appointment, independence
and services of external independent auditors. The
Audit Committee ensures that the management has
discharged its duty to establish and maintain an effective
risk management and internal control system including
the adequacy of resources, qualifications and experience
of staff fulfilling the accounting, internal control and
financial reporting functions of the Company together
with the adequacy of the staff’s training programmes and
the related budget. The Audit Committee also has the
authority to set up a reporting system on whistleblowing
to receive and handle cases of complaints or complaints
made on an anonymous basis regarding the Company’s
accounting, internal control and audit matters.
In 2020, pursuant to the requirements of the governing
laws and regulations of the places of listing and the
Charter of the Audit Committee, the Audit Committee fully
assumed its responsibilities within the scope of the clear
mandate from the Board. The Audit Committee proposed
a number of practical and professional recommendations
for improvement based on the Company’s actual
circumstances in order to promote the continuous
improvement and perfection of corporate management.
The Audit Committee has provided important support to
the Board and played a significant role in protecting the
interests of the independent shareholders.
In 2020, the Audit Committee convened 4 meetings and
passed 2 written resolutions, in which it reviewed matters
including but not limited to, the Company’s annual and
interim financial statements and quarterly financial results,
assessment of the qualifications, independence and
performance, appointments and remuneration of the
external auditors, effectiveness of risk management and
internal control systems, internal audit, implementation of
continuing connected transactions, selection of external
auditors, the progress work report of the change of
external auditors, review of the operations in 2019 and
the Charter of the Audit Committee, and the progress
report on the preparation of the Environmental, Social and
Governance Report. The Audit Committee reviewed the
annual auditor’s report, interim review report and quarterly
agreed-upon procedures reports prepared by the external
auditors, communicated with the management and the
external auditors in regard to the regular financial reports
and proposed them for the Board’s approval after review
and approval. The Audit Committee regularly received
quarterly reports in relation to the internal audit and
continuing connected transactions and provided guidance
to the Internal Audit Department. Additionally, the Audit
Committee reviewed the internal control assessment and
the attestation report, followed up with the implementation
procedures of the recommendations proposed by the
external auditors, reviewed the U.S. annual report, and
communicated independently with the external auditors
twice a year.
138
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report REMUNERATION COMMITTEE
NOMINATION COMMITTEE
As at 31 December 2020, the Remuneration Committee
As at 31 December 2020, the Nomination Committee
comprised 3 Independent Non-Executive Directors,
comprised 3 Independent Non-Executive Directors,
Mr. Xu Erming as the Chairman and Mr. Tse Hau Yin,
Madam Wang Hsuehming as the Chairlady and Mr. Tse
Aloysius and Madam Wang Hsuehming as the members.
Hau Yin, Aloysius and Mr. Xu Erming as the members.
The Remuneration Committee is responsible to the
The Nomination Committee is responsible to the Board.
Board. The Charter of the Remuneration Committee
The Charter of the Nomination Committee clearly defines
clearly defines the status, structure and qualifications,
the status, structure and qualifications, work procedures,
work procedures, duties and responsibilities, funding
duties and responsibilities, funding and remuneration, etc.
and remuneration, etc. of the Remuneration Committee.
of the Nomination Committee, and it specifically requires
The Remuneration Committee assists the Board to
that the Nomination Committee members shall have no
formulate overall remuneration policy and structure for
significant connection with the Company, and comply with
the Company’s Directors and senior management, and
the regulatory requirements related to “independence”.
to establish related procedures that are standardised and
The Nomination Committee assists the Board to formulate
transparent. The Remuneration Committee’s principal
standardised, prudent and transparent procedures for
duties include giving recommendations to the Board in
the appointment and succession plans of Directors, and
respect of the overall remuneration policy and structure
to further optimise the composition of the Board. The
for the Company’s Directors and senior management and
principal duties of the Nomination Committee include
the establishment of a formal and transparent procedure
regularly reviewing the structure, number of members,
for developing remuneration policy, and determining, with
composition and diversity of the Board; identifying
delegated responsibility by the Board, the remuneration
candidates and advising the Board with the appropriate
packages of individual Executive Directors and senior
qualifications for the position of Directors; reviewing
management including benefits in kind, pension
the Board Diversity Policy as appropriate to ensure its
rights and compensation payments (including any
effectiveness; evaluating the independence of Independent
compensation payable for loss or termination of their
Non-Executive Directors; advising the Board on matters
office or appointment). Its responsibilities comply with the
regarding the appointment or re-appointment of Directors
requirements of the Corporate Governance Code. The
and succession plans for the Directors (especially
Remuneration Committee convened 1 meeting in 2020,
Chairman and Chief Executive Officer). The Nomination
during which it reviewed and discussed the remuneration
Committee convened 1 meeting in 2020, during which
proposals for the Directors of the seventh session of the
it performed a review of the structure and operations of
Board.
the Board and considered the recommendation of the
proposed candidates for the Directors of the seventh
session of the Board.
139
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report Number of Board and Committee Meetings Attended/Held in 2020
Executive Directors
Ke Ruiwen
Li Zhengmao*
Shao Guanglu*
Liu Guiqing
Zhu Min
Chen Zhongyue*
Wang Guoquan*
Gao Tongqing*
Non-Executive Director
Chen Shengguang
Board
Meeting
Audit
Committee
Meeting
Nomination
Committee
Meeting
Remuneration
Committee
Meeting
Shareholders’
Meeting
4/4
3/3
3/3
4/4
4/4
0/4
3/3
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1/1
N/A
N/A
1/1
1/1
0/1
1/1
N/A
3/4
N/A
N/A
N/A
1/1
Independent Non-Executive Directors
Tse Hau Yin, Aloysius
Xu Erming
Wang Hsuehming
Yeung Chi Wai, Jason
4/4
4/4
4/4
4/4
4/4
4/4
4/4
4/4
1/1
1/1
1/1
N/A
1/1
1/1
1/1
N/A
1/1
1/1
1/1
1/1
Note: Certain Directors (including Non-Executive Director) could not attend some of the shareholders’ meetings and Board meetings due to other
important business commitments. Such Directors have reviewed the relevant Board meeting agendas and papers before the meetings and
authorised other Directors in writing to vote on their behalf so as to ensure their views were fully reflected in the meetings.
*
On 17 January 2020, Mr. Gao Tongqing resigned from his positions as an Executive Director and Executive Vice President of the Company due to
change in work arrangement. On 26 May 2020, Mr. Li Zhengmao and Mr. Shao Guanglu were appointed as Directors at the 2019 Annual General
Meeting. On 4 December 2020, Mr. Wang Guoquan resigned from his positions as an Executive Director and Executive Vice President of the
Company due to change in work arrangement. On 19 January 2021, Mr. Chen Zhongyue resigned from his positions as an Executive Director and
Executive Vice President of the Company due to change in work arrangement.
140
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report The Company will identify suitable Director candidates
minimum period during which written notice given to
through multiple channels such as internal recruitment and
the Company of the intention to propose a person for
recruiting from the labour market. The criteria of identifying
election as a Director, and during which written notice to
candidates include but not limited to their gender, age,
the Company by such person of his/her willingness to be
educational background, professional experience,
elected may be given, will be at least 7 days. Such period
skills, knowledge and length of service and capability to
will commence no earlier than the day after the despatch
commit to the affairs of the Company and, in the case
of the notice of the meeting for the purpose of considering
of Independent Non-Executive Director, the candidates
such election and shall end no later than 7 days prior
should fulfill the independence requirements set out in
to the date of such meeting. The ordinary resolutions to
the Listing Rules from time to time. After the Nomination
approve the appointment of Directors shall be passed
Committee and the Board have reviewed and resolved to
by votes representing more than one-half of the voting
appoint the appropriate candidate, the relevant proposal
rights represented by the shareholders (including proxies)
will be put forward in writing to the shareholders’ meeting
present at the meeting.
for approval.
SUPERVISORY COMMITTEE
Directors shall be elected at the shareholders’ meeting
for a term of 3 years. At the expiry of a Director’s
As at 31 December 2020, the Company’s Supervisory
term, the Director may stand for re-election and re-
Committee comprised 5 Supervisors, including 2
appointment. According to the Articles of Association,
Employee Representative Supervisors. The principal
before the convening of the annual general meeting,
duties of the Supervisory Committee include supervising,
shareholders holding 3% or more of the total voting
in accordance with the law, the Company’s financials
shares of the Company shall have the right to propose
and performance of its Directors, managers and other
new motions (such as election of Directors) in writing,
senior management so as to prevent them from abusing
and the Company shall place such proposed motions
their powers. The Supervisory Committee is a standing
on the agenda for such annual general meeting if there
supervisory organisation within the Company, which
are matters falling within the functions and powers of
is accountable to and reports to all shareholders. The
shareholders in general meetings. According to the
Supervisory Committee usually holds meetings at least
Articles of Association, shareholders can also request for
twice a year. The Supervisory Committee convened 2
the convening of extraordinary general meeting provided
meetings in 2020. The term of office for the seventh
that 2 or more shareholders holding in aggregate 10%
session of the Supervisory Committee lasts for 3 years,
or more of the shares carrying the right to vote at the
starting from 26 May 2020 until the day of the 2022
meeting sought to be held and they shall sign one or more
annual general meeting to be held in year 2023, upon
written requisitions in the same format and with the same
which the eighth session of the Supervisory Committee
content, requiring the Board to convene an extraordinary
will be elected.
general meeting and stating the resolutions of meeting
(such as election of Directors). The Board shall convene
an extraordinary general meeting within 2 months. The
141
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report Number of Supervisory Committee Meetings Attended/Held in 2020
Supervisors
Sui Yixun (Chairman of the Supervisory Committee and Shareholder Representative Supervisor)
Zhang Jianbin (Employee Representative Supervisor)
Dai Bin (Employee Representative Supervisor) *
Xu Shiguang (Shareholder Representative Supervisor)
You Minqiang (Shareholder Representative Supervisor) *
Yang Jianqing (Employee Representative Supervisor) *
Ye Zhong (Shareholder Representative Supervisor) *
Number of
Meetings
Attended/Held
1/2
2/2
1/1
2/2
1/1
1/1
0/1
Note: Certain Supervisors could not attend some of the meetings of the Supervisory Committee due to other important business commitments.
*
On 26 May 2020, Mr. You Minqiang was appointed as Shareholder Representative Supervisor at the 2019 Annual General Meeting. Meanwhile,
Mr. Dai Bin has been elected by the employees of the Company democratically as the Employee Representative Supervisor. Due to their age,
Mr. Yang Jianqing, an Employee Representative Supervisor of the sixth session of the Supervisory Committee, and Mr. Ye Zhong, a Shareholder
Representative Supervisor of the sixth session of the Supervisory Committee, retired from their positions as Supervisors of the Company upon the
expiry of their term of office at the 2019 Annual General Meeting.
EXTERNAL AUDITORS
The international and domestic auditors of the Company are Deloitte Touche Tohmatsu and Deloitte Touche Tohmatsu
Certified Public Accountants LLP, respectively. The non-audit services provided by the external auditors did not
contravene the requirements of the US Sarbanes-Oxley Act and therefore enabling them to maintain the independence.
A breakdown of the remuneration received by the external auditors for audit and non-audit services provided to the
Company for the year ended 31 December 2020 is as follows:
Service item
Audit services
Non-audit services (mainly include internal control advisory and other advisory services)
Total
142
Fee
(including
value-added tax)
(RMB millions)
76.83
3.13
79.96
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report
The Directors of the Company are responsible for
the preparation of consolidated financial statements
that give a true and fair view in accordance with the
International Financial Reporting Standards as issued by
the International Accounting Standards Board and the
disclosure requirements of the Hong Kong Companies
Ordinance, and for such internal control as the Directors
determine is necessary to enable the preparation of
consolidated financial statements that are free from
material misstatement, whether due to fraud or error. The
Directors were not aware of any material uncertainties
relating to any events or conditions which may cast a
serious impact upon the Group’s ability to continue as a
going concern. The statements by the external auditors
of the Company, Deloitte Touche Tohmatsu, regarding
their reporting responsibilities on the consolidated financial
statements of the Company is set out in the Independent
Auditor’s Report on pages 160 to 163 of this annual
report.
Since the approval at the annual general meeting of
the Company for the year 2012, the external auditors,
Deloitte Touche Tohmatsu and Deloitte Touche Tohmatsu
Certified Public Accountants LLP have provided audit
services for the Company for eight consecutive years.
Pursuant to the relevant regulations issued by the Ministry
of Finance of the People’s Republic of China and SASAC,
the service term of Deloitte Touche Tohmatsu and Deloitte
Touche Tohmatsu Certified Public Accountants LLP will
expire soon. They will retire as the international auditors
and domestic auditors of the Company effective upon
the close of the forthcoming annual general meeting
of the Company for the year 2020 and will not be re-
appointed. Pursuant to the open selection process, and as
recommended by the Audit Committee of the Company,
the Board has resolved to propose for the shareholders’
approval for the appointment of PricewaterhouseCoopers
and PricewaterhouseCoopers Zhong Tian LLP as the
Company’s external auditors for the year ending 31
December 2021 at the 2020 Annual General Meeting.
RISK MANAGEMENT AND
INTERNAL CONTROL SYSTEMS
The Board attaches great importance to the establishment
and perfection of the risk management and internal control
systems. The Board is responsible for evaluating and
determining the nature and extent of the risks it is willing
to take in achieving the Company’s strategic objectives,
and ensuring that the Company establishes and maintains
appropriate and effective risk management and internal
control systems, and the Board acknowledges that it is
responsible for the risk management and internal control
systems and for reviewing their effectiveness. Such
systems are designed to manage rather than eliminate
the risk of failure to achieve business objectives, and
can only provide reasonable but not absolute assurance
against material misstatements or losses. The Board
oversees management in the design, implementation
and monitoring of the risk management and internal
control systems. The Board takes effective approaches to
supervise the implementation of related control measures,
whilst enhancing operation efficiency and effectiveness,
and optimising corporate governance, risk assessment,
risk management and internal control so that the
Company can achieve long-term development goals.
The risk management and internal control systems of
the Company is built on clear organisational structure
and management duties, an effective delegation and
accountability system, definite targets, policies and
procedures, comprehensive risk assessment and
management, a sound financial accounting system,
and continuing analysis and supervision of operational
performance, etc. which plays a pivotal role in the
Company’s overall operation. The Company has
formulated a code of conduct for the senior management
and employees which ensures their ethical value and
competency. The Company attaches great importance
to the prevention of fraud and has formulated its internal
reporting system, which encourages anonymous reporting
of situations where employees, especially Directors and
senior management, breach the rules.
143
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report The Company views comprehensive risk management as
In 2021, the potential significant risks and the major risk-
an important task within the Company’s daily operation.
prevention and countering measures are as follows:
Pursuant to regulatory requirements in capital markets
of the United States and Hong Kong, the Company has
Economic and policy environment adaptation risks:
formulated a featured 5-step risk management approach
Facing the risks and challenges, such as the increasing
based on risk management theory and practice to
uncertainties in the economy development, the wide-
achieve closed-loop management of risk identification,
ranging impact of the global COVID-19 Epidemic, the
risk assessment, key risk analysis, risk reaction and risk
gradual impacts of regulatory policies’ adjustments in the
management assessment. In continuously strengthening
industry, the official commencement of the 5G era, and
the risk process control and management and focusing
the apparent increase in the sources of global unrest and
on significant risk which may be encountered, the
risks, the Company will actively respond to the change in
Company established a risk monitoring team, to follow
environment, implement the requirements of regulatory
and report the status of risk management and control
policies, accelerate the construction of information
regularly, improve the collection mechanism of risk-related
infrastructure represented by 5G, innovate 5G applications
information and identify the potential flaws of risk in a
and business models, deepen reform and innovation,
timely manner. Following the efforts made over the years,
expedite “Cloudification and Digital Transformation”,
the Company has established a structured and highly
expand ecological cooperation, perfect overseas
effective comprehensive risk management system and
compliance management system and pragmatically
has gradually perfected its comprehensive risk monitoring
promote corporate high-quality development.
and prevention mechanism.
Business development risks: Facing the needs to cultivate
In 2020, pursuant to the requirement of code provision C2
5G new applications and businesses and the persistent
of the Corporate Governance Code promulgated by the
upgrade of customers’ needs, the Company will focus
Hong Kong Stock Exchange, the Company concentrated
on customers’ needs, enhance the quality of service,
resources on the prevention of significant potential risks,
expand subscriber scale, promote corporate high-quality
and strived to reduce negative effect from significant risks.
development and in-depth cloud-network integration,
The Company was not confronted by any major risk event
comprehensively apply new technologies such as the 5G,
throughout the whole year.
cloud, Big Data, the Internet of Things and AI, implement
The Company has identified, assessed and analysed
family, government and enterprise market and expedite
potential major risks faced by the Company in 2021,
the expansion in the market for emerging businesses such
including economic and policy environment adaptation
as DICT, Internet of Things and Internet Finance, marching
risks, business development risks and network and
steadily towards becoming a leading integrated intelligent
the upgrades of marketing service strategies for individual,
information security risks etc., and has put forward
information services provider.
detailed response plans. Through strict and appropriate
risk management procedures, the Company will ensure
Network and information security risks: Facing the risks
the potential impact from the above risks on the Company
and challenges of network and information security, the
is limited and within an expected range.
Company will enhance the related sci-tech innovation
capabilities, speed up the construction of network
144
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report information security integrated system and capabilities
The Company highly values the compliance with the laws
development, strengthen the protection of key information
and regulations of the PRC as well as the places of listing
infrastructure and expand the network information security
of the Company and where the Company’s business
products and services, building network information
operations are located, strictly complies with all laws
security ecology so as to provide reliable network
and regulations and timely and proactively incorporates
information security protection for subscribers.
the laws and regulations into the Company’s rules and
The American Depositary Shares (the “ADSs”) of the
management, maintain the Company’s legitimate rights
Company may be subject to the risk of being delisted.
and interests and support the corporate to achieve long-
regulations to protect the Company’s legitimate business
On 6 January 2021 (US Eastern standard time), The
term healthy development target.
NYSE announced that it had determined to re-commence
proceedings to delist the ADSs of the Company (the
In August 2018, the Standing Committee of the National
“Determination”). Trading in the ADSs of the Company
People’s Congress (the “NPCSC”) approved the
was suspended at 4:00 a.m. (US Eastern standard time)
E-Commerce Law of the People’s Republic of China,
on 11 January 2021. The Determination may affect the
which was formally implemented on 1 January 2019. The
trading prices and volumes of the Company’s H shares
E-Commerce Law consists of seven chapters and eighty
and ADSs and may result in the Company’s ADSs being
nine articles which further regulate e-commerce activities
delisted. In order to protect the legitimate interests of the
conducted by relevant parties including e-commerce
Company and its shareholders, the Company filed with the
platform operators (“e-commerce platforms”). The
NYSE a written request for a review of the Determination
E-Commerce Law defines and confirms, for the first
by a Committee of the Board of Directors of the NYSE.
time, the obligation of e-commerce platforms to protect
The Company will continue to pay close attention to the
the consumers’ security, and requires them to bear
development of related matters and also seek professional
the corresponding responsibility when the obligation
advice and reserve all rights to protect the legitimate
is breached. It further refines the regulation for the
interests of the Company.
responsibility of intellectual property infringement on
the e-commerce platforms, regulates the industrial
Furthermore, the Company’s operations of telecommunications
and commercial registration and tax collection and
services in other jurisdictions are also subject to the licensing
management of e-commerce operators, requires
and other regulatory requirements and supervision of the
e-commerce operators to publish information when
local regulatory authorities. The license of the Company’s
terminating transactions at their own discretion, prohibits
subsidiary to provide telecommunications services in the
fabricating transactions and user comments to defraud
United States may be subject to actions by the relevant
and mislead consumers, prohibits the e-commerce
authorities in the United States and the Company cannot
platforms from abusing the dominant market position to
assure that it will be able to maintain that license in the future.
exclude and restrict competition, regulates the rules of
The Company’s subsidiary will continue to cooperate with
deposits collection and refund, requests the products
the regulatory authorities by providing additional details to
participating in bidding ranking with the results marked
support the Company’s position and address any concerns.
therein.
145
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report On 23 August 2018, the Ministry of Industry and
trade secret infringement. Fourth, the penalty on trade
Information Technology promulgated the Notice of
secret infringement has been increased. Fifth, in relation
Ministry of Industry and Information Technology on Further
to the allocation of burden of proof for trade secret
Regulating Marketing Activities for Telecommunications
infringement in the civil trial procedure, it stipulates that
Tariff Schemes (the “Notice”) which became effective from
the right holder may only need to provide preliminary
23 August 2018. The Notice encourages fundamental
evidences which can prove that the right holder has taken
telecommunications enterprises to provide a tiered
confidentiality measures and can reasonably indicate that
discount pricing formula for tariff plans according to the
the trade secret has been infringed. The amendments
usage amount of the users and simplify the structure
to the Anti-Unfair Competition Law strengthened the
of tariff packages. In formulating and implementing the
protection of intellectual property rights in China and had
tariff plans of bundled packages, the tariff plans for
a positive impact on the establishment of a fair market
each respective service should also be provided, and
order and protection of the legitimate interests of the right
the tariff rates disclosure policy should be improved.
holders.
When promoting the tariff plans, the telecommunications
enterprises shall fulfil its obligation to remind the users with
On 11 November 2019, the Ministry of Industry and
respect to matters they shall pay attention to, including
Information Technology promulgated the Notice of
the restrictive conditions, the validity period and the
the Ministry of Industry and Information Technology
charging principles. The same type of users with the same
on Printing and Publishing the Regulations on the
transaction conditions should be guaranteed with equal
Management of Mobile Number Portability Service. The
rights to select the tariff plans.
Regulations on the Management of Mobile Number
Portability Service (the “Regulations”) became effective
On 23 April 2019, the NPCSC promulgated the amended
on 1 December 2019. The Regulations expressly allow
Anti-Unfair Competition Law of the People’s Republic
the cellular mobile telecommunication users (excluding
of China (the “Anti-Unfair Competition Law”), which was
the users of Internet of Things) to apply for a change of
formally implemented on the same day. The amendments
the contracted fundamental business operator within
to the Anti-Unfair Competition Law mainly involve the
the same local network area whilst retaining their phone
provisions regarding the trade secrets of intellectual
numbers unchanged. Telecommunications business
property rights. First, the scope of trade secrets has
operators should strictly implement the relevant provisions
been expanded through the incorporation of a catch-all
on the real-name registration of users of mobile number
description, which is no longer limited to “technical” or
portability service and ensure that the users whose
“business operation” information. Second, the scope of
mobile numbers have been transferred from other
the trade secret infringer has been expanded. Apart from
networks should be entitled to the same rights under the
business operators, other natural persons, legal persons
same conditions. Providing an important basis for the
and non-legal entities have been included in the scope of
supervision and inspection of the telecommunications
the subject of liability for trade secret infringement. Third,
regulators, the Regulations explicitly require that in the
given the practical situation of evolving infringement means
course of providing the mobile number portability service
and conducts, it has been clarified that misappropriation
telecommunications business operators should not
of trade secrets through electronic intrusion or indirect
engage in 9 types of prohibited conducts including to
means, such as instigating, inducing and aiding others
refuse, prevent or delay the provision of mobile number
to acquire the right holder’s trade secrets, will constitute
portability service to users without justifiable reasons,
146
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report to restrict the users from switching to another network
and services that affect or may affect national security. It
by means of expanding the scope of the agreement
further clarifies the standards and procedures of review
in relation the terms of service, to affect the quality of
and stipulates that if the reviewers fail to be objective and
telecommunications service provided to the mobile
fair, or are unable to undertake the obligation to remain
number portability service users through technical
the confidentiality of the information received during the
measures such as interception and restriction, to conduct
review, the operators or network product and service
a comparative promotion, fabricate or disseminate
providers may report this to the Cyber Security Review
false or misleading information or discredit other
Office or other relevant departments.
telecommunication business operators when promoting
the mobile number portability service and the relevant
On 28 May 2020, the third session of the 13th National
tariff plans, to design special tariff plans and marketing
People’s Congress passed the Civil Code of the People’s
schemes for mobile number portability service users,
Republic of China (the “Civil Code”), which was formally
continue to occupy the mobile numbers transferred-in
implemented on 1 January 2021. The Civil Code, for the
while the users have exited the network and to hinder or
disrupt the normal operation of mobile number portability
service by means of handling the mobile number transfer
maliciously on behalf of the users, making complaints
maliciously on behalf of the users, etc.
On 13 April 2020, the Cyberspace Administration of China,
the National Development and Reform Commission,
the Ministry of Industry and Information Technology, the
Ministry of Public Security, the Ministry of State Security
and other government departments jointly formulated the
Cyber Security Review Measures (the “Measures”), which
became effective on 1 June 2020. The Measures further
refines the relevant provisions in the Interim Security
Review Measures for Network Products and Services,
which requires critical information infrastructures operators
to make declaration when procuring network products
first time, codifies the right of privacy as an independent
personality right, stipulates a series of specific rules
and formulates a framework of fundamental rights and
obligations between natural persons and information
processors. When conducting businesses, enterprises
shall effectively strengthen the awareness of privacy rights
of natural persons and personal data protection and
strictly adhere to the principles of legality, justification and
necessity. Enterprises shall collect and process personal
information in strict compliance with the conditions as
stipulated by laws and definitive agreements with the data
subject concerned, and shall not over collect or process
the data. The Civil Code provides principle provisions
on the protection of data and online virtual assets. The
Company should continue to strengthen the protection
of intangible assets such as proprietary data, online
virtual assets and intellectual property and enhance the
compliance on the usage of such intangible assets.
147
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report Apart from implementing the relevant latest and newly-
internal control, enhancing the safety of the Company’s
amended laws and regulations in a timely manner, the
information system so that the integrity, timeliness and
Company also actively and closely monitors forthcoming
reliability of data and information are maintained. At the
changes in the relevant laws and regulations in order to
same time, the Company attaches great importance to
strengthen the management of the relevant business
the control and monitoring of network information safety.
operation behaviour, and safeguards the effective
The Company persistently optimises the relevant rules
adherence to relevant laws and regulations so as
and guidances, further defines the responsible entities and
to ensure that the Company’s operations are in full
regularly commences the inspection of network safety and
compliance with the laws.
information safety in order to promote the enhancement of
the awareness of network information safety and relevant
Since 2003, based on the requirements of the U.S.
skills and knowledge.
securities regulatory authorities and the COSO Internal
Control Framework, and with the assistance of other
In 2020, based on external regulatory supervision,
advisory institutions including external auditors, the
changes in policy environment and requirements for
Company has formulated manuals, implementation rules
prevention and control of the Company’s key risks,
and related rules in relation to internal control, and has
the Company also took into account measures for
developed the Policies on Internal Control Management
deepened reform and innovation and changes in business
and Internal Control Accountability Management to
development. In order to focus on responding quickly
ensure the effective implementation of the above systems.
to market demands and supporting business innovation
The Company has all along continuously revises and
and operational innovation for enterprises, the Company
improves the manuals and implementation rules in view
conducted annual revision of internal control manuals,
of the ever changing internal and external operation
list of authority and implementation guidance. The
environment as well as the requirements of business
Company also supplemented and improved the contents
development over the years. While continuing to improve
of information technology strategic plan, cybersecurity
the internal control related policies, the Company has
deficiency management and management for providing
also been strengthening its IT internal control capabilities,
services to specific customers for free and optimised
which has improved the efficiency and effectiveness of
and adjusted business processes such as fixed asset
maintenance and compliance with laws and regulations.
148
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report The Internal Audit Department plays a vital role in
evaluate the nature of internal control deficiencies and
supporting the Board, the management and the risk
reach a conclusion as to the effectiveness of the internal
management and internal control systems. The functions
control system, the Company adopts the following 4
of the Internal Audit Department, which are independent of
major steps of assessment: (1) analyse and identify areas
the Company’s business operations, are complementary
which require assessment, (2) assess the effectiveness
with the functions of the external auditors while the Internal
of the design of internal control, (3) assess the operating
Audit Department plays an important role in the monitoring
effectiveness of internal control, (4) analyse the impact
of the Company’s internal management. The Internal Audit
of deficiencies in internal control, judge the nature of
Department is responsible for internal control assessment
deficiencies in internal control and conclude on the
of the Company, and provides an objective assurance
effectiveness of the internal control system. At the same
to the Audit Committee and the Board that the risk
time, the Company rectifies any deficiencies found during
management and internal control systems are maintained
the assessment. By formulating the amended “Measures
and operated by the management in compliance with
for the Internal Control Assessment”, the “Manual for the
agreed processes and standards. The Internal Audit
Self-Assessment of Internal Control”, the “Manual for the
Department regularly reports the internal audit results to
Independent Assessment of Internal Control” and other
the Audit Committee on a quarterly basis, and reports
regulations, the Company has ensured the assessment
the internal audit results to the Board through the Audit
procedures are in compliance. In 2020, the Company’s
Committee.
ANNUAL EVALUATION OF RISK
MANAGEMENT AND INTERNAL
CONTROL SYSTEMS
Internal Audit Department initiated and coordinated the
assessment of internal control all over the Company,
and reported the results to the Audit Committee and the
Board.
In terms of internal control self-assessment, the
The Company has been continuously improving its
Company continued to insist on 100% coverage of all
risk management and internal control systems so as
units (including the newly incorporated professional
to meet the regulatory requirements of its places of
companies). Through the self-assessment for the
listing, including the United States and Hong Kong, and
year 2020, management responsibilities were further
strengthen its internal control while guarding against
strengthened, and top leaders of companies at all levels
operational risk.
were identified as primary individuals responsible for
self-assessment for fulfilment with prime responsibility.
The Company has adopted the COSO Internal Control
The Company enhanced the self-assessment of the
Framework (2013) as the standard for the internal control
development and the operation effectiveness of the
assessment. With the management’s internal control
integrated supervision system for internal control, risk
testing guidelines and the Auditing Standard No. 2201
and compliance management, and further intensified
that were issued by The Public Company Accounting
the self-assessment of cross-level, cross-department
Oversight Board (PCAOB) as its directives, the Company’s
and cross-system processes. Through collaboration,
internal control assessment system is composed of the
the Company built the internal control self-assessment
self-assessment conducted by the persons responsible for
mechanism that was mutually integrated, collaborative
internal control together with the independent assessment
and efficient. Taking into account changes in internal and
conducted by the Internal Audit Department. In order to
external environment and risk prevention focuses and
149
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report focusing on the integrity and reliability of financial reports,
Furthermore, the Company organised the risk management
compliance of operation and management and key risk
and internal control assessment team and other relevant
control areas, the Company assessed the effectiveness
departments to closely coordinate with the external
of the design and implementation of internal control and
auditors’ audit of internal control over financial reporting.
focused on the soundness and effectiveness of enterprise
The internal control audit performed by the external
risk management system and compliance with laws and
auditor covered the Company and all of its subsidiaries as
regulations in light of increasing downward pressure on
well as the key processes and control points in relation to
the economy, complex and ever-changing international
material financial statements items. The external auditors
situation and growing complexity of business environment.
regularly communicated with the management in respect
In response to the internal control deficiencies identified
of the audit results.
during the self-assessment, the Company identified the
responsibilities one by one, timely rectified the deficiencies,
and effectively controlled and prevented any potential risks
The Company attaches great importance to rectifying
internal control deficiencies. Focusing on deficiencies and
to continuously improve the effectiveness of the design
problems identified through self-assessment, independent
and implementation of internal control.
assessment and internal and external audit, particularly
cross-departmental and cross-professional problems, the
The internal control independent assessment was
Company actively mobilised the function of collaborative
conducted with full coverage of all relevant units for
risk prevention. The relevant business departments jointly
a period of three years. On this basis, the scope
discussed and formulated rectification measures, specified
of assessment was further expanded in 2020 and
the acceptance criteria and monitored the rectification
independent assessment was conducted on 4 provincial
results. Entities at all levels carried out multi-layered and
branches and 10 professional companies. In terms
full-dimensional reviews of its internal control system
of the assessment method, firstly, the Company
through self-assessments and independent assessments
further enhanced the integration with internal control
and put its utmost efforts into rectifying the problems
self-assessment and inspected the quality of self-
which were identified. Through this method, the Company
assessment in the independent assessment, promoted
was able to ensure the effectiveness of its internal
the improvement of the self-inspection and self-healing
control and successfully passed the year-end attestation
capabilities of the relevant units. Secondly, several
undertaken by the external auditors.
departments of the Company jointly conducted special
investigations to evaluate the risk areas affecting the
The Board oversees the Company’s risk management
development of the company from multiple perspectives.
and internal control systems on an on-going basis and
In terms of assessment areas, the Company focused on
the Board, through the Audit Committee, conducted
the soundness of internal control system and effectiveness
an annual review of the risk management and internal
of the design and implementation of internal control, in
control systems of the Company and its subsidiaries
particular high-risk areas and problems that occurred
for the financial year ended 31 December 2020, which
frequently and analysed the cause of identified problems,
covered all material areas including financial controls,
promoting the rectification from point to surface. During
the year, the independent assessment of internal control
improved the quality of assessment and effectiveness of
rectification, effectively prevented risks and enhanced the
corporate self-healing capability, and safeguarded the
healthy corporate development.
operational controls and compliance controls, as well as
its risk management functions. After receiving the reports
from the Internal Audit Department and the confirmation
from the management to the Board on the effectiveness
of the Company’s risk management and internal control
systems (including Environmental, Social and Governance
risk management and internal control systems), the
150
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report Management held results announcement meetings and communicated with investors and media through conference
call in Beijing due to the Epidemic
Board is of the view that these systems are solid, well
established, effective and sufficient. The annual review
also confirms the adequacy of resources relating to the
Company’s accounting, internal control and financial
reporting functions, the sufficiency of the qualifications
and experience of staff, together with the adequacy of the
staff’s training programmes and the relevant budget.
INVESTOR RELATIONS AND
TRANSPARENT INFORMATION
DISCLOSURE MECHANISM
The Company established an Investor Relations
D e p a r t m e n t w h i c h i s r e s p o n s i b l e f o r p r o v i d i n g
s h a r e h o l d e r s a n d i n v e s t o r s w i t h t h e n e c e s s a r y
information, data and services in a timely manner. It also
maintains proactive communications with shareholders,
investors and other capital market participants so as to
allow them to fully and timely understand the operation
and development of the Company. The Company’s
senior management presents the annual results and
interim results every year. Through various activities such
as analyst meetings, press conferences, global investor
telephone conferences and investors road shows,
senior management provides the capital market and
media with important information and responds to key
questions which are of prime concerns to the investors.
This has helped reinforce the understanding of the
Company’s business and the overall development of the
telecommunications industry in China. Since 2004, the
Company has been holding the annual general meeting
in Hong Kong to provide convenience and encourage
its shareholders, especially the public shareholders,
to actively participate in the Company’s annual
general meeting and to promote direct and two-way
communications between the Board and shareholders.
Due to the COVID-19 Epidemic in 2020, the management
was unable to attend the results announcement briefings
and the annual general meeting in person in Hong Kong.
Therefore, the management announced the results and
communicated with investors, shareholders and the media
through online and video conferencing. Meanwhile, the
Company set up a dedicated investor relations enquiry
line, for the purpose of providing a direct channel to
address enquiries from the investment community. This
allows the Company to better serve its shareholders and
investors.
With an aim of strengthening communications with the
capital market and enhancing transparency of information
disclosure, the Company has provided quarterly
disclosure of revenue, operating expenses, EBITDA,
net profit figures and other key operational data, and
monthly announcements of the number of access lines in
service, mobile and wireline broadband subscribers. The
Company attaches great importance to maintaining daily
communication with shareholders, investors and analysts.
In 2020, facing travel restriction brought by the COVID-19
Epidemic, the Company proactively participated in a
number of investor conferences held by a number of major
international investment banks around the globe through
online meetings, which facilitated the communication with
institutional investors.
151
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report In 2020, the Company attended the following investor conferences held by major international investment banks:
Date
January 2020
January 2020
January 2020
March 2020
April 2020
May 2020
May 2020
June 2020
June 2020
June 2020
Name of Conference
ICBCI Corporate Pre-blackout NDR
UBS Greater China Conference 2020
Morgan Stanley China New Economy Summit 2020
Morgan Stanley Virtual Access Summit 2020
Bernstein 6th Annual China Telco Symposium
Nomura Virtual Greater China TMT Corporate Day 2020
Goldman Sachs TechNet Conference – Asia Pacific 2020
BofA 2020 Innovative China Virtual Conference
CITIC Securities Capital Market Forum 2020
China Merchants Securities Mid-year Online Strategy Conference 2020
August 2020
Nomura Virtual China Investor Forum 2020
September 2020
UBS China TMI Conference 2020
September 2020
Morgan Stanley Virtual Asia TMT Conference 2020
September 2020
CLSA 27th Investors’ Forum
September 2020
Inaugural Jefferies Asia Forum
September 2020
Morgan Stanley Virtual Asia Pacific Conference 2020
November 2020
11th Credit Suisse China Investment Conference
November 2020
Citi China Investor Conference 2020
November 2020
BofA China Conference 2020
November 2020
Goldman Sachs China Conference 2020
November 2020
Daiwa Investment Conference Hong Kong 2020
November 2020
Morgan Stanley Virtual European Technology, Media & Telecoms Conference 2020
November 2020
Morgan Stanley Virtual Asia Pacific Summit 2020
November 2020
Nomura Virtual 5G/Tech Corporate Day 2020
152
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report T h e C o m p a n y ’ s i n v e s t o r r e l a t i o n s w e b s i t e
anytime anywhere. The Company’s website is equipped
(www.chinatelecom-h.com) not only serves as an
with a number of useful functions including interactive
important channel for the Company to disseminate press
stock quote, interactive KPI, interactive FAQs, auto
releases and corporate information to investors, media
email alerts of investors activities, downloading to excel,
and the capital market, but also plays a significant role
RSS Feeds, self-selected items in investors briefcase,
in the Company’s valuation and our compliance with
html version annual report, financial highlights, investor
regulatory requirements for information disclosure. The
toolbar, historical stock quote, adding investor events to
Company launched a responsive website with the latest
calendars, content sharing to social media, etc. In addition
technology, which allows automatic adjustment to fit for
to setting up a dedicated investor relations enquiry line, a
different screen resolution and user interface, assuring
specialised appointment function to schedule a meeting
the best browsing experience of website content with
with investor relations professionals was also launched
desktop computers, laptops or mobile devices. This
on the Company’s website, to promote direct and close
allows investors, shareholders, reporters and the general
communication between the Company and investors, as
public to browse the latest information on the Company’s
well as to increase transparency.
website with any device more easily and promptly
The Company also strives to enhance the disclosure
quality and format of annual report. The Company further
enhanced the transparency of disclosure in environmental,
social and governance areas, by following the original
guidelines of Environmental, Social and Governance
Reporting Guide, Appendix 27 of the Listing Rules, to
report the Company’s achievements and key performance
indicators on environmental protection, while also took
initiative to comply with and adapt to the Listing Rules
which were newly amended but not yet effective as
well as the new guidelines of Environmental, Social and
Governance Reporting Guide. For details, please refer
to the Environmental, Social and Governance report of
this Annual Report. Relevant indicators and data were
analysed and assessed by independent third party to
ensure compliance with relevant requirements.
The Company also actively seeks recommendations
on how to improve the Company’s annual report
from shareholders through survey, and prepared and
distributed the annual report in a more environmentally-
153
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report friendly and cost-saving manner according to the
The Company has always maintained a sound and
recommendations received. Shareholders can ascertain
effective information disclosure mechanism while keeping
their choice of receiving the annual reports and
highly transparent communications with media, analysts
communications by electronic means, or receiving printed
and investors. Meanwhile, we attach great importance
version in English and/or Chinese. The Company clearly
to the handling of inside information and have formulated
and precisely delivered the messages about its strategies
rules on information disclosures and guidelines on inside
and goals in its 2019 Annual Report “Connecting Infinity,
information which encompass (including but not limited to)
Empowering Future”, so that shareholders and investors
disclosure of sensitive information and rules on confidential
can easily understand the Company’s development
information, identifying the scope of inside information,
directions and focus. The print and online versions of
procedure and management guidelines on handling
2019 Annual Report won a number of top accolades in
inside information. In general, the authorised speakers
international competitions, including being ranked No.7
only clarify and explain on information that is available
of “Top 100 Reports Worldwide” (No.1 in Asia Pacific) in
on the market, and avoid providing or divulging any
“LACP 2019 Vision Awards”. They also received a number
unpublished inside information either as an individual or
of platinum and gold awards in categories including
as a team. Before conducting any external interview, if the
telecommunications and technology industries, among
authorised speaker has any doubt about the information
others. In addition, the Company’s print Annual Report
to be disclosed, he/she would seek verification from the
has earned the gold award in “2020 International ARC
relevant person or the person-in-charge of the relevant
Awards”. These prestigious honours reflect the unanimous
department, so as to determine if such information is
worldwide recognition towards China Telecom’s tireless
accurate. In addition, discussions on the Company’s key
pursuit of excellence and globally leading performance
financial data or other financial indicators are avoided
on corporate governance and disclosure, on both
during the blackout periods.
conventional and digital channels.
154
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report SHAREHOLDERS
Details of shareholders by class and shareholding
Process of forwarding shareholders’ enquiries
to the Board or requesting for convening of an
extraordinary general meeting or a class meeting or
structure can be referred to the Report of the Directors on
proposing new motions
pages 48 to 79 of this annual report.
SHAREHOLDERS’ RIGHTS
Procedures for convening of an extraordinary
general meeting or a class meeting
According to the Articles of Association, shareholders
who request for the convening of an extraordinary general
meeting or a class meeting shall comply with the following
procedures:
2 or more shareholders holding in aggregate 10% or
more of the shares carrying the right to vote at the
meeting sought to be held shall sign one or more written
requisitions in the same format and with the same
content, stating the proposed matters to be discussed
at the meeting, and requiring the Board to convene an
extraordinary general meeting or a class meeting thereof.
The Board shall convene an extraordinary general meeting
within 2 months. If the Board fails to issue a notice of such
a meeting within 30 days from the date of receipt of the
Shareholders may at any time send their enquiries,
requests, proposals and concerns to the Board in
writing through the Company Secretary and the Investor
Relations Department.
To conform with the operation needs for corporate
governance after the A Share Offering, the Company is
required to amend the Articles of Association pursuant to
the Securities Law and the Guidelines for the Articles of
Association and other relevant laws and regulations. The
relevant amendments (including those articles applicable
to shareholders’ rights) will be submitted for the approval
by the shareholders of the Company at the extraordinary
general meeting to be held on 9 April 2021. The new
applicable Articles of Association will take effect from the
date of the A Share Offering and Listing upon approval by
the shareholders of the Company and fulfilment of relevant
procedures of the regulatory authorities.
Please refer to the announcement published by the
Company on 9 March 2021 and the relevant circular for
requisitions, the shareholders who make the requisitions
further details.
may themselves convene such a meeting (in a manner as
similar as possible to the manner in which shareholders’
The contact details of the Company Secretary are as
meetings are convened by the Board) within 4 months
follows:
from the date of receipt of the requisitions by the Board.
Procedures for proposing resolutions at the annual
general meeting
When the Company convenes an annual general meeting,
The Company Secretary
China Telecom Corporation Limited
28th Floor, Everbright Centre,
108 Gloucester Road, Wanchai,
shareholders holding 3% or more of the total voting
Hong Kong
shares of the Company shall have the right to propose
new motions in writing, and the Company shall place such
proposed motions on the agenda for such annual general
meeting if they are matters falling within the functions and
Email:
ir@chinatelecom-h.com
Tel No.:
(852) 2877 9777
IR Enquiry:
(852) 2582 0388
Fax No.:
(852) 2877 0988
powers of shareholders’ meetings.
155
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report A dedicated “Investor” section is available on the
amend notice period, shareholders’ proposal rights and
Company’s website (www.chinatelecom-h.com). There
convening procedures for general meetings applicable
is a FAQ function in the “Investor” section designated to
to joint stock companies incorporated in the PRC and
enable timely, effective and interactive communication
listed overseas, the Company amended the relevant
between the Company, shareholders and investors.
provisions in the Articles of Association regarding notice
C o m p a n y S e c r e t a r y a n d t h e I n v e s t o r R e l a t i o n s
period, shareholders’ proposal rights and convening
Department of the Company handle both telephone and
procedures for the general meetings. Please refer to
written enquiries from shareholders of the Company from
the announcement published by the Company on 24
time to time. Shareholders’ enquiries and concerns will
March 2020 in relation to the proposed amendments
be forwarded to the Board and/or the relevant Board
to the Articles of Association and the circular published
Committees of the Company, where appropriate, which
by the Company on 9 April 2020 for the details of the
will answer the shareholders’ questions. Information on
amendments.
the Company’s website is updated regularly.
AMENDMENTS TO ARTICLES OF
ASSOCIATION
At the 2019 Annual General Meeting held on 26 May 2020,
the shareholders approved the amendments to the Articles
of Association. Pursuant to the requirements of regulatory
SIGNIFICANT DIFFERENCES
BETWEEN THE CORPORATE
GOVERNANCE PRACTICES
FOLLOWED BY THE COMPANY
AND THOSE FOLLOWED BY NYSE-
LISTED U.S. COMPANIES
authorities and the actual operational needs of the
The Company was established in the PRC and is currently
Company, the Company amended the relevant provisions
listed on the Hong Kong Stock Exchange and the NYSE.
of the Articles of Association regarding the scope of
As a foreign private issuer in respect of its listing on the
business to reflect the amendments to the contents of
NYSE, the Company is not required to comply with all
the operation permit for value-added telecommunications
corporate governance rules of Section 303A of the NYSE
businesses. Pursuant to the requirements of “Reply of the
Listed Company Manual. However, the Company is
State Council on the Adjustment of the Notice Period of
required to disclose the significant differences between the
the General Meeting and Other Matters Applicable to the
corporate governance practices of the Company and the
Overseas Listed Companies (Guo Han [2019] No. 97)” to
listing standards followed by NYSE-listed U.S. companies.
156
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report Pursuant to the requirements of the NYSE Listed
for corporate governance; therefore, the Company has
Company Manual, the Board of all NYSE-listed U.S.
not formulated any separate corporate governance
companies must be made up by a majority of Independent
guidelines. However, the Company has implemented the
Directors. Under currently applicable PRC and Hong
code provisions under the Corporate Governance Code
Kong laws and regulations, the Board is not required to
and Corporate Governance Report as set out in Appendix
be formed with a majority of Independent Directors. As a
14 of the Listing Rules for the financial year ended 31
listed company on the Hong Kong Stock Exchange, the
December 2020.
Company needs to comply with the Listing Rules. The
Listing Rules require that at least one-third of the Board
of a listed company in Hong Kong be Independent Non-
Executive Directors. As at the date of this report, the
CONTINUOUS EVOLUTION OF
CORPORATE GOVERNANCE
Board comprises 10 Directors, of which 4 are Independent
The Company continuously analyses the corporate
Directors, making the number of Independent Directors
governance development of international advanced
exceeds one-third of the total number of Directors on
enterprises and the investors’ desires, constantly examines
the Board, in compliance with the requirements of the
and strengthens the corporate governance measures
Listing Rules. These Independent Directors also satisfy the
and practice, and improves the current practices at the
requirements on “independence” under the Listing Rules.
appropriate time; we strongly believe that by adhering to
However, the related standard set out in the Listing Rules is
good corporate governance principles, and improving the
different from the requirements in Section 303A.02 of the
transparency of operations, as well as the establishment
NYSE Listed Company Manual.
of the effective accountability system, we can ensure the
long-term stable development of the Company and seek
Pursuant to the requirements of the NYSE Listed
sustainable returns for the shareholders and investors.
Company Manual, companies shall formulate separate
corporate governance guidelines. Under the currently
For further information, please browse our website at
applicable PRC and Hong Kong laws and regulations,
the Company is not required to formulate any guidelines
www.chinatelecom-h.com
157
China Telecom Corporation Limited Annual Report 2020ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTCorporate Governance Report Digitalisation
for the Future
0
4
1
70
6
1
0
9
6
02
3
1
TO THE SHAREHOLDERS OF CHINA TELECOM CORPORATION LIMITED
(Incorporated in The People’s Republic of China with limited liability)
OPINION
We have audited the consolidated financial statements of China Telecom Corporation Limited (the “Company”) and its subsidiaries
(collectively referred to as the “Group”) set out on pages 164 to 244, which comprise the consolidated statement of financial position
as at 31 December 2020, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31
December 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance
with International Financial Reporting Standards (“IFRSs”) and have been properly prepared in compliance with the disclosure
requirements of the Hong Kong Companies Ordinance.
BASIS FOR OPINION
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the Hong Kong Institute of Certified
Public Accountants (“HKICPA”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the
HKICPA’s Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance
with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
China Telecom Corporation Limited Annual Report 2020INDEPENDENT AUDITOR’S REPORT KEY AUDIT MATTERS (continued)
Key audit matter
Revenue recognition
We identified revenue recognition as a key audit matter because
there is an inherent industry risk around the accuracy of revenue
recorded by the IT billing systems given the complexity of the
systems and the significance of volumes of data processed by
the systems.
Revenues from the provision of telecommunications services are,
in general, recognised as performance obligations are satisfied.
Fees for telecommunications packages are recognised for each
service type in the packages. The data records are captured and
the revenue transactions are recorded by the IT billing systems.
Details of the accounting policies for revenue recognition and
an analysis of revenues are disclosed in Notes 3(m) and 28,
respectively, to the consolidated financial statements.
How our audit addressed the key audit matter
Our procedures in relation to revenue recognition comprising both
control testing and substantive procedures on a sample basis,
included involving our internal IT specialists to assist with:
•
•
•
•
•
•
Testing the IT environment in which the billing systems
reside, including interface controls between different IT
applications.
Testing the key controls over the calculation of the
amounts billed to customers and the capturing and
recording of the revenue transactions.
Testing the key controls over the authorisation of the rate
changes and the input of such rates to the billing systems.
Testing the end-to-end reconciliations from data records to
the billing systems and to the general ledger.
Testing material journals processed between the billing
systems and the general ledger.
Testing the accuracy of customer bill calculations and the
respective revenue transactions recorded.
Impairment of goodwill and long-lived assets within the cash-generating unit
We identified the impairment of goodwill and long-lived assets
within the cash-generating unit as a key audit matter because
the impairment assessment of cash-generating unit requires the
management to exercise significant judgments relating to the
estimation of level of revenue, amount of operating costs and
applicable discount rate.
Details of the accounting policies for impairment of goodwill
and long-lived assets and the related accounting estimates are
disclosed in Notes 3(h) and 48, respectively, to the consolidated
financial statements. Details of goodwill impairment assessment
are disclosed in Note 7 to the consolidated financial statements.
Our procedures in relation to the impairment of goodwill and long-
lived assets within the cash-generating unit included:
•
•
•
With the assistance of our internal valuation specialists,
assessing the discount rate and assumptions used by the
management in the value in use model and comparing
the discount rate used by the management to externally
derived data and our own assessments of key inputs used
in deriving the discount rate.
With the assistance of our internal valuation specialists,
comparing the key inputs to the projected cash flows,
such as the number of subscribers, the average
revenue per subscriber and amount of operating costs,
with corresponding historical data to evaluate the
reasonableness of the management’s projections.
Assessing and challenging the significant judgments
and estimates used in the management’s impairment
assessment and evaluating the sensitivity analysis
performed by the management.
China Telecom Corporation Limited Annual Report 2020INDEPENDENT AUDITOR’S REPORT OTHER INFORMATION
The directors of the Company are responsible for the other information. The other information comprises the information included in the
annual report, but does not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE
FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view
in accordance with IFRSs and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the
directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion solely to you, as a body,
in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept
liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
China Telecom Corporation Limited Annual Report 2020INDEPENDENT AUDITOR’S REPORT AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also: (continued)
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in the independent auditor’s report is Ip Kan Wah.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
9 March 2021
China Telecom Corporation Limited Annual Report 2020INDEPENDENT AUDITOR’S REPORT 31 December
31 December
2020
RMB
2019
RMB
Notes
ASSETS
Non-current assets
Property, plant and equipment, net
Construction in progress
Right-of-use assets
Goodwill
Intangible assets
Interests in associates
Financial assets at fair value through profit or loss
Equity instruments at fair value through other comprehensive income
Deferred tax assets
Other assets
Total non-current assets
Current assets
Inventories
Income tax recoverable
Accounts receivable, net
Contract assets
Prepayments and other current assets
Financial assets at fair value through profit or loss
Short-term bank deposits and restricted cash
Cash and cash equivalents
Total current assets
Total assets
4
5
6
7
8
10
11
12
13
15
16
17
18
19
418,605
410,008
48,425
59,457
29,920
18,508
40,303
73
1,073
8,164
6,552
59,206
61,549
29,923
16,349
39,192
–
1,458
7,577
4,687
631,080
629,949
3,317
334
21,502
604
25,167
–
9,408
23,684
84,016
2,880
1,662
21,489
474
22,219
39
3,628
20,791
73,182
715,096
703,131
The notes on pages 171 to 244 form part of these consolidated financial statements.
China Telecom Corporation Limited Annual Report 2020CONSOLIDATED STATEMENT OF FINANCIAL POSITIONat 31 December 2020 (Amounts in millions) LIABILITIES AND EQUITY
Current liabilities
Short-term debt
Current portion of long-term debt
Accounts payable
Accrued expenses and other payables
Contract liabilities
Income tax payable
Current portion of lease liabilities
Current portion of deferred revenues
Total current liabilities
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Long-term debt
Lease liabilities
Deferred revenues
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity
Share capital
Reserves
Total equity attributable to equity holders of the Company
Non-controlling interests
Total equity
Total liabilities and equity
31 December
31 December
2020
RMB
2019
RMB
Notes
20
20
21
22
23
24
25
20
24
25
12
26
27
27,994
1,126
42,527
4,444
107,578
102,616
56,775
63,849
350
13,192
278
48,516
54,388
243
11,569
358
271,142
264,661
(187,126)
(191,479)
443,954
438,470
24,222
27,455
861
24,208
1,033
77,779
348,921
80,932
282,524
363,456
2,719
366,175
715,096
32,051
30,577
1,097
19,078
627
83,430
348,091
80,932
271,578
352,510
2,530
355,040
703,131
Approved and authorised for issue by the Board of Directors on 9 March 2021 and are signed on its behalf by:
Ke Ruiwen
Chairman and
Chief Executive Officer
Zhu Min
Executive Director,
Executive Vice President and Chief Financial Officer
The notes on pages 171 to 244 form part of these consolidated financial statements.
China Telecom Corporation Limited Annual Report 2020CONSOLIDATED STATEMENT OF FINANCIAL POSITIONat 31 December 2020 (Amounts in millions) Operating revenues
Operating expenses
Depreciation and amortisation
Network operations and support
Selling, general and administrative
Personnel expenses
Other operating expenses
Impairment loss on property, plant and equipment
Total operating expenses
Operating profit
Net finance costs
Investment income
Share of profits of associates
Profit before taxation
Income tax
Profit for the year
Other comprehensive income for the year
Items that will not be reclassified subsequently to profit or loss:
Change in fair value of investments in equity instruments at fair value
through other comprehensive income
Deferred tax on change in fair value of investments in equity instruments
at fair value through other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange difference on translation of financial statements of
subsidiaries outside mainland China
Share of other comprehensive income of associates
Other comprehensive income for the year, net of tax
Notes
28
2020
RMB
2019
RMB
393,561
375,734
29
30
31
4
32
33
34
(90,240)
(88,145)
(119,517)
(109,799)
(55,059)
(65,989)
(29,074)
(5,042)
(57,361)
(63,567)
(27,792)
–
(364,921)
(346,664)
28,640
(3,014)
60
1,701
27,387
(6,307)
21,080
(385)
97
(288)
(312)
(4)
(316)
(604)
29,070
(3,639)
30
1,573
27,034
(6,322)
20,712
604
(147)
457
102
(2)
100
557
Total comprehensive income for the year
20,476
21,269
The notes on pages 171 to 244 form part of these consolidated financial statements.
China Telecom Corporation Limited Annual Report 2020CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 December 2020 (Amounts in millions except for per share data) Profit attributable to
Equity holders of the Company
Non-controlling interests
Profit for the year
Total comprehensive income attributable to
Equity holders of the Company
Non-controlling interests
Total comprehensive income for the year
Basic earnings per share
Number of shares (in millions)
Note
39
39
2020
RMB
20,850
230
21,080
20,244
232
20,476
0.26
80,932
2019
RMB
20,517
195
20,712
21,074
195
21,269
0.25
80,932
The notes on pages 171 to 244 form part of these consolidated financial statements.
China Telecom Corporation Limited Annual Report 2020CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 December 2020 (Amounts in millions except for per share data) Attributable to equity holders of the Company
General
Share
capital
RMB
Capital
reserve
RMB
Share
Surplus
risk
Other
Exchange
Retained
premium
reserves
reserve
reserves
reserve
earnings
RMB
RMB
RMB
RMB
RMB
RMB
Notes
Non-
controlling
interests
RMB
Total
RMB
Total
equity
RMB
Balance as at 1 January 2019
80,932
17,806
10,746
76,231
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Contribution from non-controlling interests
Acquisition of non-controlling interests
Distribution to non-controlling interests
Share of an associate’s other changes in reserves
Dividends
Appropriations to statutory surplus reserve
Appropriations to general risk reserve
38
27
27
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3
–
(305)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,812
–
Balance as at 31 December 2019
80,932
17,504
10,746
78,043
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Acquisition of non-controlling interests
Distribution to non-controlling interests
Share of associates’ other changes in reserves
Dividends
Appropriations to statutory surplus reserve
Appropriations to general risk reserve
38
27
27
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(36)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,811
–
Balance as at 31 December 2020
80,932
17,468
10,746
79,854
–
–
–
–
–
–
–
–
–
–
23
23
–
–
–
–
–
–
–
–
33
56
160
–
455
455
–
–
–
–
–
–
–
615
–
(294)
(294)
–
–
–
–
–
–
(727)
155,481
340,629
1,027
341,656
–
102
102
–
–
–
–
–
–
–
20,517
20,517
–
557
20,517
21,074
–
–
–
–
(8,891)
(1,812)
(23)
–
3
–
(305)
(8,891)
–
–
195
–
195
1,500
(11)
(181)
–
–
–
–
20,712
557
21,269
1,500
(8)
(181)
(305)
(8,891)
–
–
(625)
165,272
352,510
2,530
355,040
–
20,850
20,850
(312)
(312)
–
(606)
20,850
20,244
–
–
–
–
–
–
–
–
–
(9,262)
(1,811)
(33)
–
–
(36)
(9,262)
–
–
230
2
232
(1)
(42)
–
–
–
–
21,080
(604)
20,476
(1)
(42)
(36)
(9,262)
–
–
321
(937)
175,016
363,456
2,719
366,175
The notes on pages 171 to 244 form part of these consolidated financial statements.
China Telecom Corporation Limited Annual Report 2020CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 December 2020 (Amounts in millions) Notes
(a)
2020
RMB
2019
RMB
132,260
112,600
(88,748)
(82,853)
(74)
(220)
863
24
47
(4,664)
5,695
(478)
(310)
2,514
115
296
(5,119)
8,621
(87,077)
(77,214)
(12,738)
81,049
(10,699)
103,315
(106,982)
(120,107)
(9,262)
(42)
(1)
–
978
5,728
(837)
(8,891)
(181)
(8)
1,590
–
4,098
(405)
(42,107)
(31,288)
3,076
20,791
(183)
23,684
4,098
16,666
27
20,791
Net cash from operating activities
Cash flows used in investing activities
Capital expenditure
Purchase of investments
Payments for right-of-use assets
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of right-of-use assets
Proceeds from disposal of investments
Purchase of short-term bank deposits
Maturity of short-term bank deposits
Net cash used in investing activities
Cash flows used in financing activities
Repayments of principal of lease liabilities
Proceeds from bank and other loans
Repayments of bank and other loans
Payment of dividends
Distribution to non-controlling interests
Payment for the acquisition of non-controlling interests
Contribution from non-controlling interests
Advanced payment received in respect of contribution from non-
controlling interest
Net deposits with Finance Company
Increase in statutory reserve deposits placed by Finance Company
(b)
(b)
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of changes in foreign exchange rate
Cash and cash equivalents at 31 December
The notes on pages 171 to 244 form part of these consolidated financial statements.
China Telecom Corporation Limited Annual Report 2020CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 December 2020 (Amounts in millions) (a) RECONCILIATION OF PROFIT BEFORE TAXATION TO NET CASH FROM
OPERATING ACTIVITIES
Profit before taxation
Adjustment for:
Depreciation and amortisation
Impairment loss on property, plant and equipment
Impairment losses for financial assets and other items, net of reversal
Write down of inventories, net of reversal
Investment income
Share of profits of associates
Interest income
Interest expense
Net foreign exchange loss
Net loss on retirement and disposal of long-lived assets
Operating profit before changes in working capital
Increase in accounts receivable
(Increase)/decrease in contract assets
(Increase)/decrease in inventories
(Increase)/decrease in prepayments and other current assets
(Increase)/decrease in restricted cash
(Increase)/decrease in other assets
Increase/(decrease) in accounts payable
Increase in accrued expenses and other payables
Increase/(decrease) in contract liabilities
Decrease in deferred revenues
Cash generated from operations
Interest received
Interest paid
Investment income received
Income tax paid
2020
RMB
27,387
90,240
5,042
1,512
35
(60)
(1,701)
(582)
3,433
163
3,827
2019
RMB
27,034
88,145
–
1,695
61
(30)
(1,573)
(492)
4,090
41
2,710
129,296
(1,771)
121,681
(2,601)
(132)
(474)
(116)
(6,097)
(2,971)
5,689
1,934
9,516
(55)
4
1,891
1,045
89
414
(2,657)
614
(1,412)
(90)
134,819
118,978
594
(3,524)
603
(232)
474
(4,200)
133
(2,785)
Net cash from operating activities
132,260
112,600
(b)
“Finance Company” refers to China Telecom Group Finance Co., Ltd., a subsidiary of the Company established on 8 January
2019, providing capital and financial management services to the member units of China Telecommunications Corporation.
The notes on pages 171 to 244 form part of these consolidated financial statements.
China Telecom Corporation Limited Annual Report 2020CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 December 2020 (Amounts in millions) 1. PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PRESENTATION
Principal activities
China Telecom Corporation Limited (the “Company”) and its subsidiaries (hereinafter, collectively referred to as the “Group”)
offers a comprehensive range of wireline and mobile telecommunications services including voice, Internet, telecommunications
network resource and equipment services, information and application services and other related services. The Group provides
wireline telecommunications services and related services in Beijing Municipality, Shanghai Municipality, Guangdong Province,
Jiangsu Province, Zhejiang Province, Anhui Province, Fujian Province, Jiangxi Province, Guangxi Zhuang Autonomous
Region, Chongqing Municipality, Sichuan Province, Hubei Province, Hunan Province, Hainan Province, Guizhou Province,
Yunnan Province, Shaanxi Province, Gansu Province, Qinghai Province, Ningxia Hui Autonomous Region and Xinjiang Uygur
Autonomous Region of the People’s Republic of China (the “PRC”). The Group also provides mobile telecommunications and
related services in the mainland China and Macau Special Administrative Region (“Macau”) of the PRC. The Group also provides
international telecommunications services, including network services, Internet access and transit, Internet Data Centre and
mobile virtual network services in certain countries and regions of the Asia Pacific, Europe, Africa, South America and North
America. The operations of the Group in the mainland China are subject to the supervision by the PRC government and relevant
regulation.
Organisation
As part of the reorganisation (the “Restructuring”) of China Telecommunications Corporation, the Company was incorporated in
the PRC on 10 September 2002. In connection with the Restructuring, China Telecommunications Corporation transferred to
the Company the wireline telecommunications business and related operations in Shanghai Municipality, Guangdong Province,
Jiangsu Province and Zhejiang Province together with the related assets and liabilities in consideration for 68,317 million ordinary
domestic shares of the Company. The shares issued to China Telecommunications Corporation have a par value of RMB1.00
each and represented the entire registered and issued share capital of the Company at that date.
On 31 December 2003, the Company acquired the entire equity interests in Anhui Telecom Company Limited, Fujian Telecom
Company Limited, Jiangxi Telecom Company Limited, Guangxi Telecom Company Limited, Chongqing Telecom Company
Limited and Sichuan Telecom Company Limited (collectively the “First Acquired Group”) and certain network management
and research and development facilities from China Telecommunications Corporation for a total purchase price of RMB46,000
million (hereinafter, referred to as the “First Acquisition”).
On 30 June 2004, the Company acquired the entire equity interests in Hubei Telecom Company Limited, Hunan Telecom
Company Limited, Hainan Telecom Company Limited, Guizhou Telecom Company Limited, Yunnan Telecom Company
Limited, Shaanxi Telecom Company Limited, Gansu Telecom Company Limited, Qinghai Telecom Company Limited, Ningxia
Telecom Company Limited and Xinjiang Telecom Company Limited (collectively the “Second Acquired Group”) from China
Telecommunications Corporation for a total purchase price of RMB27,800 million (hereinafter, referred to as the “Second
Acquisition”).
On 30 June 2007, the Company acquired the entire equity interests in China Telecom System Integration Co., Ltd. (“CTSI”),
China Telecom Global Limited (“CT Global”) and China Telecom (Americas) Corporation (“CT Americas”) (collectively the “Third
Acquired Group”) from China Telecommunications Corporation for a total purchase price of RMB1,408 million (hereinafter,
referred to as the “Third Acquisition”).
On 30 June 2008, the Company acquired the entire equity interest in China Telecom Group Beijing Corporation (“Beijing
Telecom” or the “Fourth Acquired Company”) from China Telecommunications Corporation for a total purchase price of
RMB5,557 million (hereinafter, referred to as the “Fourth Acquisition”).
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 1. PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PRESENTATION
(continued)
Organisation (continued)
On 1 August 2011 and 1 December 2011, the subsidiaries of the Company, E-surfing Pay Co., Ltd (“E-surfing Pay”) and
E-surfing Media Co., Ltd. (“E-surfing Media”), acquired the e-commerce business and video media business (collectively the
“Fifth Acquired Group”) from China Telecommunications Corporation and its subsidiaries for a total purchase price of RMB61
million (hereinafter, referred to as the “Fifth Acquisition”). The Company disposed the equity interest in E-surfing Media to China
Telecommunications Corporation in 2013.
On 30 April 2012, the Company acquired the digital trunking business (the “Sixth Acquired Business”) from Besttone Holding
Co., Ltd. (“Besttone Holding”), a subsidiary of China Telecommunications Corporation, at a purchase price of RMB48 million
(hereinafter, referred to as the “Sixth Acquisition”).
On 31 December 2013, CT Global, a subsidiary of the Company, acquired 100% equity interest in China Telecom (Europe)
Limited (“CT Europe” or the “Seventh Acquired Company”), a wholly owned subsidiary of China Telecommunications
Corporation, from China Telecommunications Corporation for a total purchase price of RMB278 million (hereinafter, referred to as
the “Seventh Acquisition”).
On 31 October 2017, the Company disposed of the 100% equity interest in Chengdu E-store Technology Co., Ltd (“E-store”),
a subsidiary of the Company, to Besttone Holding. The final consideration for the disposal of the equity interest in E-store was
arrived at RMB251 million, among which RMB249 million was received on 16 November 2017 and the remaining balance of
RMB2 million was received in 2018.
In December 2017, the Company acquired the satellite communications business (the “Satcom Business”) from China Telecom
Satellite Communication Co., Ltd., a wholly owned subsidiary of China Telecommunications Corporation, at a purchase price
of RMB70 million. In the same month, E-surfing Pay acquired a 100% interest in Shaanxi Zhonghe Hengtai Insurance Agent
Limited (currently known as Orange Insurance Agent Limited) (“Orange Insurance”), a wholly owned subsidiary of Shaanxi
Communications Services Company Limited (“Shaanxi Comservice”, a company ultimately held by China Telecommunications
Corporation), from Shaanxi Comservice, at a purchase price of RMB17 million. The acquisitions of the Satcom Business and
Orange Insurance (collectively referred to as the “Eighth Acquired Group”) are two separate transactions, which are collectively
referred to as the “Eighth Acquisition”. The total final consideration of the Eighth Acquisition was paid by 30 June 2018.
Hereinafter, the First Acquired Group, the Second Acquired Group, the Third Acquired Group, the Fourth Acquired Company,
the Fifth Acquired Group, the Sixth Acquired Business, the Seventh Acquired Company and the Eighth Acquired Group are
collectively referred to as the “Acquired Groups”.
Basis of presentation
Since the Group and the Acquired Groups are under common control of China Telecommunications Corporation, the Group’s
acquisitions of the Acquired Groups have been accounted for as a combination of entities under common control in a manner
similar to a pooling-of-interests. Accordingly, the assets and liabilities of these entities have been accounted for at historical
amounts and the consolidated financial statements of the Group prior to the acquisitions are combined with the financial
statements of the Acquired Groups. The considerations for the acquisition of the Acquired Groups are accounted for as an
equity transaction in the consolidated statement of changes in equity.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 1. PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PRESENTATION
(continued)
Merger with subsidiaries
Pursuant to the resolution passed by the Company’s shareholders at an extraordinary general meeting held on 25 February
2008, the Company entered into merger agreements with each of the following subsidiaries: Shanghai Telecom Company
Limited, Guangdong Telecom Company Limited, Jiangsu Telecom Company Limited, Zhejiang Telecom Company Limited,
Anhui Telecom Company Limited, Fujian Telecom Company Limited, Jiangxi Telecom Company Limited, Guangxi Telecom
Company Limited, Chongqing Telecom Company Limited, Sichuan Telecom Company Limited, Hubei Telecom Company
Limited, Hunan Telecom Company Limited, Hainan Telecom Company Limited, Guizhou Telecom Company Limited, Yunnan
Telecom Company Limited, Shaanxi Telecom Company Limited, Gansu Telecom Company Limited, Qinghai Telecom Company
Limited, Ningxia Telecom Company Limited and Xinjiang Telecom Company Limited. In addition, the Company entered into
merger agreement with Beijing Telecom on 1 July 2008. Pursuant to these merger agreements, the Company merged with
these subsidiaries and the assets, liabilities and business operations of these subsidiaries were transferred to the Company’s
branches in the respective regions.
2. APPLICATION OF AMENDMENTS TO INTERNATIONAL FINANCIAL
REPORTING STANDARDS (“IFRSs”)
In the current year, the Group has applied, for the first time, the Amendments to References to the Conceptual Framework in
IFRS Standards and the following amendments to IFRSs issued by the International Accounting Standards Board (the “IASB”)
that are mandatorily effective for the current year:
Amendments to IAS 1 and IAS 8, “Definition of Material”
Amendments to IFRS 3, “Definition of a Business”
Amendments to IFRS 9, IAS 39 and IFRS 7, “Interest Rate Benchmark Reform”
In addition, the Group has early applied the Amendment to IFRS 16, “Covid-19-Related Rent Concessions”.
Except as described below, the application of the Amendments to References to the Conceptual Framework in IFRS Standards
and the above amendments to IFRSs in the current year has had no material effect on the Group’s consolidated financial
statements.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 2. APPLICATION OF AMENDMENTS TO INTERNATIONAL FINANCIAL
REPORTING STANDARDS (“IFRSs”) (continued)
2.1
Impacts on early application of Amendment to IFRS 16, “Covid-19-Related
Rent Concessions”
The Group has applied the amendment for the first time in the current year. The amendment introduces a new practical
expedient for lessees to elect not to assess whether a Covid-19-related rent concession is a lease modification. The
practical expedient only applies to rent concessions occurring as a direct consequence of the Covid-19 that meets all of
the following conditions:
•
•
•
the change in lease payments results in revised consideration for the lease that is substantially the same as, or
less than, the consideration for the lease immediately preceding the change;
any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
there is no substantive change to other terms and conditions of the lease.
As a result of applying the practical expedient, the Group accounts for changes in lease payments resulting from rent
concessions the same way it would account for the changes applying IFRS 16, “Leases” (“IFRS 16”) if the changes
were not a lease modification. Forgiveness or waiver of lease payments are accounted for as variable lease payments.
The related lease liabilities are adjusted to reflect the amounts forgiven or waived with a corresponding adjustment
recognised in the profit or loss in the period in which the event occurs.
The application has no impact to the opening reserves as at 1 January 2020. The amounts related to changes in
lease payments that resulted from rent concessions in the profit or loss for the current year was not material to the
consolidated financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The accompanying consolidated financial statements have been prepared in accordance with IFRSs as issued by the
IASB. For the purpose of preparation of the consolidated financial statements, information is considered material if such
information is reasonably expected to influence decisions made by primary users. The consolidated financial statements
also comply with the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure
provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing
Rules”). The consolidated financial statements of the Group have been prepared on a going concern basis.
The consolidated financial statements are prepared on the historical cost basis as modified by the revaluation of certain
financial instruments measured at fair value (Note 3(k)).
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of preparation (continued)
The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgments,
estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. The estimates and associated assumptions are based
on historical experience and various other factors that management believes are reasonable under the circumstances,
the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
Judgments made by management in the application of IFRSs that have significant effect on the consolidated financial
statements and major sources of estimation uncertainty are discussed in Note 48.
(b) Basis of consolidation
The consolidated financial statements comprise the Company and its subsidiaries and the Group’s interests in
associates.
A subsidiary is an entity controlled by the Company. When fulfilling the following conditions, the Company has control
over an entity: (a) has power over the investee, (b) has exposure, or rights, to variable returns from its involvement with
the investee, and (c) has the ability to use its power over the investee to affect the amount of the investor’s returns.
When assessing whether the Company has power over that entity, only substantive rights (held by the Company and
other parties) are considered.
The financial results of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases, and the profit attributable to non-controlling interests is separately
presented on the face of the consolidated statement of comprehensive income as an allocation of the profit or loss
for the year between the non-controlling interests and the equity holders of the Company. Non-controlling interests
represent the equity in subsidiaries not attributable directly or indirectly to the Company. For each business combination,
other than business combination under common control, the Group measures the non-controlling interests at the
proportionate share, of the acquisition date, of fair value of the subsidiary’s net identifiable assets. Non-controlling
interests at the end of the reporting period are presented in the consolidated statement of financial position within equity
and consolidated statement of changes in equity, separately from the equity of the Company’s equity holders. Changes
in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions,
whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity
to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary,
with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date
when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a
financial asset or, when appropriate, the cost on initial recognition of an investment in an associate or a joint venture.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Basis of consolidation (continued)
An associate is an entity, not being a subsidiary, in which the Group exercises significant influence, but not control, over
its management. Significant influence is the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
An investment in an associate is accounted for in the consolidated financial statements under the equity method and
is initially recorded at cost, adjusted for any excess of the Group’s share of the acquisition-date fair values of the
investee’s net identifiable assets over the cost of the investment (if any) after reassessment. Thereafter, the investment is
adjusted for the Group’s equity share of the post-acquisition changes in the associate’s net assets and any impairment
loss relating to the investment. When the Group ceases to have significant influence over an associate, it is accounted
for as a disposal of the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any
interest retained in that former investee at the date when significant influence is lost is recognised at fair value and this
amount is regarded as the fair value on initial recognition of a financial asset.
All significant intercompany balances and transactions and unrealised gains arising from intercompany transactions are
eliminated on consolidation. Unrealised gains arising from transactions with associates are eliminated to the extent of
the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
(c) Foreign currencies
The accompanying consolidated financial statements are presented in Renminbi (“RMB”). The functional currency of the
Company and its subsidiaries in mainland China is RMB. The functional currency of the Group’s foreign operations is
the currency of the primary economic environment in which the foreign operations operate. Transactions denominated
in currencies other than the functional currency during the year are translated into the functional currency at the
applicable rates of exchange prevailing on the transaction dates. Foreign currency monetary assets and liabilities are
translated into the functional currency using the applicable exchange rates at the end of the reporting period. The
resulting exchange differences, other than those capitalised as construction in progress (Note 3(e)), are recognised as
income or expense in profit or loss. For the periods presented, no exchange differences were capitalised.
When preparing the Group’s consolidated financial statements, the results of operations of the Group’s foreign
operations are translated into RMB at average rate prevailing during the year. Assets and liabilities of the Group’s
foreign operations are translated into RMB at the foreign exchange rates ruling at the end of the reporting period. The
resulting exchange differences are recognised in other comprehensive income and accumulated separately in equity in
the exchange reserve.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Property, plant and equipment
Property, plant and equipment are initially recorded at cost, less subsequent accumulated depreciation and impairment
losses (Note 3(h)). The cost of an asset comprises its purchase price, any costs directly attributable to bringing the
asset to working condition and location for its intended use and the cost of borrowed funds used during the periods of
construction. Expenditure incurred after the asset has been put into operation, including cost of replacing part of such
an item, is capitalised only when it increases the future economic benefits embodied in the item of property, plant and
equipment and the cost can be measured reliably. All other expenditure is expensed as it is incurred.
Gains or losses arising from retirement or disposal of property, plant and equipment are determined as the difference
between the net disposal proceeds and the carrying amount of the respective asset and are recognised as income or
expense in the profit or loss on the date of disposal.
Depreciation is provided to write off the cost of each asset over its estimated useful life on a straight-line basis, after
taking into account its estimated residual value, as follows:
Buildings and improvements
Telecommunications network plant and equipment
Furniture, fixture, motor vehicles and other equipment
Depreciable lives
primarily range from
8 to 30 years
5 to 10 years
5 to 10 years
Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on
a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its
residual value are reviewed annually.
(e) Construction in progress
Construction in progress represents buildings, telecommunications network plant and equipment and other equipment
and intangible assets under construction and pending installation, and is stated at cost less impairment losses (Note
3(h)). The cost of an item comprises direct costs of construction, capitalisation of interest charge, and foreign exchange
differences on related borrowed funds to the extent that they are regarded as an adjustment to interest charges during
the periods of construction. Capitalisation of these costs ceases and the construction in progress is transferred to
property, plant and equipment and intangible assets when the asset is substantially ready for its intended use.
No depreciation is provided in respect of construction in progress.
(f) Goodwill
Goodwill represents the excess of the cost over the Group’s interest in the fair value of the net assets acquired in the
CDMA business (as defined in Note 7) acquisition.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and
is tested annually for impairment (Note 3(h)). On disposal of a cash generating unit during the year, any attributable
amount of the goodwill is included in the calculation of the profit or loss on disposal.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
Intangible assets
The Group’s intangible assets are primarily software.
Software that is not an integral part of any tangible assets, is recorded at cost less subsequent accumulated
amortisation and impairment losses (Note 3(h)). Amortisation of software is mainly calculated on a straight-line basis
over the estimated useful lives, which range from 3 to 5 years.
(h)
Impairment of goodwill and long-lived assets
The carrying amounts of the Group’s long-lived assets, including property, plant and equipment, right-of-use assets,
intangible assets with finite useful lives, construction in progress and contract costs included in other assets are
reviewed periodically to determine whether there is any indication of impairment. These assets are tested for impairment
whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable.
For goodwill, the impairment testing is performed annually at each year end.
Before the Group recognises an impairment loss for assets capitalised as contract costs under IFRS 15, “Revenue from
Contracts with Customers” (“IFRS 15”), the Group assesses and recognises any impairment loss on other assets related
to the relevant contracts in accordance with applicable standards. Then, impairment loss, if any, for assets capitalised
as contract costs is recognised to the extent the carrying amounts exceeds the remaining amount of consideration that
the Group expects to receive in exchange for related goods or services less the costs which relate directly to providing
those goods or services that have not been recognised as expenses. The assets capitalised as contract costs are
then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating
impairment of that cash-generating unit.
The recoverable amount of an asset or cash-generating unit is the greater of its fair value less costs of disposal and
value in use. The recoverable amount of a tangible and an intangible asset is estimated individually. When an asset
does not generate cash flows largely independent of those from other assets, the recoverable amount is determined
for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit). In determining
the value in use, expected future cash flows generated by the assets are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. The goodwill arising from a business combination, for
the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies
of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated
recoverable amount. Impairment loss is recognised as an expense in profit or loss. Impairment loss recognised in
respect of cash-generating units is allocated first to reduce the carrying amount of any goodwill allocated to the units
and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
The Group assesses at the end of each reporting period whether there is any indication that an impairment loss
recognised for an asset in prior years may no longer exist. An impairment loss is reversed if there has been a favourable
change in the estimates used to determine the recoverable amount. A subsequent increase in the recoverable amount
of an asset, when the circumstances and events that led to the write-down cease to exist, is recognised as an
income in profit or loss. The reversal is reduced by the amount that would have been recognised as depreciation and
amortisation had the write-down not occurred. An impairment loss in respect of goodwill is not reversed. For the years
presented, no reversal of impairment loss was recognised in profit or loss.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
Interests in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have the rights
to the assets, and obligation for the liabilities, relating to the joint arrangement. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in
accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or
contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint
operation, and gains and losses resulting from the transactions are recognised in the consolidated financial statements
only to the extent of other parties’ interests in the joint operation.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of
assets), the Group does not recognise its share of the gains and losses until it resells those assets to a third party.
(j)
Inventories
Inventories consist of materials and supplies used in maintaining the telecommunications network and goods for resale.
Inventories are valued at cost using the specific identification method or the weighted average cost method, less a
provision for obsolescence.
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in
the ordinary course of business less the estimated costs of completion, the estimated costs to make the sale and the
related tax expenses.
(k) Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of
the instrument. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date
basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within
the time frame established by regulation or convention in the market place.
Financial assets and financial liabilities are initially measured at fair value except for accounts receivable arising from
contracts with customers which are initially measured in accordance with IFRS 15. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or financial
liabilities at fair value through profit or loss (“FVTPL”)) are added to or deducted from the fair value of the financial assets
or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at FVTPL are recognised immediately in profit or loss.
The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and
of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form
an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected
life of the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial
recognition.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Financial instruments (continued)
Financial assets
Classification and subsequent measurement of financial assets
(i)
Financial assets measured subsequently at amortised cost
Financial assets that meet the following conditions are subsequently measured at amortised cost:
•
•
the financial asset is held within a business model whose objective is to collect contractual cash flows;
and
the contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Interest income is recognised using the effective interest method for financial assets measured subsequently at
amortised cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount
of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For
financial assets that have subsequently become credit-impaired, interest income is recognised by applying the
effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit
risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired,
interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial
asset from the beginning of the reporting period following the determination that the asset is no longer credit-
impaired.
(ii)
Equity instruments designated as at fair value through other comprehensive income (“FVTOCI”)
At initial recognition of a financial asset, the Group may irrevocably elect to present subsequent changes in fair
value of an equity investment in other comprehensive income, and accumulate in other reserves, if that equity
investment is neither held for trading nor contingent consideration recognised by an acquirer in a business
combination to which IFRS 3, “Business Combinations” applies. These equity instruments are not subject to
impairment assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the
equity investments, and will be transferred to retained earnings.
Dividend from these investments in equity instruments are recognised in profit or loss when the Group’s right to
receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the
investment. Dividends are included in the “investment income” line item in profit or loss.
(iii)
Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI or designated as
FVTOCI are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value
gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss includes any
dividend or interest earned on the financial asset and is included in the “investment income” line item.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Financial instruments (continued)
Financial assets (continued)
Impairment of financial assets and other items subject to impairment assessment under IFRS 9,
“Financial Instruments” (“IFRS 9”)
The Group performs impairment assessment under expected credit loss (“ECL”) model on financial assets (including
accounts receivable, financial assets included in prepayments and other current assets, short-term bank deposits and
restricted cash, cash and cash equivalents) and other item (contract assets) which are subject to impairment assessment
under IFRS 9. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial
recognition.
Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant
instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected to result from
default events that are possible within 12 months after the reporting date. Assessments are done based on the Group’s
historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and
an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.
The Group always recognises lifetime ECL for accounts receivable and contract assets. The ECL on these assets are
assessed individually for debtors with significant balances or credit-impaired debtors, and collectively using a provision
matrix with appropriate groupings based on shared credit risk characteristics, nature of services provided as well as
type of customers, such as receivable from telephone and Internet subscribers and from enterprise customers.
For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there has been a
significant increase in credit risk since initial recognition, the Group recognises lifetime ECL. The assessment of whether
lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since
initial recognition.
(i)
Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the
risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring
on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers
both quantitative and qualitative information that is reasonable and supportable, including historical experience
and forward-looking information that is available without undue cost or effort.
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly:
•
•
•
•
failure to make payments of principal or interest on their contractually due dates;
an actual or expected significant deterioration in a financial instrument’s external or internal credit rating
(if available);
an actual or expected significant deterioration in the operating results of the debtor; and
existing or forecast changes in the technological, market, economic or legal environment that have a
significant adverse effect on the debtor’s ability to meet its obligation to the Group.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Financial instruments (continued)
Financial assets (continued)
Impairment of financial assets and other items subject to impairment assessment under IFRS 9,
“Financial Instruments” (“IFRS 9”) (continued)
(ii)
Definition of default
For internal credit risk management, the Group considers an event of default occurs when information
developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collaterals held by the Group).
(iii)
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated
future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired
includes observable data about the following events:
•
•
•
•
•
significant financial difficulty of the issuer or the borrower;
a breach of contract, such as a default or past due event;
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial
difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise
consider;
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for that financial asset because of financial difficulties.
(iv)
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe
financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has been
placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be
subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice
where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognised in
profit or loss.
(v)
Measurement and recognition of ECL
The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the
loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given
default is based on the historical data and forward-looking information. The Group uses a practical expedient
in estimating ECL on accounts receivable using a provision matrix taking into consideration historical credit loss
experience, adjusted for forward-looking information that is available without undue cost or effort.
Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance
with the contract and all the cash flows that the Group expects to receive, discounted at the effective interest
rate determined at initial recognition.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Financial instruments (continued)
Financial assets (continued)
Impairment of financial assets and other items subject to impairment assessment under IFRS 9,
“Financial Instruments” (“IFRS 9”) (continued)
Measurement and recognition of ECL (continued)
(v)
Lifetime ECL for accounts receivable and contract assets are considered on a collective basis taking into
consideration past due information and relevant credit information such as forward-looking macroeconomic
information.
For collective assessment, the Group takes into consideration the following characteristics when formulating
the grouping:
•
•
•
Past-due status;
Nature, size and industry of debtors; and
External credit ratings where available.
The grouping is regularly reviewed by management to ensure the constituents of each group continue to share
similar credit risk characteristics.
The Group recognises an impairment gain or loss in profit or loss for all financial instruments measured at
amortised cost by adjusting their carrying amount, with the exception of accounts receivable and other
receivables where the corresponding adjustment is recognised through a loss allowance account.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is recognised in profit or loss.
On derecognition of an investment in equity instrument which the Group has elected on initial recognition to measure at
FVTOCI, the cumulative gain or loss previously accumulated in other reserves is not reclassified to profit or loss, but is
transferred to retained earnings.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of
the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Financial instruments (continued)
Financial liabilities and equity (continued)
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method.
Financial liabilities including short-term and long-term debt, accounts payable and financial liabilities included in accrued
expenses and other payables are subsequently measured at amortised cost, using the effective interest method.
Offsetting a financial asset and a financial liability
A financial asset and a financial liability are offset and the net amount presented in the consolidated statement of
financial position when, and only when, the Group currently has a legally enforceable right to set off the recognised
amounts; and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
(l) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and time deposits with original maturities of three
months or less when purchased. Cash equivalents are stated at cost, which approximates fair value.
(m) Revenue from contract with customers
The Group recognises revenue when (or as) a performance obligation is satisfied. i.e. when “control” of the goods or
services underlying the particular performance obligation is transferred to the customer.
A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of
distinct goods or services that are substantially the same.
Control is transferred over time and revenue is recognised over time by reference to the progress towards complete
satisfaction of the relevant performance obligation if one of the following criteria is met:
•
•
•
the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the
Group performs;
the Group’s performance creates or enhances an asset that the customer controls as the Groups performs; or
the Group’s performance does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for performance completed to date.
As such, revenues from contracts with customers of telecommunications services, including voice, Internet, information
and application and telecommunications network resource and equipment services, resale of mobile services (MVNO)
and repair and maintenance of equipment are generally recognised over time during which the services are provided to
customers.
Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct good or service.
As such, revenues from sales of equipment are recognise at a point in time when the equipment is delivered to the
customers and when the control over the equipment have been transferred to the customers.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Revenue from contract with customers (continued)
A contract asset represents the Group’s right to consideration in exchange for goods or services that the Group has
transferred to a customer but the right is conditioned on the Group’s future performance. A contract asset is transferred
to accounts receivable when the right becomes unconditional. A contract asset is assessed for impairment in
accordance with IFRS 9. In contrast, a receivable represents the Group’s unconditional right to consideration, i.e. only
the passage of time is required before payment of that consideration is due.
A contract liability represents the Group’s obligation to transfer goods or services to a customer for which the Group
has received consideration (or an amount of consideration is due) from the customer. When the Group receives
an advance payment before the performance obligation is satisfied, this will give rise to a contract liability, until the
operating revenues recognised on the relevant contract exceed the amount of the advance payment.
A contract asset and a contract liability relating to the same contract are accounted for and presented on a net basis.
Contracts with multiple performance obligations (including allocation of
transaction price)
For contracts that contain more than one performance obligations, such as the Group’s direct sales of promotional
packages bundling terminal equipment, e.g. mobile handsets, and the telecommunications services, the Group
allocates the transaction price to each performance obligation on a relative stand-alone selling price basis.
The stand-alone selling price of the distinct good or service underlying each performance obligation is determined at
contract inception. It represents the price at which the Group would sell a promised good or service separately to a
customer. If a stand-alone selling price is not directly observable, the Group estimates it using appropriate techniques
such that the transaction price ultimately allocated to any performance obligation reflects the amount of consideration
to which the Group expects to be entitled in exchange for transferring the promised goods or services to the customer.
Over time revenue recognition: measurement of progress towards complete
satisfaction of a performance obligation
The progress towards complete satisfaction of a performance obligation is generally measured based on output
method, which is to recognise revenue on the basis of direct measurements of the value of the goods or services
transferred to the customer to date relative to the remaining goods or services promised under the contract.
Principal versus agent
When another party is involved in providing goods or services to a customer, the Group determines whether the nature
of its promise is a performance obligation to provide the specified goods or services itself (i.e. the Group is a principal)
or to arrange for those goods or services to be provided by the other party (i.e. the Group is an agent).
The Group is a principal if it controls the specified good or service before that good or service is transferred to a
customer.
The Group is an agent if its performance obligation is to arrange for the provision of the specified good or service by
another party. In this case, the Group does not control the specified good or service provided by another party before
that good or service is transferred to the customer. When the Group acts as an agent, it recognises revenue in the
amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or
services to be provided by the other party.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Revenue from contract with customers (continued)
Consideration payable to a customer
Consideration payable to a customer includes cash amounts that the Group pays, or expects to pay, to the customer,
and also includes credit or other items that can be applied against amounts owed to the Group. The Group accounted
for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless
the payment to the customer is in exchange for a distinct good or service that the customer transfers to the Group and
the fair value of the good or service received from the customer can be reasonably estimated.
Certain subsidies payable to third party agent incurred by the Group in respect of customer contracts, which will be
ultimately enjoyed by end customers, and other subsidies incurred by the Group directly payable to its customers, are
qualified as consideration payable to a customer and accounted for as a reduction of operating revenues.
Incremental costs of obtaining a contract
Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer
that it would not have incurred if the contract had not been obtained.
Certain commissions incurred by the Group paid or payable to third party agents, whose selling activities resulted in
customers entering into telecommunications service agreements with the Group, are qualified as incremental costs. The
Group recognises such costs as an asset, included in other assets, if it expects to recover these costs. The asset so
recognised is subsequently amortised to profit or loss on a systematic basis that is consistent with the transfer to the
customer of the goods or services to which the assets relate. The asset is subject to impairment review.
The Group applies the practical expedient of expensing all incremental costs to obtain a contract if these costs would
otherwise have been fully amortised to profit or loss within one year.
Costs to fulfil a contract
When the Group incurs costs to fulfil a contract, it first assesses whether these costs qualify for recognition as an asset
in terms of other relevant standards, failing which it recognises an asset for these costs only if they meet all of the
following criteria:
•
•
•
the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify;
the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy)
performance obligations in the future; and
the costs are expected to be recovered.
The asset so recognised is subsequently amortised to profit or loss on a systematic basis that is consistent with the
transfer to the customer of the goods or services to which the assets relate. The asset is subject to impairment review.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Leases
Definition of a lease
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration.
The Group assesses whether a contract is or contains a lease based on the definition under IFRS 16 at inception
or modification date. Such contract will not be reassessed unless the terms and conditions of the contract are
subsequently changed.
The Group as a lessee
As a practical expedient, leases with similar characteristics are accounted on a portfolio basis when the Group
reasonably expects that the effects on the consolidated financial statements would not differ materially from individual
leases within the portfolio.
Allocation of consideration to components of a contract
For a contract that contains a lease component and one or more additional lease or non-lease components, the Group
allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the
lease component and the aggregate stand-alone price of the non-lease components.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to leases that have a lease term of 12 months or less
from the commencement date and do not contain a purchase option. It also applies the recognition exemption for lease
of low-value assets. Lease payments on short-term leases and leases of low-value assets are recognised as expenses
on a straight-line basis over the lease term.
Right-of-use assets
The cost of right-of-use asset includes:
•
•
•
•
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date, less any lease incentives received;
any initial direct costs incurred by the lessee; and
an estimate of costs to be incurred by the lessee in dismantling and removing the underlying assets, restoring
the site on which it is located or restoring the underlying asset to the condition required by the terms and
conditions of the lease.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities other than adjustments to lease liabilities resulting from Covid-19-related rent
concessions in which the Group applied the practical expedient.
Right-of-use assets in which the Group is reasonably certain to obtain ownership of the underlying leased assets at the
end of the lease term is depreciated from commencement date to the end of the useful life. Otherwise, right-of-use assets
are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
The Group presents right-of-use assets as a separate line item on the consolidated statement of financial position.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Leases (continued)
The Group as a lessee (continued)
Lease liabilities
At the commencement date of a lease, the Group recognises and measures the lease liability at the present value
of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses
the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily
determinable.
The lease payments include:
•
•
•
•
fixed payments (including in-substance fixed payments) less any lease incentives receivable;
variable lease payments that depend on an index or a rate;
the exercise price of a purchase option reasonably certain to be exercised by the Group; and
payments of penalties for terminating a lease, if the lease term reflects the Group exercising an option to
terminate the lease.
Variable lease payments that depend on an index or a rate are initially measured using the index or rate as at the
commencement date. Variable lease payments that do not depend on an index or a rate are not included in the
measurement of lease liabilities and right-of-use assets, and are recognised as expense in the period on which the
event or condition that triggers the payment occurs.
After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.
The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets)
whenever:
•
the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which
case the related lease liability is remeasured by discounting the revised lease payments using a revised discount
rate at the date of assessment.
•
the lease payments change due to changes in market rental rates following a market rent review, in which
cases the related lease liability is remeasured by discounting the revised lease payments using the initial
discount rate.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Leases (continued)
The Group as a lessee (continued)
Lease modifications
Except for Covid-19-related rent concessions in which the Group applied the practical expedient, the Group accounts
for a lease modification as a separate lease if:
•
•
the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
the consideration for the leases increases by an amount commensurate with the stand-alone price for the
increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the
particular contract.
For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based
on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the
effective date of the modification.
The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the relevant
right-of-use asset. When the modified contract contains a lease component and one or more additional lease or non-
lease components, the Group allocates the consideration in the modified contract to each lease component on the
basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease
components.
Covid-19-related rent concessions
In relation to rent concessions that occurred as a direct consequence of the Covid-19 pandemic, the Group has elected
to apply the practical expedient not to assess whether the change is a lease modification if all of the following conditions
are met:
•
•
•
the change in lease payments results in revised consideration for the lease that is substantially the same as, or
less than, the consideration for the lease immediately preceding the change;
any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
there is no substantive change to other terms and conditions of the lease.
As a result of applying the practical expedient, the Group accounts for changes in lease payments resulting from
rent concessions the same way it would account for the changes applying IFRS 16 if the changes were not a lease
modification. Forgiveness or waiver of lease payments are accounted for as variable lease payments. The related lease
liabilities are adjusted to reflect the amounts forgiven or waived with a corresponding adjustment recognised in the profit
or loss in the period in which the event occurs.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Leases (continued)
The Group as a lessor
Classification and measurement of leases
Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease
transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, the contract is
classified as a finance lease. All other leases are classified as operating leases.
Amounts due from lessees under finance leases are recognised as receivables at commencement date at amounts
equal to net investments in the leases, measured using the interest rate implicit in the respective leases. Initial direct
costs (other than those incurred by manufacturer or dealer lessors) are included in the initial measurement of the net
investments in the leases. Interest income is allocated to accounting periods so as to reflect a constant periodic rate of
return on the Group’s net investment outstanding in respect of the leases.
Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of
the leased asset, and such costs are recognised as an expense on a straight-line basis over the lease term. Variable
lease payments for operating leases that depend on an index or a rate are estimated and included in the total lease
payments to be recognised on a straight-line basis over the lease term. Variable lease payments that do not depend on
an index or a rate are recognised as income when they arise.
Allocation of consideration to components of a contract
When a contract includes both leases and non-lease components, the Group applies IFRS 15 to allocate consideration
in a contract to lease and non-lease components. Non-lease components are separated from lease component on the
basis of their relative stand-alone selling prices.
Refundable rental deposits
Refundable rental deposits received are accounted under IFRS 9 and initially measured at fair value. Adjustments to fair
value at initial recognition are considered as additional lease payments from lessees.
Sublease
When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts.
The sub-lease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head
lease, not with reference to the underlying asset.
Lease modification
Changes in considerations of lease contracts that were not part of the original terms and conditions are accounted for as
lease modifications, including lease incentives provided through forgiveness or reduction of rentals.
The Group accounts for a modification to an operating lease as a new lease from the effective date of the modification,
considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the
new lease.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(o) Net finance costs
Net finance costs comprise interest income on bank deposits, interest costs on borrowings, interest expense on lease
liabilities and foreign exchange gains and losses. Interest income from bank deposits is recognised as it accrues using
the effective interest method.
Interest costs incurred in connection with borrowings are calculated using the effective interest method and are
expensed as incurred, except to the extent that they are capitalised as being directly attributable to the construction of
an asset which necessarily takes a substantial period of time to get ready for its intended use.
(p) Research and development expense
Research and development expenditure is expensed as incurred if the criteria of recognition as intangible assets
were not met. For the year ended 31 December 2020, research and development expense, other than those related
personnel expenses and depreciation was RMB2,215 million (2019: RMB2,105 million). Research and development
related personnel expenses and depreciation for the year ended 31 December 2020 amounted to RMB2,392 million
(2019: RMB1,950 million) and RMB130 million (2019: RMB141 million), respectively.
(q) Employee benefits
The Group’s contributions to defined contribution retirement plans administered by the PRC government and defined
contribution retirement plans administered by independent external parties are recognised in profit or loss as incurred.
Further information is set out in Note 46.
Compensation expense in respect of the share appreciation rights granted is accrued as a charge to the profit or loss
over the applicable vesting period based on the fair value of the share appreciation rights. The liability of the accrued
compensation expense is re-measured to fair value at the end of each reporting period with the effect of changes in
the fair value of the liability charged or credited to profit or loss. Further details of the Group’s share appreciation rights
scheme are set out in Note 47.
(r) Government grants
The Group’s government grants are mainly related to the government loans with below-market rate of interest.
Government grants shall only be recognised until there is reasonable assurance that:
•
•
the Group will comply with all the conditions attaching to them; and
the grants will be received.
Government grants that compensate expenses incurred are recognised in the consolidated statement of comprehensive
income in the same periods in which the expenses are incurred.
Government grants relating to assets are recognised in deferred revenue and are credited to the consolidated statement
of comprehensive income on a straight-line basis over the expected lives of the related assets.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(s) Provisions and contingent liabilities
A provision is recognised in the consolidated statement of financial position when the Group has a legal or constructive
obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is
the best estimate of the consideration required to settle the present obligation at the end of the reporting period. Where
the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the
obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is
remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or
more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is
remote.
(t)
Value-added tax (“VAT”)
Output VAT rate for basic telecommunications services (including voice communication, lease or sale of network
resources) is 9% since 1 April 2019, 10% between 1 May 2018 and 1 April 2019, or 11% before 1 May 2018, while the
output VAT rate for value-added telecommunications services (including Internet access services, short and multimedia
messaging services, transmission and application service of electronic data and information) is 6%, and the output
VAT for sales of telecommunications terminals and equipment is 13% since 1 April 2019, 16% between 1 May 2018
and 1 April 2019, or 17% before 1 May 2018. Input VAT rate depends on the type of services received and the assets
purchased as well as the VAT rate applicable to a specific industry, and ranges from 3% to 13% since 1 April 2019, 3%
to 16% between 1 May 2018 and 1 April 2019, or 3% to 17% before 1 May 2018.
Output VAT is excluded from operating revenues while input VAT is excluded from operating expenses or the original
cost of equipment purchased and can be netted against the output VAT, arriving at the net amount of VAT recoverable
or payable. As the VAT obligations are borne by branches and subsidiaries of the Company, input and output VAT
are set off at branches and subsidiaries levels which are not offset at the consolidation level. Such net amount of VAT
recoverable or payable is recorded in the line items of prepayments and other current assets and accrued expenses
and other payables, respectively, on the face of consolidated statement of financial position.
(u)
Income tax
Income tax for the year comprises current tax and movement in deferred tax assets and liabilities. Income tax is
recognised in profit or loss except to the extent that it relates to items recognised in other comprehensive income, or
directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly
in equity respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of
previous years. Deferred tax is provided using the balance sheet liability method, providing for all temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. The amount
of deferred tax is calculated on the basis of the enacted or substantively enacted tax rates that are expected to apply
in the period when the asset is realised or the liability is settled. The effect on deferred tax of any changes in tax rates
is charged or credited to profit or loss, except for the effect of a change in tax rate on the carrying amount of deferred
tax assets and liabilities which were previously recognised in other comprehensive income, in such case the effect of a
change in tax rate is also recognised in other comprehensive income.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(u)
Income tax (continued)
A deferred tax asset is recognised only to the extent that it is probable that future taxable income will be available
against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax liabilities are
recognised for taxable temporary differences associated with investments in subsidiaries and associates, except where
the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
For the purposes of measuring deferred tax for leasing transactions in which the Group recognises the right-of-use assets
and the related lease liabilities, the Group first determines whether the tax deductions are attributable to the right-of-use
assets or the lease liabilities.
The tax deductions of the Group’s leasing transactions are attributable to the lease liabilities. The Group applies IAS 12,
“Income Taxes” requirements to the leasing transaction as a whole. Temporary differences relating to right-of-use assets
and lease liabilities are assessed on a net basis. Excess of depreciation on right-of-use assets over the lease payments
for the principal portion of lease liabilities resulting in net deductible temporary differences.
(v) Dividends
Dividends are recognised as a liability in the period in which they are declared.
(w) Related parties
(a)
A person, or a close member of that person’s family, is related to the Group if that person:
(i)
has control or joint control over the Group;
(ii)
has significant influence over the Group; or
(iii)
is a member of the key management personnel of the Group or the Group’s parent.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) Related parties (continued)
(b)
An entity is related to the Group if any of the following conditions applies:
(i)
The entity and the Group are members of the same group (which means that each parent, subsidiary
and fellow subsidiary is related to the others);
(ii)
The entity is an associate or joint venture of the Group (or an associate or joint venture of a member of
a group of which the Group is a member); or the Group is an associate or joint venture of the entity (or
an associate or joint venture of a member of a group of which the entity is a member);
(iii)
The entity and the Group are joint ventures of the same third party;
(iv)
The entity is a joint venture of a third entity and the Group is an associate of the third entity; or the
Group is a joint venture of a third entity and the entity is an associate of the third entity;
(v)
The entity is controlled or jointly controlled by a person identified in (a);
(vi)
A person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
Close members of the family of a person are those family members who may be expected to influence, or be influenced
by, that person in their dealings with the entity.
(x) Segmental reporting
An operating segment is a component of an entity that engages in business activities from which revenues are earned
and expenses are incurred, and is identified on the basis of the internal financial reports that are regularly reviewed
by the chief operating decision maker in order to allocate resources and assess performance of the segment. For
the periods presented, management has determined that the Group has one operating segment as the Group is
only engaged in the integrated telecommunications business. The Group’s assets located outside mainland China
and operating revenues derived from activities outside mainland China are less than 10% of the Group’s assets and
operating revenues, respectively. No geographical area information has been presented as such amount is immaterial.
No single external customer accounts for 10% or more of the Group’s operating revenues.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 4. PROPERTY, PLANT AND EQUIPMENT, NET
Buildings and
improvements
RMB millions
Telecommunications
network plant
and equipment
RMB millions
Furniture, fixture,
motor vehicles and
other equipment
RMB millions
Total
RMB millions
Cost/Deemed cost:
Balance at 1 January 2019
Additions
Transferred from construction in progress
Retirement and disposal
Reclassification
Balance at 31 December 2019
Additions
Transferred from construction in progress
Retirement and disposal
Reclassification
Balance at 31 December 2020
Accumulated depreciation and impairment:
Balance at 1 January 2019
Depreciation charge for the year
Written back on retirement and disposal
Reclassification
Balance at 31 December 2019
Depreciation charge for the year
Provision for impairment loss
Written back on retirement and disposal
Reclassification
Balance at 31 December 2020
Net book value at 31 December 2020
Net book value at 31 December 2019
102,541
554
2,060
(751)
(39)
104,365
425
2,249
(1,435)
(10)
105,594
(58,300)
(4,185)
681
19
(61,785)
(4,196)
–
1,324
8
(64,649)
40,945
42,580
854,382
274
74,157
(62,560)
(536)
865,717
139
84,567
(53,500)
(512)
896,411
(498,986)
(64,672)
56,943
358
(506,357)
(64,208)
(5,027)
48,451
401
(526,740)
369,671
359,360
31,558
277
1,644
(2,419)
575
31,635
253
1,791
(3,039)
522
31,162
(23,400)
(2,101)
2,311
(377)
(23,567)
(2,038)
(15)
2,856
(409)
(23,173)
7,989
8,068
988,481
1,105
77,861
(65,730)
–
1,001,717
817
88,607
(57,974)
–
1,033,167
(580,686)
(70,958)
59,935
–
(591,709)
(70,442)
(5,042)
52,631
–
(614,562)
418,605
410,008
As a result of the continuing optimisation of the Group’s 4G mobile network coverage and the scale deployment of the Group’s
5G mobile network, the utilisation of the Group’s 3G mobile network have been decreasing rapidly. For the year ended 31
December 2020, 3G handset data traffic only accounted for a low proportion of the Group’s total handset data traffic. As a
result, the Group has identified an impairment indicator on the 3G specific mobile network assets (the “3G Assets”). Given the
Group has made a commitment in the year to gradually terminate its use of 3G Assets in the near future, the Group performed
an impairment test on the 3G Assets on the basis of each individual asset as at 31 December 2020. The recoverable amount
of the 3G Assets was determined based on their fair value less costs of disposal, which was nominal. As a result, for the
year ended 31 December 2020, an impairment loss on property, plant and equipment of RMB5,042 million (2019: nil) was
recognised.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 5. CONSTRUCTION IN PROGRESS
Balance at 1 January 2019
Additions
Transferred to property, plant and equipment
Transferred to intangible assets
Balance at 31 December 2019
Additions
Transferred to property, plant and equipment
Transferred to intangible assets
Balance at 31 December 2020
6. RIGHT-OF-USE ASSETS
RMB millions
66,644
76,870
(77,861)
(6,447)
59,206
84,145
(88,607)
(6,319)
48,425
Leasehold
lands
RMB millions
Telecommunications
towers and
related assets
RMB millions
Buildings
RMB millions
Equipment
RMB millions
Others
RMB millions
Total
RMB millions
20,441
20,952
745
732
8,672
8,289
3,626
2,968
18,866
11,230
23,740
7,642
6,966
8,361
2,151
1,612
248
207
78
65
59,457
61,549
14,242
12,343
As at 31 December 2020
Carrying amount
As at 31 December 2019
Carrying amount
For the year ended 31 December 2020
Depreciation charge
For the year ended 31 December 2019
Depreciation charge
For the year ended 31 December 2020, expenses relating to short-term leases amounting to RMB1,077 million (2019: RMB939
million, including those relating to other leases with lease terms ended within 12 months of the date of initial application of IFRS
16), expenses relating to leases of low value assets (excluding short-term leases of low value assets) amounting to RMB46
million (2019: RMB45 million) and variable lease payments not included in the measurement of lease liabilities amounting to
RMB5,151 million (2019: RMB4,640 million), are recognized in profit or loss.
For the year ended 31 December 2020, total cash outflow for leases is RMB20,798 million (2019: RMB18,240 million), and
additions to right-of-use assets are RMB13,561 million (2019: RMB9,172 million).
The Group leases telecommunications towers and related assets, land and buildings, equipment and other assets for its
operations. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. In
determining the lease term and assessing the length of the non-cancellable period, the Group applies the definition of a contract
and determines the period for which the contract is enforceable.
The Group regularly entered into short-term leases for buildings and other assets. As at 31 December 2020 and 2019, the
portfolio of short-term leases is similar to the portfolio of short-term leases to which the short-term lease expense disclosed
above in this note.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 7. GOODWILL
Cost:
31 December
2020
2019
RMB millions
RMB millions
Goodwill arising from acquisition of CDMA business
29,920
29,923
On 1 October 2008, the Group acquired the CDMA mobile communication business and related assets and liabilities, which
also included the entire equity interests of China Unicom (Macau) Company Limited (currently known as China Telecom (Macau)
Company Limited) and 99.5% equity interests of Unicom Huasheng Telecommunications Technology Company Limited (currently
known as Tianyi Telecom Terminals Company Limited) (collectively the “CDMA business”) from China Unicom Limited and China
Unicom Corporation Limited (collectively “Unicom Group”). The purchase price of the business combination was RMB43,800
million, which was fully settled as at 31 December 2010. In addition, pursuant to the acquisition agreement, the Group acquired
the customer-related assets and assumed the customer-related liabilities of CDMA business for a net settlement amount of
RMB3,471 million due from Unicom Group. This amount was subsequently settled by Unicom Group in 2009. The business
combination was accounted for using the purchase method.
The goodwill recognised in the business combination is attributable to the skills and technical talent of the acquired business’s
workforce, and the synergies expected to be achieved from integrating and combining the CDMA mobile communication
business into the Group’s telecommunications business.
For the purpose of goodwill impairment testing, the goodwill arising from the acquisition of CDMA business was allocated to the
appropriate cash-generating unit of the Group, which is the Group’s telecommunications business. The recoverable amount of
the Group’s telecommunications business is estimated based on the value in use model, which considers the Group’s financial
budgets covering a five-year period and a pre-tax discount rate of 9.6% (2019: 9.2%). Cash flows beyond the five-year period
are extrapolated using a steady 1.5% growth rate (2019: 1.5%). The financial budgets, growth rate and discount rate have been
reassessed as at 31 December 2020 taking into consideration higher degree of estimation uncertainties in the current year
due to uncertainty on how the Covid-19 pandemic may progress and evolve and volatility in financial markets. Management
performed impairment tests for the goodwill at the end of the reporting period and determined that goodwill was not impaired.
Management believes any reasonably possible change in the key assumptions on which the recoverable amount is based would
not cause its recoverable amount to be less than carrying amount.
Key assumptions used for the value in use calculation model are the number of subscribers, the average revenue per subscriber
and the amount of operating cost. Management determined the number of subscribers, the average revenue per subscriber and
the amount of operating cost based on historical trends and financial information and operational data.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 8.
INTANGIBLE ASSETS
Cost:
Balance at 1 January 2019
Additions
Transferred from construction in progress
Disposals
Balance at 31 December 2019
Additions
Transferred from construction in progress
Disposals
Balance at 31 December 2020
Accumulated amortisation and impairment:
Balance at 1 January 2019
Amortisation charge for the year
Written back on disposals
Balance at 31 December 2019
Amortisation charge for the year
Written back on disposals
Balance at 31 December 2020
Net book value at 31 December 2020
Net book value at 31 December 2019
Software
RMB millions
37,314
624
6,447
(591)
43,794
1,489
6,319
(748)
50,854
(23,153)
(4,844)
552
(27,445)
(5,556)
655
(32,346)
18,508
16,349
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 9.
INVESTMENTS IN SUBSIDIARIES
Details of the Company’s subsidiaries which principally affected the results, assets and liabilities of the Group at 31 December
2020 are as follows:
Name of company
Type of
legal entity
Date of
incorporation
Place of
incorporation
and operation
Registered/issued
capital (in RMB
million unless
otherwise stated)
Principal activity
China Telecom System
Limited Company
13 September 2001
PRC
542
Provision of system integration and
Integration Co., Limited
China Telecom
Global Limited
Limited Company
25 February 2000
Hong Kong Special
HK$168 million
Provision of telecommunications
Administrative Region
of the PRC
services
consulting services
China Telecom
Limited Company
22 November 2001
The United States
US$43 million
Provision of telecommunications
(Americas) Corporation
of America
services
China Telecom Best Tone
Limited Company
15 August 2007
PRC
350
Provision of Best Tone information
Information Service
Co., Limited
China Telecom (Macau)
Company Limited
Limited Company
15 October 2004
Macau Special
MOP60 million
Provision of telecommunications
Administrative Region
of the PRC
services
services
Tianyi Telecom Terminals
Limited Company
1 July 2005
PRC
500
Sales of telecommunications
Company Limited
terminals
China Telecom (Singapore)
Limited Company
5 October 2006
Singapore
S$1,000,001
Provision of international value-
Pte. Limited
E-surfing Pay Co., Ltd
Limited Company
3 March 2011
Shenzhen Shekou
Limited Company
5 May 1984
PRC
PRC
Telecommunications
Company Limited
added network services
635
Provision of e-commerce services
91
Provision of telecommunications
services
China Telecom (Australia)
Limited Company
10 January 2011
Australia
AUD1 million
Provision of international value-
Pty Limited
China Telecom
Korea Co., Ltd
China Telecom
(Malaysia) SDN BHD
Limited Company
16 May 2012
South Korea
KRW500 million
Provision of international
value-added network services
Limited Company
26 June 2012
Malaysia
MYR3,723,500
Provision of international
value-added network services
added network services
China Telecom
Limited Company
9 July 2012
Vietnam
VND10,500 million
Provision of international
Information Technology
(Vietnam) Co., Ltd
value-added network services
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 9.
INVESTMENTS IN SUBSIDIARIES (continued)
Name of company
iMUSIC Culture &
Technology Co., Ltd.
China Telecom
(Europe) Limited
Type of
legal entity
Date of
incorporation
Place of
incorporation
and operation
Limited Company
9 June 2013
PRC
Registered/issued
capital (in RMB
million unless
otherwise stated)
Principal activity
250
Provision of music production and
related information services
Limited Company
2 March 2006
The United Kingdom
GBP16.15 million
Provision of telecommunications
of Great Britain and
Northern Ireland
services
Zhejiang Yixin Technology
Limited Company
19 August 2013
PRC
11
Provision of instant messenger
Co., Ltd.
service
Tianyi Capital Holding
Limited Company
30 November 2017
PRC
5,000
Capital investment and
Co., Ltd.
China Telecom Leasing
Corporation Limited
China Telecom Group
Finance Co., Ltd
(“Finance Company”)
Limited Company
30 November 2018
PRC
5,000
Provision of finance lease service
provision of consulting services
Limited Company
8 January 2019
PRC
5,000
Provision of capital and
financial management services
Except for Shenzhen Shekou Telecommunications Company Limited which is 51% owned by the Company, Zhejiang Yixin
Technology Co., Ltd. which is 65% owned by the Company, E-surfing Pay Co., Ltd, which is 78.74% owned by the Company
and Finance Company, which is 70% owned by the Company, all of the above subsidiaries are directly or indirectly wholly-
owned by the Company. No subsidiaries of the Group have material non-controlling interest. None of the subsidiaries had issued
any debt securities at the end of the year.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 10. INTERESTS IN ASSOCIATES
Cost of investment in associates
Share of post-acquisition changes in net assets
Fair value of listed investments
31 December
2020
2019
RMB millions
RMB millions
37,168
3,135
40,303
34,625
37,173
2,019
39,192
55,601
The Group’s interests in associates are accounted for under the equity method. Details of the Group’s principal associates are as
follows:
Name of company
equity interest
Principal activities
Attributable
China Tower Corporation Limited
20.5% Construction, maintenance and operation of
(Note (i))
Shanghai Information Investment
Incorporation (Note (ii))
telecommunications towers as well as ancillary
facilities
24.0% Provision of information technology consultancy services
Notes:
(i)
(ii)
China Tower Corporation Limited (“China Tower”) is established and operated in the PRC, and listed on the Main Board of The Stock
Exchange of Hong Kong Limited on 8 August 2018.
Shanghai Information Investment Incorporation (“Shanghai Info-investment”) is established and operated in the PRC and is not traded on
any stock exchange.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 10. INTERESTS IN ASSOCIATES (continued)
Summarised financial information of the Group’s principal associates and reconciled to the carrying amounts of interests in
associates in the Group’s consolidated financial statements are disclosed below:
China Tower
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Operating revenues
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Dividend received from China Tower
Reconcile to the Group’s interests in the associate:
Net assets of China Tower
Non-controlling interests of China Tower
The Group’s effective interest in China Tower
The Group’s share of net assets of China Tower
Adjustment for the remaining balance of
the deferred gain from the Tower Assets Disposal
Carrying amount of the interest in China Tower
in the consolidated financial statements of the Group
31 December
2020
2019
RMB millions
RMB millions
43,204
294,176
106,635
44,499
40,995
297,072
128,364
27,142
2020
2019
RMB millions
RMB millions
81,099
6,427
–
6,427
525
76,428
5,221
–
5,221
81
31 December
2020
2019
RMB millions
RMB millions
186,246
182,561
(1)
20.5%
38,180
(2)
20.5%
37,425
(717)
(865)
37,463
36,560
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 10. INTERESTS IN ASSOCIATES (continued)
Shanghai Info-investment
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Operating revenues
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Dividend received from Shanghai Info-investment
Reconcile to the Group’s interests in the associate:
Net assets of the Shanghai Info-investment
Non-controlling interests of Shanghai Info-investment
The Group’s effective interest in Shanghai Info-investment
The Group’s share of net assets of Shanghai Info-investment
Carrying amount of the interest in Shanghai Info-investment
in the consolidated financial statements of the Group
31 December
2020
2019
RMB millions
RMB millions
4,752
5,878
2,124
1,803
2020
4,292
5,203
2,494
787
2019
RMB millions
RMB millions
982
641
(17)
624
14
3,214
1,158
(7)
1,151
9
31 December
2020
2019
RMB millions
RMB millions
6,703
(83)
24.0%
1,589
6,214
(144)
24.0%
1,457
1,589
1,457
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 10. INTERESTS IN ASSOCIATES (continued)
Aggregate financial information of the Group’s associates that are not individually material is disclosed below:
The Group’s share of profit of these associates
The Group’s share of total comprehensive income of these associates
Aggregate carrying amount of interests in these associates
in the consolidated financial statements of the Group
2020
2019
RMB millions
RMB millions
86
86
85
85
31 December
2020
2019
RMB millions
RMB millions
1,251
1,175
11. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME
Equity securities listed in the mainland China
Unlisted equity securities
31 December
2020
2019
Notes
RMB millions
RMB millions
(i)
(ii)
838
235
1,073
1,228
230
1,458
Notes:
(i)
The above listed equity instruments represent ordinary shares of entities listed in the mainland China. These investments are not held
for trading, instead, they are held for long-term strategic purposes. The directors of the Company have elected to designate these
investments in equity instruments as at FVTOCI as they believe that recognising short-term fluctuations in these investments’ fair value in
profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes and realising their
performance potential in the long run.
(ii)
The above unlisted equity securities represent the Group’s equity interests in various private entities established in the PRC. The directors
of the Company have elected to designate these investments in equity instruments as at FVTOCI as they believe that the Group will hold
these investments for long-term strategic purposes.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 12. DEFERRED TAX ASSETS AND LIABILITIES
The components of deferred tax assets and deferred tax liabilities recognised in the consolidated statement of financial position
and the movements are as follows:
Assets
Liabilities
Net Balance
31 December
31 December
31 December
31 December
31 December
31 December
2020
RMB millions
2019
2020
RMB millions RMB millions
2019
2020
RMB millions RMB millions
2019
RMB millions
Provisions and impairment losses,
primarily for credit losses
Property, plant and equipment and others
Right-of-use assets and lease liabilities
Deferred revenues and installation costs
Equity instruments at fair value through
other comprehensive income
2,069
5,299
791
5
–
1,953
4,862
744
18
–
–
2,069
1,953
(24,067)
(18,831)
(18,768)
(13,969)
–
(4)
–
(13)
791
1
744
5
–
(137)
(234)
(137)
(234)
Deferred tax assets/(liabilities)
8,164
7,577
(24,208)
(19,078)
(16,044)
(11,501)
Provisions and impairment losses, primarily for credit losses
Property, plant and equipment and others
Right-of-use assets and lease liabilities
Deferred revenues and installation costs
Equity instruments at fair value through
other comprehensive income
Net deferred tax liabilities
Recognised in
consolidated
statement of
comprehensive
income
RMB millions
Balance at
1 January
2020
RMB millions
Balance at
31 December
2020
RMB millions
1,953
(13,969)
744
5
(234)
(11,501)
116
(4,799)
47
(4)
97
2,069
(18,768)
791
1
(137)
(4,543)
(16,044)
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 12. DEFERRED TAX ASSETS AND LIABILITIES (continued)
Recognised in
consolidated
statement of
Balance at
Balance at
1 January
comprehensive
31 December
2019
income
2019
RMB millions
RMB millions
RMB millions
Provisions and impairment losses, primarily for credit losses
Property, plant and equipment and others
Right-of-use assets and lease liabilities
Deferred revenues and installation costs
Equity instruments at fair value through
other comprehensive income
Net deferred tax liabilities
13. OTHER ASSETS
Contract costs
Installation fees
Other long-term prepaid expenses and receivables
1,925
(8,442)
676
10
(87)
(5,918)
Note
(i)
28
(5,527)
68
(5)
(147)
(5,583)
1,953
(13,969)
744
5
(234)
(11,501)
2019
31 December
2020
RMB millions
RMB millions
1,151
16
5,385
6,552
988
56
3,643
4,687
Note:
(i)
Contract costs capitalised as at 31 December 2020 and 2019 mainly relate to the incremental sales commissions paid to third party
agents whose selling activities resulted in subscribers entering into telecommunications service agreements with the Group and the cost
of installing terminal equipment at subscribers’ homes for the provision of Smart Family services of the Group. The amount of capitalised
costs recognised in profit or loss during the year ended 31 December 2020 was RMB1,234 million (2019: RMB1,367 million). There was
no impairment in relation to the opening balance of capitalised costs or the costs capitalised during the years.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 14. JOINT OPERATION
On 9 September 2019, the Group entered into a framework cooperation agreement (the “Cooperation Agreement”) with China
United Network Communications Corporation Limited (“China Unicom”) to co-build and co-share 5G access network. Pursuant
to the Cooperation Agreement, the Group and China Unicom delineate and designate the regions to jointly construct and
operate one 5G access network nationwide. In certain regions in which the 5G access network is constructed, operated and
maintained by China Unicom, the Group operates its 5G business relying on China Unicom’s network, while in other regions in
which the 5G access network is constructed, operated and maintained by the Group, China Unicom operates its 5G business
relying on the Group’s network.
Pursuant to the Cooperation Agreement, the Group and China Unicom co-share 5G spectrum resources while the 5G core
network is respectively constructed, operated and maintained by each party. Both parties jointly ensure an unified standard on
network planning, construction, operation, maintenance and service quality in the 5G network co-build and co-share regions,
and assure the same service level.
The 5G network co-build and co-share arrangement is agreed by the Group and China Unicom through coordination and
promotion institution jointly established by both parties, in order to set up relevant mechanism, system and rules with unanimous
consensus from both parties. The main function of such joint coordination and promotion institution is to carry out joint network
planning and investment decision, project initiation and acceptance and other related works, such as the determination of the
location of 5G base stations and types of equipment, and coordinate the operation and maintenance of 5G co-build and co-
share network in order to ensure the effective implementation of the Cooperation Agreement. For example, the timing, scale
and location of the 5G base station construction, selection of equipment and appointment of maintenance suppliers across all
regions are all negotiated and agreed by both parties with unanimous consensus.
Under the joint operation, the business and branding of each party continue to operate independently and the subscribers
belong to each party respectively. Revenues from each party’s subscribers are recognised by each party, cost and expenses
are assumed by each party respectively, while assets constructed by each party and the relevant liabilities are recognised and
assumed by each respective party.
15. INVENTORIES
Materials and supplies
Goods for resale
31 December
2020
RMB millions
2019
RMB millions
484
2,833
3,317
577
2,303
2,880
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 16. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net, are analysed as follows:
Third parties
China Telecom Group
China Tower
Other telecommunications operators in the PRC
Less: Allowance for credit losses
Note:
31 December
2020
2019
Note
RMB millions
RMB millions
(i)
23,688
1,784
23
441
25,936
(4,434)
21,502
24,438
1,188
5
550
26,181
(4,692)
21,489
(i)
China Telecommunications Corporation together with its subsidiaries other than the Group are referred to as “China Telecom Group”.
As at 1 January 2019, 31 December 2019 and 2020, the gross carrying amounts of accounts receivable from contracts with
customers amounted to RMB25,155 million, RMB26,087 million and RMB25,836 million.
Ageing analysis of accounts receivable from telephone and Internet subscribers based on the billing dates is as follows:
Current, within 1 month
1 to 3 months
4 to 12 months
More than 12 months
Less: Allowance for credit losses
31 December
2020
2019
RMB millions
RMB millions
7,068
1,601
1,481
921
11,071
(2,438)
8,633
7,545
1,777
1,822
1,002
12,146
(2,803)
9,343
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 16. ACCOUNTS RECEIVABLE, NET (continued)
Ageing analysis of accounts receivable from other telecommunications operators and enterprise customers based on dates of
rendering of services is as follows:
Current, within 1 month
1 to 3 months
4 to 12 months
More than 12 months
Less: Allowance for credit losses
31 December
2020
2019
RMB millions
RMB millions
5,331
2,785
3,801
2,948
14,865
(1,996)
12,869
4,701
2,964
3,768
2,602
14,035
(1,889)
12,146
As at 31 December 2020 and 2019, included in the net balance of the Group’s accounts receivable are debtors with aggregate
carrying amount of RMB1,694 million and RMB1,936 million, respectively, which are past due as at the reporting date.
Details of impairment assessment of accounts receivable for the year ended 31 December 2020 and 2019 are set out in Note
41.
17. CONTRACT ASSETS
Third parties
China Telecom Group
31 December
2020
2019
RMB millions
RMB millions
555
49
604
447
27
474
As at 1 January 2019, contract assets amounted to RMB478 million.
The Group’s contracts for information and application services include payment schedules which require stage payments over
the service period once certain specified milestones are reached. The Group classifies these contract assets as current because
the Group expects to realise them in its normal operating cycle.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 18. PREPAYMENTS AND OTHER CURRENT ASSETS
Amounts due from China Telecom Group
Amounts due from China Tower
Amounts due from other telecommunications operators in the PRC
Prepayments in connection with construction work and equipment purchases
Prepaid expenses and deposits
Value-added tax recoverable
Other receivables
19. CASH AND CASH EQUIVALENTS
31 December
2020
2019
RMB millions
RMB millions
1,189
138
204
6,080
2,994
8,501
6,061
1,233
192
352
3,352
2,993
8,803
5,294
25,167
22,219
31 December
2020
RMB millions
2019
RMB millions
Cash at bank and in hand
Time deposits with original maturity within three months
23,193
491
23,684
20,006
785
20,791
20. SHORT-TERM AND LONG-TERM DEBT
Short-term debt comprises:
31 December
2020
RMB millions
2019
RMB millions
Loans from banks – unsecured
Super short-term commercial papers – unsecured
Other loans – unsecured
Loans from China Telecom Group – unsecured
Total short-term debt
4,831
11,999
–
11,164
27,994
15,831
19,995
80
6,621
42,527
The weighted average interest rate of the Group’s total short-term debt as at 31 December 2020 was 2.8% (31 December
2019: 2.9%) per annum. As at 31 December 2020, the Group’s loans from banks and other loans bear interest at rates ranging
from 3.3% to 4.4% (31 December 2019: 3.5% to 4.4%) per annum, and are repayable within one year; super short-term
commercial papers bear interest at rates ranging from 1.6% to 2.5% (31 December 2019: 1.9% to 2.2%) per annum, of which
RMB8,999 million was repaid in January 2021 while the remaining balance will be repaid by 12 March 2021; the loans from
China Telecom Group bear interest at rate of 3.1% (31 December 2019: 3.5%) per annum and are repayable within one year.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 20. SHORT-TERM AND LONG-TERM DEBT (continued)
Long-term debt comprises:
Bank loans – unsecured
Interest rates and final maturity
2020
2019
RMB millions
RMB millions
31 December
Renminbi denominated (Note (i))
Interest rates ranging from 1.08% to 1.20%
6,975
7,738
per annum with maturities through 2036
US Dollars denominated
Interest rates ranging from 1.25% to 2.00%
per annum with maturities through 2028
Euro denominated
Interest rate of 2.30% per annum with
maturities through 2032
Other loans – unsecured
Renminbi denominated
Medium-term note – unsecured (Note (ii))
Company bonds – unsecured (Note (iii))
Loans from China Telecom Group
– unsecured
Renminbi denominated (Note (iv))
Total long-term debt
Less: current portion
Non-current portion
224
152
288
173
7,351
8,199
1
4,996
2,000
11,000
25,348
(1,126)
24,222
1
4,995
–
23,300
36,495
(4,444)
32,051
Notes:
(i)
The Group obtained long-term RMB denominated government loans with below-market interest rates ranging from 1.08% to 1.20% per
annum through banks (the “Low-interest Loans”). The Group recognised the Low-interest Loans at their fair value on initial recognition,
and accreted the discount to profit or loss using the effective interest rate method. The difference between the fair value and face value
of the Low-interest Loans was recognised as government grants in deferred revenue (Note 25).
(ii)
On 22 January 2019, the Group issued three-year RMB denominated medium-term note, amounting to RMB3,000 million, with interest
rate of 3.42% per annum, and incurred issuing costs of RMB3 million. The medium-term note is unsecured and is repayable on 21
January 2022.
On 19 March 2019, the Group issued three-year RMB denominated medium-term note, amounting to RMB2,000 million, with interest
rate of 3.41% per annum and incurred issuing costs of RMB3 million. The medium-term note is unsecured and is repayable on 18 March
2022.
On 10 March 2020, the Group issued three-year RMB denominated company bonds, amounting to RMB2,000 million, to qualified
investors in Shanghai Stock Exchange, with interest rate of 2.90% per annum. The company bonds are unsecured and are payable on 9
March 2023.
On 25 December 2017, the Group obtained long-term RMB denominated loans, amounting to RMB40,000 million, from China
Telecommunications Corporation, with interest rate of 3.8% per annum, which are repayable within 3 to 5 years. The Group partially
repaid these loans amounting to RMB3,000 million, RMB13,700 million and RMB12,300 million, respectively, in 2018, 2019 and 2020.
(iii)
(iv)
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 20. SHORT-TERM AND LONG-TERM DEBT (continued)
The aggregate maturities of the Group’s long-term debt subsequent to 31 December 2020 are as follows:
Within 1 year
Between 1 to 2 years
Between 2 to 3 years
Between 3 to 4 years
Between 4 to 5 years
Thereafter
31 December
2020
2019
RMB millions
RMB millions
1,126
17,081
3,009
984
952
2,196
25,348
4,444
1,078
26,032
965
940
3,036
36,495
The Group’s short-term and long-term debt do not contain any financial covenants. As at 31 December 2020, the Group had
unutilised committed credit facilities amounting to RMB244,326 million (31 December 2019: RMB245,847 million).
21. ACCOUNTS PAYABLE
Accounts payable are analysed as follows:
Third parties
China Telecom Group
China Tower
Other telecommunications operators in the PRC
31 December
2020
2019
RMB millions
RMB millions
83,254
19,272
4,344
708
78,123
19,531
4,312
650
107,578
102,616
Amounts due to China Telecom Group and China Tower are payable in accordance with contractual terms which are similar to
those terms offered by third parties.
Ageing analysis of accounts payable based on the due dates is as follows:
Due within 1 month or on demand
Due after 1 month but within 3 months
Due after 3 months but within 6 months
Due after 6 months
31 December
2020
2019
RMB millions
RMB millions
17,261
24,451
30,965
34,901
17,546
17,273
33,237
34,560
107,578
102,616
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 22. ACCRUED EXPENSES AND OTHER PAYABLES
31 December
2020
2019
Note
RMB millions
RMB millions
Amounts due to China Telecom Group
Amounts due to China Tower
Amounts due to other telecommunications operators in the PRC
Accrued expenses
Advanced payment received in respect of contribution from
non-controlling interests
Value-added tax payable
Customer deposits and receipts in advance
(i)
11,279
1,192
34
36,885
978
600
5,807
56,775
6,069
1,261
32
34,628
–
564
5,962
48,516
Note:
(i)
For the year ended 31 December 2020, E-surfing Pay, a subsidiary of the Company, received RMB978 million advanced payment in
respect of contribution from non-controlling interests.
23. CONTRACT LIABILITIES
31 December
2020
RMB millions
2019
RMB millions
Third parties
China Telecom Group
China Tower
63,629
54,225
217
3
162
1
63,849
54,388
As at 1 January 2019, contract liabilities amounted to RMB55,783 million. Majority of contract liabilities as at 31 December 2019
was recognised as operating revenues for the year ended 31 December 2020.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 24. LEASE LIABILITIES
Within one year
Within a period of more than one year but not more than two years
Within a period of more than two year but not more than five years
Within a period of more than five years
Less: Current portion
Non-current portion
25. DEFERRED REVENUES
31 December
2020
2019
RMB millions
RMB millions
13,192
12,585
11,138
3,732
40,647
(13,192)
27,455
11,569
10,887
16,255
3,435
42,146
(11,569)
30,577
Deferred revenues as at 31 December 2020 and 2019 mainly represent the unearned portion of installation fees for wireline
services received from customers (Note 13), and the unamortised portion of government grants (Note 20).
Balance at beginning of the year
Reductions for the year:
Amortisation of installation fees
Amortisation of government grants
Balance at end of year
Representing:
Current portion
Non-current portion
26. SHARE CAPITAL
Registered, issued and fully paid
67,054,958,321 ordinary domestic shares of RMB1.00 each
13,877,410,000 overseas listed H shares of RMB1.00 each
All ordinary domestic shares and H shares rank pari passu in all material respects.
2020
2019
RMB millions
RMB millions
1,455
1,829
(55)
(261)
1,139
278
861
1,139
(90)
(284)
1,455
358
1,097
1,455
31 December
2020
2019
RMB millions
RMB millions
67,055
13,877
80,932
67,055
13,877
80,932
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 27. RESERVES
The Group
Capital
reserve
Share
premium
Surplus
General risk
reserves
reserve
Other
reserves
Exchange
reserves
Retained
earnings
Total
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
(Note (iii))
(Note (v))
(Note (ii))
10,746
76,231
Balance as at 1 January 2019
Total comprehensive income for the year
Acquisition of non-controlling interests
Share of an associate’s other changes in reserves
Dividends (Note 38)
Appropriations to statutory surplus reserve (Note (iii))
Appropriations to general risk reserve (Note (v))
(Note (i))
17,806
–
3
(305)
–
–
–
–
–
–
–
–
–
Balance as at 31 December 2019
17,504
10,746
Total comprehensive income for the year
Share of associates’ other changes in reserves
Dividends (Note 38)
Appropriations to statutory surplus reserve (Note (iii))
Appropriations to general risk reserve (Note (v))
–
(36)
–
–
–
–
–
–
–
–
Balance as at 31 December 2020
17,468
10,746
The Company
–
–
–
–
1,812
–
78,043
–
–
–
1,811
–
79,854
–
–
–
–
–
–
23
23
–
–
–
–
33
56
160
455
–
–
–
–
–
615
(294)
–
–
–
–
(727)
102
–
–
–
–
–
(625)
(312)
–
–
–
–
155,481
20,517
–
–
(8,891)
(1,812)
(23)
165,272
20,850
–
(9,262)
(1,811)
(33)
259,697
21,074
3
(305)
(8,891)
–
–
271,578
20,244
(36)
(9,262)
–
–
321
(937)
175,016
282,524
Capital
reserve
Share
premium
Surplus
reserves
Other
reserves
Retained
earnings
Total
RMB millions RMB millions RMB millions RMB millions RMB millions RMB millions
(Note (i))
(Note (iii))
(Note (ii))
(Note (iv))
Balance as at 1 January 2019
29,144
10,746
76,231
Total comprehensive income for the year
Share of an associate’s other changes in reserves
Dividends (Note 38)
Appropriations to statutory surplus reserve (Note (iii))
–
(305)
–
–
–
–
–
–
Balance as at 31 December 2019
28,839
10,746
Total comprehensive income for the year
Share of associates’ other changes in reserves
Dividends (Note 38)
Appropriations to statutory surplus reserve (Note (iii))
–
(36)
–
–
–
–
–
–
Balance as at 31 December 2020
28,803
10,746
–
–
–
1,812
78,043
–
–
–
1,811
79,854
(12)
441
–
–
–
429
(297)
–
–
–
130,892
247,001
18,123
18,564
–
(8,891)
(1,812)
(305)
(8,891)
–
138,312
256,369
18,112
17,815
–
(9,262)
(1,811)
(36)
(9,262)
–
132
145,351
264,886
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 27. RESERVES (continued)
Notes:
(i)
Capital reserve of the Group mainly represents the sum of (a) the difference between the carrying amount of the Company’s net assets
and the par value of the Company’s shares issued upon its formation; (b) the difference between the consideration paid by the Group
for the entities acquired, other than the Fifth Acquired Group, from China Telecommunications Corporation, which were accounted for
as equity transactions as disclosed in Note 1, and the historical carrying amount of the net assets of these acquired entities; and (c) the
difference between the consideration paid by the Group for the acquisition of non-controlling interests and the carrying amount of the
non-controlling interests acquired.
The difference between the consideration paid by the Group and the historical carrying amount of the net assets of the Fifth Acquisition
was recorded as a deduction of retained earnings.
Capital reserve of the Company represents the difference between the carrying amount of the Company’s net assets and the par value
of the Company’s shares issued upon its formation.
(ii)
Other reserves of the Group and the Company represent primarily the change in the fair value of investment in equity instruments at
FVTOCI and the deferred tax liabilities recognised due to the change in fair value of those investment in equity instruments.
(iii)
The surplus reserves consist of statutory surplus reserve and discretionary surplus reserve.
According to the Company’s Articles of Association, the Company is required to transfer 10% of its net profit, as determined in
accordance with the lower of the amount determined under the PRC Accounting Standards for Business Enterprises and the amount
determined under IFRSs, to the statutory surplus reserve until such reserve balance reaches 50% of the registered capital. The transfer
to this reserve must be made before distribution of any dividend to shareholders. For the years ended 31 December 2020 and 2019,
the net profit of the Company determined in accordance with the PRC Accounting Standards for Business Enterprises and IFRSs are
the same. For the year ended 31 December 2020, the Company transferred RMB1,811 million (2019: RMB1,812 million), being 10%
of the year’s net profit, to this reserve. As at 31 December 2020, the amount of statutory surplus reserve was RMB33,775 million (31
December 2019: RMB31,964 million).
The Company did not transfer any discretionary surplus reserve for the years ended 31 December 2020 and 2019. As at 31 December
2020 and 2019, the amount of discretionary surplus reserve was RMB46,079 million.
The statutory and discretionary surplus reserves are non-distributable other than in liquidation and can be used to make good of previous
years’ losses, if any, and may be utilised for business expansion or converted into share capital by issuing new shares to existing
shareholders in proportion to their shareholdings or by increasing the par value of the shares currently held by them, provided that the
remaining statutory surplus reserve balance after such issue is not less than 25% of the registered capital.
According to the Company’s Articles of Association, the amount of retained earnings available for distribution to shareholders of the
Company is the lower of the amount of the Company’s retained earnings determined in accordance with the PRC Accounting Standards
for Business Enterprises and the amount determined in accordance with IFRSs. As at 31 December 2020, the amount of retained
earnings available for distribution was RMB145,351 million (31 December 2019: RMB138,312 million), being the amount determined in
accordance with IFRSs. Final dividend of approximately RMB8,403 million in respect of the financial year 2020 proposed after the end of
the reporting period has not been recognised as a liability in the consolidated financial statements at the end of the reporting period (Note
38).
Pursuant to “Requirements on Impairment Allowance for Financial Institutions” (Caijin [2012] No. 20) issued by the Ministry of Finance
of the PRC effective on 1 July 2012 (the “Requirements”), the Group’s subsidiaries, mainly Finance Company, establish a general risk
reserve within equity, through appropriation of retained earnings, to address unidentified potential losses relating to risk assets. The
general risk reserve balance should not be less than 1.5% of the ending balance of risk assets, as defined in the Requirements.
(iv)
(v)
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 28. OPERATING REVENUES
Disaggregation of revenues
Type of goods or services
Revenue from contracts with customers
Voice
Internet
Information and application services
Telecommunications network resource and equipment services
Sales of goods and others
Subtotal
Revenue from other sources
Total operating revenues
Timing of revenue recognition
A point in time
Over time
Total operating revenues
Notes
RMB millions
RMB millions
2020
2019
(i)
(ii)
(iii)
(iv)
(v)
(vi)
40,866
208,019
96,885
22,623
19,598
387,991
5,570
393,561
16,141
377,420
393,561
45,146
197,244
87,623
21,978
17,906
369,897
5,837
375,734
14,591
361,143
375,734
Notes:
(i)
Represent the aggregate amount of voice usage fees, installation fees and interconnections fees charged to customers for the provision
of telephony services.
(ii)
Represent amounts charged to customers for the provision of Internet access services.
(iii)
(iv)
(v)
Represent primarily the aggregate amount of fees charged to customers for the provision of Internet data centre service, system
integration services, Smart Family, caller ID service and short messaging service and etc.
Represent amounts charged to other domestic telecommunications operators and enterprise customers for the provision of
telecommunications network resource and equipment services.
Represent primarily revenues from sales, and repair and maintenance of telecommunications equipment as well as the resale of mobile
services (MVNO).
(vi)
Represent primarily revenue from property rental and other revenues.
As at 31 December 2020 and 2019, the aggregated amount of the transaction price allocated to the remaining performance
obligations under the Group’s existing contracts represents revenue expected to be recognised in the future when service is
provided over the contract terms over the next 1 to 3 years.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 Others
Note:
(i)
29. NETWORK OPERATIONS AND SUPPORT EXPENSES
Note
RMB millions
RMB millions
2020
2019
Operating and maintenance
Utility
Network resources usage and related fee
(i)
70,943
14,637
22,766
11,171
65,087
13,818
20,976
9,918
119,517
109,799
Network resources usage and related fee includes the variable lease payments not depending on an index or a rate and fee for non-lease
components in respect of telecommunication towers and related assets lease and fee in respect of the short-term leases and leases of
low-value assets, variable lease payments and fee for non-lease components in respect of the usage of network resources provided by
third parties.
30. PERSONNEL EXPENSES
Personnel expenses are attributable to the following functions:
Network operations and support
Selling, general and administrative
31. OTHER OPERATING EXPENSES
Interconnection charges
Cost of goods sold
Donations
Others
2020
RMB millions
2019
RMB millions
43,260
22,729
65,989
42,214
21,353
63,567
Notes
2020
RMB millions
2019
RMB millions
(i)
(ii)
(iii)
12,050
15,440
13
1,571
29,074
12,683
13,413
1
1,695
27,792
Notes:
(i)
Interconnection charges represent amounts incurred for the use of other domestic and foreign telecommunications operators’ networks
for delivery of voice and data traffic that originate from the Group’s telecommunications networks.
(ii)
Cost of goods sold primarily represents cost of telecommunications equipment sold.
(iii)
Others mainly include tax and surcharges other than value-added tax and income tax.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 32. TOTAL OPERATING EXPENSES
Total operating expenses for the year ended 31 December 2020 were RMB364,921 million (2019: RMB346,664 million) which
include auditor’s remuneration in relation to audit and non-audit services (excluding value-added tax) of RMB72 million and
RMB3 million respectively (2019: RMB77 million and RMB3 million).
33. NET FINANCE COSTS
Interest expense on short-term and long-term debts
Interest expense on lease liabilities
Less: Interest expense capitalised*
Net interest expense
Interest income
Foreign exchange losses
Foreign exchange gains
2020
2019
RMB millions
RMB millions
1,981
1,566
(114)
3,433
(582)
1,018
(855)
3,014
2,623
1,607
(140)
4,090
(492)
680
(639)
3,639
*Interest expense was capitalised in construction in progress
at the following rates per annum
3.0%-4.4%
3.5%-4.4%
34. INCOME TAX
Income tax in the profit or loss comprises:
Provision for PRC income tax
Provision for income tax in other tax jurisdictions
Deferred taxation
2020
RMB millions
2019
RMB millions
1,532
135
4,640
6,307
781
105
5,436
6,322
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 34. INCOME TAX (continued)
A reconciliation of the expected tax expense with the actual tax expense is as follows:
Profit before taxation
Expected income tax expense at statutory tax rate of 25%
Differential tax rate on PRC subsidiaries’ and branches’ income
Differential tax rate on other subsidiaries’ income
Non-deductible expenses
Non-taxable income
Effect of change in tax rate
Others
Actual income tax expense
Notes
RMB millions
RMB millions
2020
2019
(i)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
27,387
6,847
(306)
(47)
915
(576)
(29)
(497)
6,307
27,034
6,759
(315)
(129)
979
(460)
–
(512)
6,322
Notes:
(i)
(ii)
Except for certain subsidiaries and branches which are mainly taxed at preferential rate of 15%, the provision for mainland China income
tax is based on a statutory rate of 25% of the assessable income of the Company, its mainland China subsidiaries and branches as
determined in accordance with the relevant income tax rules and regulations of the PRC.
Income tax provisions of the Company’s subsidiaries in Hong Kong and Macau Special Administrative Regions of the PRC, and in other
countries are based on the subsidiaries’ assessable income and income tax rates applicable in the respective tax jurisdictions which
range from 8% to 35%.
(iii)
Amounts represent miscellaneous expenses in excess of statutory deductible limits for tax purposes.
(iv)
Amounts represent miscellaneous income which are not subject to income tax.
(v)
Hainan branch of the Company obtained approval from tax authority to adopt the preferential income tax rate of 15% during the current
year. Accordingly, deferred tax assets and deferred tax liabilities that were expected to be recovered or settled after 31 December 2019
were adjusted to reflect the change in tax rate. The overall effect of change in tax rate amounting to RMB29 million was credited to the
consolidated statement of comprehensive income.
(vi)
Amounts primarily represent settlement of tax filing differences of prior year annual tax return and other tax benefits such as additional tax
deduction on research and development expenses.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 35. DIRECTORS’ AND SUPERVISORS’ REMUNERATION
The following table sets out the remuneration of the Company’s directors and supervisors:
2020
Executive directors
Ke Ruiwen
Li Zhengmao1
Shao Guanglu1
Liu Guiqing
Zhu Min
Chen Zhongyue2
Wang Guoquan3
Gao Tongqing4
Non-executive director
Chen Shengguang
Independent non-executive directors7
Tse Hau Yin, Aloysius
Xu Erming
Wang Hsuehming
Yeung Chi Wai, Jason
Supervisors
Sui Yixun
Zhang Jianbin
Dai Bin5
Xu Shiguang
You Minqiang5
Yang Jianqing6
Ye Zhong6
Directors’/
supervisors’
fees
RMB
thousands
Salaries,
allowances
and benefits
in kind
RMB
thousands
Discretionary
bonuses8
RMB
thousands
Retirement
scheme
contributions
RMB
thousands
Share-based
payments
RMB
thousands
Total
RMB
thousands
–
–
–
–
–
–
–
–
–
477
250
261
261
–
–
–
–
–
–
–
221
129
116
197
197
199
181
17
–
–
–
–
–
227
214
110
118
–
–
–
527
434
436
464
464
468
447
16
–
–
–
–
–
494
494
202
335
–
–
–
73
48
46
59
52
71
42
8
–
–
–
–
–
49
49
26
33
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
821
611
598
720
713
738
670
41
–
477
250
261
261
770
757
338
486
–
–
–
8,512
1
2
3
4
5
6
7
8
9
Mr Li Zhengmao and Mr Shao Guanglu was appointed as executive directors of the Company on 26 May 2020.
1,249
1,926
4,781
556
Mr Chen Zhongyue resigned as an executive director of the Company on 19 January 2021.
Mr Wang Guoquan resigned as an executive director of the Company on 4 December 2020.
Mr Gao Tongqing resigned as an executive director of the Company on 17 January 2020.
Mr Dai Bin and Mr You Minqiang was appointed as supervisors of the Company on 26 May 2020.
Mr Yang Jianqing and Mr Ye Zhong retired as supervisors of the Company on 26 May 2020.
The independent non-executive directors’ remuneration were for their services as directors of the Company.
The discretionary bonuses of the executive directors and supervisors were determined based on the Group’s performance for the year.
The remuneration of all directors and supervisors were calculated based on their respective actual terms of office within this year. None
of the directors or supervisors received any inducements for joining the Company or compensation for loss of office, or waived or agreed
to waive any emoluments during this year.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 35. DIRECTORS’ AND SUPERVISORS’ REMUNERATION (continued)
2019
Executive directors
Ke Ruiwen
Chen Zhongyue
Liu Guiqing1
Zhu Min
Wang Guoquan2
Yang Jie3
Gao Tongqing4
Non-executive director
Chen Shengguang
Independent non-executive directors5
Tse Hau Yin, Aloysius
Xu Erming
Wang Hsuehming
Yeung Chi Wai, Jason
Supervisors
Sui Yixun
Zhang Jianbin
Yang Jianqing
Xu Shiguang
Ye Zhong
Directors’/
supervisors’
fees
RMB
thousands
Salaries,
allowances
and benefits
in kind
RMB
thousands
Discretionary
bonuses6
RMB
thousands
Retirement
scheme
contributions
RMB
thousands
Share-based
payments
RMB
thousands
Total
RMB
thousands
–
–
–
–
–
–
–
–
487
250
266
266
–
–
–
–
–
221
199
66
197
66
37
199
–
–
–
–
–
265
253
309
145
–
648
603
399
458
98
399
603
–
–
–
–
–
494
494
458
356
–
113
111
43
106
41
32
112
–
–
–
–
–
107
107
111
84
–
967
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
982
913
508
761
205
468
914
–
487
250
266
266
866
854
878
585
–
9,203
1
2
3
4
5
6
7
1,269
1,957
5,010
Mr Liu Guiqing was appointed as an executive director of the Company on 19 August 2019.
Mr Wang Guoquan was appointed as an executive director of the Company on 19 August 2019.
Mr Yang Jie resigned as an executive director of the Company on 4 March 2019.
Mr Gao Tongqing resigned as an executive director of the Company on 17 January 2020.
The independent non-executive directors’ remuneration were for their services as directors of the Company.
The discretionary bonuses of the executive directors and supervisors were determined based on the Group’s performance for the
year. In addition, according to the respective provision of the State-owned Assets Supervision and Administration Commission of the
State Council of China (“SASAC”), certain directors were also entitled to deferred bonuses in relation to 2016 and 2018. The deferred
bonuses paid to Mr Ke Ruiwen, Mr Chen Zhongyue, Mr Liu Guiqing, Madam Zhu Min, Mr Yang Jie and Mr Gao Tongqing in the current
year were RMB583 thousand, RMB578 thousand, RMB206 thousand, RMB111 thousand, RMB642 thousand and RMB578 thousand,
respectively.
The remuneration of all directors and supervisors were calculated based on their respective actual terms of office within this year. None
of the directors or supervisors received any inducements for joining the Company or compensation for loss of office, or waived or agreed
to waive any emoluments during this year.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 36. INDIVIDUALS WITH HIGHEST EMOLUMENTS AND SENIOR MANAGEMENT
REMUNERATION
(a) Five highest paid individuals
None of the five highest paid individuals of the Group for the years ended 31 December 2020 and 2019 were directors
of the Company.
The aggregate of the emoluments in respect of the five (2019: five) individuals (non-directors) are as follows:
Salaries, allowances and benefits in kind
Discretionary bonuses
Retirement scheme contributions
2020
2019
RMB thousands
RMB thousands
8,248
2,423
46
7,054
3,456
48
10,717
10,558
The emoluments of the five (2019: five) individuals (non-directors) with the highest emoluments are within the following
bands:
RMB0 – RMB1,000,000
RMB1,000,001 – RMB1,500,000
RMB1,500,001 – RMB2,000,000
More than RMB2,000,001
2020
Number of
individuals
2019
Number of
individuals
–
–
4
1
–
–
4
1
None of these employees received any inducements for joining the Company or compensation for loss of office, or
waived any emoluments during the periods presented.
(b) Senior management remuneration
The emoluments of the Group’s senior management are within the following bands:
RMB0 – RMB1,000,000
RMB1,000,001 – RMB1,500,000
RMB1,500,001 – RMB2,000,000
2020
Number of
individuals
2019
Number of
individuals
21
–
–
12
5
1
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 37. PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
For the year ended 31 December 2020, the consolidated profit attributable to equity holders of the Company includes a profit of
RMB18,112 million which has been dealt with in the stand-alone financial statements of the Company.
For the year ended 31 December 2019, the consolidated profit attributable to equity holders of the Company includes a profit of
RMB18,123 million which has been dealt with in the stand-alone financial statements of the Company.
38. DIVIDENDS
Pursuant to a resolution passed at the Board of Directors’ meeting on 9 March 2021, a final dividend of equivalent to HK$0.125
per share totaling approximately RMB8,403 million for the year ended 31 December 2020 was proposed for shareholders’
approval at the Annual General Meeting. The dividend has not been provided for in the consolidated financial statements for the
year ended 31 December 2020.
Pursuant to the shareholders’ approval at the Annual General Meeting held on 26 May 2020, a final dividend of RMB0.114441
(equivalent to HK$0.125) per share totaling RMB9,262 million in respect of the year ended 31 December 2019 was declared,
and paid on 31 July 2020.
Pursuant to the shareholders’ approval at the Annual General Meeting held on 29 May 2019, a final dividend of RMB0.109851
(equivalent to HK$0.125) per share totaling RMB8,891 million in respect of the year ended 31 December 2018 was declared,
and paid on 26 July 2019.
39. BASIC EARNINGS PER SHARE
The calculation of basic earnings per share for the years ended 31 December 2020 and 2019 is based on the profit attributable
to equity holders of the Company of RMB20,850 million and RMB20,517 million respectively, divided by 80,932,368,321
shares.
Diluted earnings per share were equivalent to basic earnings per share, as there were no potential ordinary shares in existence
for the periods presented.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 40. COMMITMENTS AND CONTINGENCIES
Capital commitments
As at 31 December 2020 and 2019, the Group had capital commitments as follows:
Contracted for but not provided
Property
Telecommunications network plant and equipment
Contingent liabilities
31 December
2020
2019
RMB millions
RMB millions
1,202
18,997
20,199
1,810
19,131
20,941
(a)
The Group was advised by their PRC lawyers that no material contingent liabilities were assumed by the Group.
(b)
As at 31 December 2020 and 2019, the Group did not have contingent liabilities in respect of guarantees given to
banks in respect of banking facilities granted to other parties, or other forms of contingent liabilities.
Legal contingencies
The Group is a defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course
of business. Management has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other
proceedings and based on such assessment, believes that any resulting liabilities will not have a material adverse effect on the
financial position, operating results or cash flows of the Group.
41. FINANCIAL INSTRUMENTS
Financial assets of the Group include cash and cash equivalents, bank deposits and restricted cash, equity instruments,
accounts receivable, financial assets at FVTPL and financial assets included in prepayments and other current assets. Financial
liabilities of the Group include short-term and long-term debt, accounts payable and financial liabilities included in accrued
expenses and other payables.
(a) Fair Value Measurements
Based on IFRS 13, “Fair Value Measurement”, the fair value of each financial instrument is categorised in its entirety
based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
• Level 1:
fair values measured using quoted prices (unadjusted) in active markets for identical financial
instruments
• Level 2:
fair values measured using quoted prices in active markets for similar financial instruments, or using
valuation techniques in which all significant inputs are directly or indirectly based on observable market
data
• Level 3:
fair values measured using valuation techniques in which any significant input is not based on
observable market data
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 41. FINANCIAL INSTRUMENTS (continued)
(a) Fair Value Measurements (continued)
The fair values of the Group’s financial instruments (other than long-term debt and financial instruments measured at fair
value) approximate their carrying amounts due to the short-term maturity of these instruments.
The listed equity securities investment included in Group’s equity instruments at fair value through other comprehensive
income are categorised as level 1 financial instruments. As at 31 December 2020, the fair value of the Group’s listed
equity securities investment are RMB838 million (31 December 2019: RMB1,228 million) based on quoted market price
on PRC stock exchanges.
The fair value of long-term debt is estimated by discounting future cash flows using current market interest rates offered
to the Group for debt with substantially the same characteristics and maturities. The fair value measurement of long-
term debt is categorised as level 2. The interest rates used by the Group in estimating the fair values of long-term debt,
having considered the foreign currency denomination of the debt, ranged from 2.9% to 4.9% (31 December 2019: 3.7%
to 4.9%). As at 31 December 2020 and 2019, the carrying amounts and fair value of the Group’s long-term debt were as
follows:
31 December 2020
Carrying
amount
RMB millions
Fair value
RMB millions
31 December 2019
Carrying
amount
Fair value
RMB millions
RMB millions
Long-term debt
25,348
25,294
36,495
35,780
During the year, there were no transfers among instruments in level 1, level 2 or level 3.
(b) Risks
The Group’s financial instruments are exposed to three main types of risks, namely, credit risk, liquidity risk and market
risk (which mainly comprises of interest rate risk and foreign currency exchange rate risk). The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the Group’s financial performance. Risk management is carried out under policies approved by the Board
of Directors. The Board provides principles for overall risk management, as well as policies covering specific areas,
such as liquidity risk, credit risk, and market risk. The Board regularly reviews these policies and authorises changes if
necessary based on operating and market conditions and other relevant risks. The following summarises the qualitative
and quantitative disclosures for each of the three main types of risks:
(i) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial
loss to the Group. For the Group, this arises mainly from deposits it maintains at financial institutions and credit
it provides to customers for the provision of telecommunications services.
Cash and cash equivalents, short-term bank deposits and restricted cash
To limit exposure to credit risk relating to deposits, the Group primarily places cash deposits only with large
state-owned financial institutions in the PRC with acceptable credit ratings. The credit risks on bank balances
are limited because the counterparties are banks with high credit ratings.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 41. FINANCIAL INSTRUMENTS (continued)
(b) Risks (continued)
(i) Credit risk (continued)
Accounts receivable and contract assets arising from contracts with customers
For accounts receivable and contract assets, management performs ongoing credit evaluations of its
customers’ financial condition and generally does not require collateral on accounts receivable and contract
assets. These evaluations focus on the customer’s past history of making payments when due and current
ability to pay, and take into account information specific to the customer as well as pertaining to the economic
environment in which the customer operates. In addition, the Group performs impairment assessment
under ECL model on trade balances individually or based on provision matrix. Furthermore, the Group has a
diversified base of customers with no single customer contributing more than 10% of revenues for the periods
presented.
The Group measures loss allowances for accounts receivable and contract assets at an amount equal to
lifetime ECL, which is calculated using a provision matrix, or individually assessed for those debtors with
significant balances or credit impaired debtors. As different loss patterns were indicated during the analysis
of the Group’s historical credit loss experience between telephone and Internet subscribers and enterprise
customers, the following tables provide information about the Group’s exposure to credit risk and ECL for
accounts receivable and contract assets from telephone and Internet subscribers and enterprise customers,
respectively, as at 31 December 2020 and 2019:
Accounts receivable from telephone and Internet subscribers:
Current, within 1 month
1 to 3 months
4 to 6 months
7 to 12 months
Over 12 months
Expected
loss rate
31 December 2020
Gross carrying
amount
% RMB millions
Loss
allowance
RMB millions
2%
20%
60%
80%
100%
7,068
1,601
561
920
921
132
317
333
735
921
11,071
2,438
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 41. FINANCIAL INSTRUMENTS (continued)
(b) Risks (continued)
(i) Credit risk (continued)
Accounts receivable and contract assets arising from contracts with customers
(continued)
Accounts receivable from telephone and Internet subscribers: (continued)
Current, within 1 month
1 to 3 months
4 to 6 months
7 to 12 months
Over 12 months
31 December 2019
Expected
Gross carrying
Loss
loss rate
amount
allowance
%
2%
20%
60%
80%
100%
RMB millions
RMB millions
7,545
1,777
739
1,083
1,002
12,146
141
349
444
867
1,002
2,803
Accounts receivable and contract assets from enterprise customers:
Due to greater financial uncertainty triggered by the Covid-19 pandemic, the Group has increased the expected
loss rates on accounts receivable and contract assets from enterprise customers in the current year as there is
higher risk that a prolonged pandemic could lead to increased credit default rates.
1 to 6 months
7 to 12 months
1 to 2 years
2 to 3 years
Over 3 years
Expected
loss rate
31 December 2020
Gross carrying
amount
% RMB millions
Loss
allowance
RMB millions
2%
22%
67%
100%
100%
6,031
1,120
685
347
324
124
232
445
333
324
8,507
1,458
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 41. FINANCIAL INSTRUMENTS (continued)
(b) Risks (continued)
(i) Credit risk (continued)
Accounts receivable and contract assets arising from contracts with customers
(continued)
Accounts receivable and contract assets from enterprise customers: (continued)
1 to 6 months
7 to 12 months
1 to 2 years
2 to 3 years
Over 3 years
31 December 2019
Expected
Gross carrying
Loss
loss rate
amount
allowance
%
2%
20%
60%
90%
100%
RMB millions
RMB millions
5,452
1,428
621
258
371
102
239
353
224
364
8,130
1,282
As at 31 December 2020, the loss allowance for accounts receivable and contract assets was RMB4,434
million and RMB9 million (2019: RMB4,692 million and RMB8 million), respectively. Loss allowance of RMB547
million as at 31 December 2020 (2019: RMB615 million), which was not calculated collectively in the above
tables, was made individually on debtors with significant balances or credit impaired debtors.
Expected loss rates are based on actual loss experience over the past 1 to 3 years. These rates are adjusted
to reflect differences between economic conditions during the period over which the historical data has been
collected, current conditions and the Group’s view of economic conditions over the expected lives of the
receivables.
Movement in the loss allowance account in respect of accounts receivable is as follows:
At beginning of year
Impairment losses for ECL
Amounts written off
At end of year
2020
2019
RMB millions
RMB millions
4,692
1,382
(1,640)
4,434
4,680
1,653
(1,641)
4,692
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 41. FINANCIAL INSTRUMENTS (continued)
(b) Risks (continued)
(ii)
Liquidity risk
Liquidity risk refers to the risk that funds will not be available to meet liabilities as they fall due, and results from
timing and amount mismatches of cash inflow and outflow. The Group manages liquidity risk by maintaining
sufficient cash balances and adequate amount of committed banking facilities to meet its funding needs,
including working capital, principal and interest payments on debts, dividend payments, capital expenditures
and new investments for a set minimum period of between 3 to 6 months.
The following table sets out the remaining contractual maturities at the end of the reporting period of the
Group’s financial liabilities and lease liabilities, which are based on contractual undiscounted cash flows (including
interest payments computed using contractual rates or, if floating, based on prevailing rates at the end of the
reporting period) and the earliest date the Group would be required to repay:
31 December 2020
Total
contractual
undiscounted
cash flow
Within
1 year or
on demand
More than
1 year but
less than
2 years
More than
2 years but
less than
5 years
Carrying
amount
More than
5 years
RMB millions RMB millions RMB millions RMB millions RMB millions RMB millions
Short-term debt
Long-term debt
Accounts payable
Accrued expenses and other payables
Lease liabilities
Short-term debt
Long-term debt
Accounts payable
Accrued expenses and other payables
Lease liabilities
27,994
25,348
28,417
27,805
28,417
1,410
107,578
107,578
107,578
56,775
40,647
56,775
43,896
56,775
14,449
258,342
264,471
208,629
–
17,838
–
–
13,363
31,201
–
5,609
–
–
12,110
17,719
–
2,948
–
–
3,974
6,922
31 December 2019
Total
contractual
Carrying
undiscounted
Within
1 year or
amount
cash flow
on demand
More than
1 year but
less than
2 years
More than
2 years but
less than
5 years
More than
5 years
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
RMB millions
42,527
36,495
43,697
40,791
43,697
4,625
–
–
1,184
30,824
102,616
102,616
102,616
48,516
42,146
48,516
45,535
48,516
12,846
272,300
281,155
212,300
–
–
11,794
12,978
–
–
17,266
48,090
–
4,158
–
–
3,629
7,787
Management believes that the Group’s current cash on hand, expected cash flows from operations and
available credit facilities from banks (Note 20) will be sufficient to meet the Group’s working capital requirements
and repay its borrowings and obligations when they become due.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 41. FINANCIAL INSTRUMENTS (continued)
(b) Risks (continued)
(iii)
Interest rate risk
The Group’s interest rate risk exposure arises primarily from its short-term debt and long-term debt. Debts
carrying interest at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair
value interest rate risk, respectively. The Group manages its exposure to interest rate risk by closely monitoring
the change in the market interest rate.
The following table sets out the interest rate profile of the Group’s debt at the end of the reporting period:
31 December 2020
31 December 2019
Effective
interest
rate % RMB millions
Effective
interest
rate %
RMB millions
2.7
2.7
3.3
22,719
25,348
48,067
5,275
5,275
53,342
90.1%
2.5
3.1
3.8
29,022
36,495
65,517
13,505
13,505
79,022
82.9%
Fixed rate debt:
Short-term debt
Long-term debt
Variable rate debt:
Short-term debt
Total debt
Fixed rate debt as a percentage of
total debt
Management does not expect the increase or decrease in interest rate will materially affect the Group’s financial
position and result of operations because the interest rates of 90.1% (31 December 2019: 82.9%) of the
Group’s short-term and long-term debt as at 31 December 2020 are fixed as set out above.
(iv) Foreign currency exchange rate risk
Foreign currency exchange rate risk arises on financial instruments that are denominated in a currency other
than the functional currency in which they are measured. The Group’s foreign currency risk exposure mainly
relates to bank deposits and borrowings denominated primarily in US dollars, Euros and Hong Kong dollars.
Management does not expect the appreciation or depreciation of the Renminbi against foreign currencies will
materially affect the Group’s financial position and result of operations because 73.0% (31 December 2019:
78.0%) of the Group’s cash and cash equivalents and 99.3% (31 December 2019: 99.4%) of the Group’s
short-term and long-term debt as at 31 December 2020 are denominated in Renminbi. Details of bank loans
denominated in other currencies are set out in Note 20.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 42. CAPITAL MANAGEMENT
The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so
that it can continue to provide investment returns for shareholders and benefits for other stakeholders, by pricing products and
services commensurately with the level of risk and by securing access to finance at a reasonable cost.
Management regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns
that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position,
and makes adjustments to the capital structure in light of changes in economic conditions.
Management monitors its capital structure on the basis of total debt-to-total assets ratio. For this purpose the Group defines
total debt as the sum of short-term debt and long-term debt. Total debts do not include balance of deposits received by
Finance Company from China Telecom Group amounting to RMB9,826 million and lease liabilities amounting to RMB40,647
million as at 31 December 2020 (31 December 2019: RMB4,098 million and RMB42,146 million). As at 31 December 2020,
the Group’s total debt-to-total assets ratio was 7.5% (31 December 2019: 11.2%), which is within the range of management’s
expectation.
Except Finance Company is subject to certain capital requirements imposed by China Banking and Insurance Regulatory
Commission, neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 43. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in
the Group’s consolidated statement of cash flows as cash flows from financing activities.
Short-term
Long-term
Lease
debt
debt
liabilities
Dividend
payable
Deposits
Other payables
with
in respect of
Finance
certain equity
Company
transactions
Total
RMB millions RMB millions RMB millions RMB millions RMB millions RMB millions RMB millions
Balance as at 1 January 2019
Financing cash flows
New leases
Lease modifications
Transferred to accounts payable
Interest expenses
Foreign exchange loss
Acquisition of non-controlling interests
Distribution to non-controlling interests
Dividends declared
Balance as at 31 December 2019
Financing cash flows
New leases
Lease modifications
Transferred to accounts payable
Interest expenses
Foreign exchange loss
Acquisition of non-controlling interests
Distribution to non-controlling interests
Dividends declared
49,537
(7,010)
45,991
(9,782)
–
–
–
–
–
–
–
–
–
–
–
284
2
–
–
–
42,527
(14,533)
36,495
(11,400)
–
–
–
–
–
–
–
–
–
–
–
266
(13)
–
–
–
45,864
(10,699)
8,856
(589)
(2,900)
1,607
7
–
–
–
42,146
(12,738)
13,561
(1,254)
(2,618)
1,566
(16)
–
–
–
Balance as at 31 December 2020
27,994
25,348
40,647
(Note (i))
–
4,098
–
(9,072)
–
–
–
–
–
–
181
8,891
–
(9,304)
–
–
–
–
–
–
42
9,262
–
–
–
–
–
–
–
–
–
4,098
5,728
–
–
–
–
–
–
–
–
–
(8)
–
–
–
–
–
8
–
–
–
977
–
–
–
–
–
1
–
–
141,392
(32,473)
8,856
(589)
(2,900)
1,891
9
8
181
8,891
125,266
(41,270)
13,561
(1,254)
(2,618)
1,832
(29)
1
42
9,262
104,793
9,826
978
Notes:
(i)
(ii)
As at 31 December 2020, the balance of deposits with Finance Company amounting to RMB9,826 million (31 December 2019:
RMB4,098 million) were included in amounts due to China Telecom Group in accrued expenses and other payables (Note 22).
For the year ended 31 December 2020, other than the net financing cash outflows totalling RMB41,270 million as presented above:
Finance Company, a subsidiary of the Company, placed statutory reserve deposits amounting to RMB837 million at the People’s Bank
of China which was included in the balance of short-term bank deposits and restricted cash as at 31 December 2020.
For the year ended 31 December 2019, other than the net financing cash outflows totalling RMB32,473 million as presented above:
E-surfing Pay received RMB90 million as part of the total consideration amounting to RMB945 million in respect of contribution from non-
controlling interests; Finance Company received RMB1,500 million in respect of contribution from non-controlling interests, and placed
statutory reserve deposits amounting to RMB405 million at the People’s Bank of China which was included in the balance of short-term
bank deposits and restricted cash as at 31 December 2019.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 44. RELATED PARTY TRANSACTIONS
(a) Transactions with China Telecom Group
The Group is a part of companies under China Telecommunications Corporation, a company owned by the PRC
government, and has significant transactions and business relationships with members of China Telecom Group.
The principal transactions with China Telecom Group are as follows. These transactions constitute continuing connected
transactions under the Listing Rules and the Company has complied with the relevant disclosure requirements under
Chapter 14A of the Listing Rules. Further details of these continuing connected transactions are disclosed under the
paragraph “Continuing Connected Transactions” in the Report of Directors.
Notes
RMB millions
RMB millions
2020
2019
Construction and engineering services
Receiving ancillary services
Interconnection revenues
Interconnection charges
Receiving community services
Net transaction amount of centralised services
Property lease income
Property lease related expenses
Addition to right-of-use assets
Interest expense on lease liabilities
Provision of IT services
Receiving IT services
Purchases of telecommunications equipment and materials
Sales of telecommunications equipment and materials
Internet applications channel services
Interest on loans from China Telecom Group*
Others*
Net deposit by China Telecom Group with Finance Company
Interest expense on the deposit by China Telecom Group with
Finance Company
(i)
(ii)
(iii)
(iii)
(iv)
(v)
(vi)
(vii)
(vii)
(vii)
(viii)
(viii)
(ix)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiii)
15,046
18,903
54
123
3,682
268
45
581
335
16
556
2,653
3,567
2,070
73
975
243
5,728
82
14,014
18,571
97
183
3,464
133
57
577
284
11
464
2,175
3,538
1,444
108
1,485
189
4,098
7
*
These transactions are conducted on normal commercial terms and are fully exempted from compliance with the reporting,
announcement, independent shareholders’ approval and/or annual review requirements under Rules 14A.76 or 14A.90 of the
Listing Rules.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 44. RELATED PARTY TRANSACTIONS (continued)
(a) Transactions with China Telecom Group (continued)
Notes:
(i)
(ii)
(iii)
(iv)
(v)
Represent construction and engineering as well as design and supervisory services provided by China Telecom Group.
Represent amounts paid and payable to China Telecom Group in respect of ancillary services such as repairs and maintenance
of telecommunications equipment and facilities and certain customer services.
Represent amounts received and receivable from/paid and payable to China Telecom Group for interconnection of local and
domestic long distance calls.
Represent amounts paid and payable to China Telecom Group in respect of cultural, educational, health care and other
community services.
Represent net amount shared between the Company and China Telecom Group for costs associated with centralised services.
The amount represents amounts received or receivable for the net amount of centralised services.
(vi)
Represent amounts of property lease fee received and receivable from China Telecom Group for leasing of properties.
(vii)
Represent amounts in relation to the leasing of properties from China Telecom Group, including the fee for short-term leases,
leases of low-value assets, variable lease payments not depending on an index or a rate and fee for non-lease components.
(viii)
Represent IT services provided to and received from China Telecom Group.
(ix)
(x)
Represent the amount of telecommunications equipment and materials purchased from/sold to China Telecom Group and
commission paid and payable for procurement services provided by China Telecom Group.
Represent amounts received and receivable from China Telecom Group in respect of Internet applications channel services,
including the provision of telecommunications channel and applications support platform and billing and deduction services,
etc.
(xi)
Represent interest paid and payable to China Telecom Group with respect to the loans from China Telecom Group (Note 20).
(xii)
Represent amounts paid and payable to China Telecom Group primarily for usage of certain CDMA mobile telecommunications
network (“CDMA network”) facilities located in Xizang Autonomous Region, certain inter-provincial transmission optic fibres
within its service regions and certain land use rights.
(xiii)
Represent amounts related to financial services provided by Finance Company to China Telecom Group, including lending
services, deposit services and other financial services.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 44. RELATED PARTY TRANSACTIONS (continued)
(a) Transactions with China Telecom Group (continued)
Amounts due from/to China Telecom Group are summarised as follows:
Accounts receivable
Contract assets
Prepayments and other current assets
Total amounts due from China Telecom Group
Accounts payable
Accrued expenses and other payables
Contract liabilities
Lease liabilities
Short-term debt
Long-term debt
Total amounts due to China Telecom Group
31 December
2020
2019
RMB millions
RMB millions
1,784
49
1,189
3,022
19,272
11,279
217
489
11,164
11,000
53,421
1,188
27
1,233
2,448
19,531
6,069
162
389
6,621
23,300
56,072
Amounts due from/to China Telecom Group, other than short-term debt, long-term debt, deposit with Finance
Company included in accrued expenses and other payables (Note 43(i)), bear no interest, are unsecured and are
repayable in accordance with contractual terms which are similar to those terms offered by third parties. The terms and
conditions associated with short-term debt and long-term debt due to China Telecom Group are set out in Note 20.
As at 31 December 2020 and 2019, no material loss allowance was recognised in respect of amounts due from China
Telecom Group.
(b) Transactions with China Tower
The principal transactions with China Tower are as follows. These transactions do not constitute connected transactions
under the Listing Rules.
Tower assets lease related expenses
Additions of right-of-use assets
Interest expense on lease liabilities
Provision of IT services
Note
RMB millions
RMB millions
2020
2019
(i)
(i)
(i)
(ii)
10,746
3,645
805
31
10,543
3,735
938
31
Notes:
(i)
Represent amounts in relation to the lease of tower assets, including the variable lease payments not depending on an index or
a rate and fee for non-lease components.
(ii)
Represent IT and other ancillary services provided to China Tower.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 44. RELATED PARTY TRANSACTIONS (continued)
(b) Transactions with China Tower (continued)
Amounts due from/to China Tower are summarised as follows:
Accounts receivable
Prepayments and other current assets
Total amounts due from China Tower
Accounts payable
Accrued expenses and other payables
Contract liabilities
Lease liabilities
Total amounts due to China Tower
31 December
2020
2019
RMB millions
RMB millions
23
138
161
4,344
1,192
3
19,798
25,337
5
192
197
4,312
1,261
1
24,474
30,048
Amounts due from/to China Tower bear no interest, are unsecured and are repayable in accordance with contractual
terms which are similar to those terms offered by third parties.
As at 31 December 2020 and 2019, no material loss allowance was recognised in respect of amounts due from China
Tower.
(c) Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the Group, directly or indirectly, including directors and supervisors of the Group.
Key management personnel compensation of the Group is summarised as follows:
Short-term employee benefits
Post-employment benefits
2020
2019
RMB thousands
RMB thousands
8,727
628
9,355
9,604
1,199
10,803
The above remuneration is included in personnel expenses.
(d) Contributions to post-employment benefit plans
The Group participates in various defined contribution post-employment benefit plans organised by municipal,
autonomous regional and provincial governments for its employees. Further details of the Group’s post-employment
benefit plans are disclosed in Note 46.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 44. RELATED PARTY TRANSACTIONS (continued)
(e) Transactions with other government-related entities in the PRC
The Group is a government-related enterprise and operates in an economic regime currently dominated by entities
directly or indirectly controlled by the People’s Republic of China through government authorities, agencies, affiliations
and other organisations (collectively referred to as “government-related entities”).
Apart from transactions with parent company and its fellow subsidiaries (Note 44(a)), the Group has transactions that
are collectively but not individually significant with other government-related entities, which include but not limited to the
following:
•
•
•
•
•
rendering and receiving services, including but not limited to telecommunications services
sales and purchases of goods, properties and other assets
lease of assets
depositing and borrowing
use of public utilities
These transactions are conducted in the ordinary course of the Group’s business on terms comparable to the terms
of transactions with other entities that are not government-related. The Group prices its telecommunications services
and products based on government-regulated tariff rates, where applicable, or based on commercial negotiations.
The Group has also established procurement policies and approval processes for purchases of products and services,
which do not depend on whether the counterparties are government-related entities or not.
The directors of the Company believe the above information provides appropriate disclosure of related party
transactions.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 45. INFORMATION ABOUT THE STATEMENT OF FINANCIAL POSITION OF THE
COMPANY
ASSETS
Non-current assets
31 December
2020
2019
Note
RMB millions
RMB millions
Property, plant and equipment, net
Construction in progress
Right-of-use assets
Goodwill
Intangible assets
Investments in subsidiaries
Interests in associates
Equity instruments at fair value through other comprehensive income
Deferred tax assets
Other assets
9
Total non-current assets
Current assets
Inventories
Income tax recoverable
Accounts receivable, net
Contract assets
Prepayments and other current assets
Short-term bank deposits and restricted cash
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Short-term debt
Current portion of long-term debt
Accounts payable
Accrued expenses and other payables
Contract liabilities
Income tax payable
Current portion of lease liabilities
Current portion of deferred revenues
Total current liabilities
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Long-term debt
Lease liabilities
Deferred revenues
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
415,515
47,319
58,702
29,877
16,810
16,045
39,873
865
7,802
4,569
637,377
1,431
232
18,614
443
17,546
1,617
12,104
51,987
689,364
56,403
1,126
102,528
36,014
57,506
87
12,896
278
266,838
(214,851)
422,526
24,222
27,010
861
23,915
700
76,708
343,546
406,749
58,042
60,839
29,877
14,882
16,044
38,814
1,255
7,251
3,918
637,671
1,500
1,534
19,161
370
16,616
2,780
6,382
48,343
686,014
63,394
4,444
101,280
35,060
50,119
53
11,300
358
266,008
(217,665)
420,006
32,051
30,137
1,097
18,820
600
82,705
348,713
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 45. INFORMATION ABOUT THE STATEMENT OF FINANCIAL POSITION OF THE
COMPANY (continued)
Equity
Share capital
Reserves
Total equity
Total liabilities and equity
46. POST-EMPLOYMENT BENEFITS PLANS
31 December
2020
2019
Note
RMB millions
RMB millions
27
80,932
264,886
345,818
689,364
80,932
256,369
337,301
686,014
As stipulated by the regulations of the PRC, the Group participates in various defined contribution retirement plans organised
by municipal, autonomous regional and provincial governments for its employees. The Group is required to make contributions
to the retirement plans at rates ranging from 14% to 20% of the salaries, bonuses and certain allowances of the employees,
while the PRC government resolved to waive certain proportion of such contributions during the specific period affected by
Covid-19 in order to help enterprises withstand the pandemic and stabilise employment. A member of the plan is entitled to a
pension equal to a fixed proportion of the salary prevailing at the member’s retirement date. Other than the above, the Group
also participates in supplementary defined contribution retirement plans managed by independent external parties whereby the
Group is required to make contributions to the retirement plans at fixed rates of the employees’ salaries, bonuses and certain
allowances. The Group has no other material obligation for the payment of pension benefits associated with these plans beyond
the annual contributions described above. During the reporting period, no forfeited contributions may be used by the Group to
reduce the existing level of contributions.
The Group’s contributions for the above plans for the year ended 31 December 2020 were RMB6,599 million (31 December
2019: RMB8,616 million).
The amount payable for contributions to the above defined contribution retirement plans as at 31 December 2020 was RMB746
million (31 December 2019: RMB755 million).
47. SHARE APPRECIATION RIGHTS
The Group implemented a share appreciation rights plan for members of its management to provide incentives to these
employees. Under this plan, share appreciation rights are granted in units with each unit representing one H share. No shares
will be issued under the share appreciation rights plan. Upon exercise of the share appreciation rights, a recipient will receive,
subject to any applicable withholding tax, a cash payment in RMB, translated from the Hong Kong dollar amount equal to the
product of the number of share appreciation rights exercised and the difference between the exercise price and market price of
the Company’s H shares at the date of exercise based on the applicable exchange rate between RMB and Hong Kong dollar at
the date of the exercise. The Company recognises compensation expense of the share appreciation rights over the applicable
period.
In November 2018, the Company approved the granting of 2,394 million share appreciation right units to eligible employees.
Under the terms of this grant, all share appreciation rights had a contractual life of five years from date of grant and an exercise
price of HK$3.81 per unit. A recipient of share appreciation rights may exercise the rights in stages commencing November
2020. As at each of the third, fourth and fifth anniversary of the date of grant, the total number of share appreciation rights
exercisable may not in aggregate exceed 33.3%, 66.7% and 100.0%, respectively, of the total share appreciation rights granted
to such person.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 47. SHARE APPRECIATION RIGHTS (continued)
During the year ended 31 December 2020 and 2019, no share appreciation right units were exercised. For the year ended 31
December 2020, compensation expense of RMB101 million was reversed by the Group in respect of share appreciation rights.
For the year ended 31 December 2019, compensation expense of RMB136 million was recognised by the Group in respect of
share appreciation rights.
As at 31 December 2020, the carrying amount of the liability arising from share appreciation rights was RMB65 million (2019:
RMB166 million).
48. ACCOUNTING ESTIMATES AND JUDGMENTS
The Group’s financial position and results of operations are sensitive to accounting methods, assumptions and estimates
that underlie the preparation of the consolidated financial statements. Management bases the assumptions and estimates on
historical experience and on other factors that the management believes to be reasonable and which form the basis for making
judgments about matters that are not readily apparent from other sources. On an on-going basis, management evaluates its
estimates. Actual results may differ from those estimates as facts, circumstances and conditions change.
The selection of significant accounting policies, the judgments and other uncertainties affecting application of those policies and
the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing the
consolidated financial statements. The significant accounting policies are set forth in Note 3. Management believes the following
significant accounting policies involve the most significant judgments and estimates used in the preparation of the consolidated
financial statements.
Provision of ECL for accounts receivable
The Group uses provision matrix to calculate ECL for the accounts receivable. The provision rates are based on customer’s
past history of making payments when due and current ability to pay by groupings of various debtors that have similar loss
patterns. The provision matrix is based on the Group’s historical credit loss experience taking into consideration reasonable and
supportable forward-looking information that is available without undue cost or effort. The historical loss rates are reassessed
annually, and changes in the forward-looking information are considered. In addition, accounts receivable with significant
balances or credit-impaired are assessed for ECL individually.
The provision of ECL is sensitive to changes in estimates. Due to greater financial uncertainty triggered by the Covid-19
pandemic, the Group has increased the expected loss rates in the current year as there is higher risk that a prolonged pandemic
could lead to increased credit default rate. The information about the ECL and the Group’s accounts receivable are disclosed in
Notes 41 and 16.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 48. ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
Impairment of goodwill and long-lived assets
If circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, the asset may be considered
“impaired”, and an impairment loss would be recognised in accordance with accounting policy for impairment of long-lived assets
as described in Note 3(h). The carrying amounts of the Group’s long-lived assets, including property, plant and equipment,
intangible assets with finite useful lives, construction in progress, right-of-use assets and contract costs are reviewed periodically
to determine whether there is any indication of impairment. These assets are tested for impairment whenever events or changes
in circumstances indicate that their recorded carrying amounts may not be recoverable. For goodwill, the impairment testing
is performed annually at the end of each reporting period. The recoverable amount of an asset or cash-generating unit is the
greater of its value in use and fair value less costs of disposal. When an asset does not generate cash flows largely independent
of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows
independently (i.e. a cash-generating unit). In determining the value in use, expected future cash flows generated by the
assets are discounted to their present value. An impairment loss is recognised if the carrying amount of an asset or its cash-
generating unit exceeds its estimated recoverable amount. It is difficult to precisely estimate fair value of the Group’s long-lived
assets because quoted market prices for such assets may not be readily available. In determining the value in use, expected
future cash flows generated by the asset are discounted to their present value, which requires significant judgment relating to
level of revenue, amount of operating costs and applicable discount rate. Management uses all readily available information in
determining an amount that is a reasonable approximation of recoverable amount.
For the year ended 31 December 2020, provision for impairment loss of RMB5,042 million was made against the carrying value
of property, plant and equipment (Note 4), mainly based on the impairment test on the 3G Assets on the basis of each individual
asset. For the year ended 31 December 2019, no provision for impairment loss was made against the carrying value of long-
lived assets.
In determining the recoverable amount of the assets within the cash-generating unit, significant judgments were required
in estimating future cash flows, level of revenue, amount of operating costs and applicable discount rate. Changes in these
estimates could have a significant impact on the carrying value of the assets and could result in additional impairment charge or
reversal of impairment in future periods. Furthermore, the financial budgets, growth rate and discount rate are subject to greater
uncertainties in the current year due to uncertainty on how the Covid-19 pandemic may progress and evolve and volatility in
financial markets.
Depreciation and amortisation
Property, plant and equipment and intangible assets with finite useful lives are depreciated and amortised on a straight-
line basis over the estimated useful lives of the assets, after taking into account their estimated residual value. Management
reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation
and amortisation expense to be recorded during any reporting period. The useful lives and residual values are based on the
Group’s historical experience with similar assets and take into account anticipated technological changes. The depreciation and
amortisation expense for future periods is adjusted if there are significant changes from previous estimates.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 49. POSSIBLE IMPACT OF NEW AND AMENDMENTS TO STANDARDS ISSUED
BUT NOT YET EFFECTIVE FOR THE ANNUAL ACCOUNTING PERIOD
ENDED 31 DECEMBER 2020
Up to the date of issue of the consolidated financial statements, the IASB has issued the following new and amendments to
standards which are not yet effective and not early adopted by the Group for the annual accounting period ended 31 December
2020:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
“Interest Rate Benchmark Reform – Phase 2”
Amendments to IFRS 3, “Reference to the Conceptual Framework”
Amendments to IAS 16, “Property, Plant and Equipment: Proceeds before Intended Use”
Amendments to IAS 37, “Onerous Contracts – Cost of Fulfilling a Contract”
Amendments to IFRS Standards, “Annual Improvements to IFRS Standards 2018-2020”
IFRS 17, “Insurance Contracts and the related Amendments”
Amendments to IAS 1, “Classification of Liabilities as Current or Non-current”
Amendments to IAS 1 and IFRS Practice Statement 2, “Disclosure of Accounting Policies”
Amendments to IAS 8, “Definition of Accounting Estimates”
Amendments to IFRS 10 and IAS 28,
Effective for
accounting period
beginning on or after
1 January 2021
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
1 January 2023
1 January 2023
“Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”
To be determined
The Group is in the process of making an assessment of the impact that will result from adopting the new and amendments
to standards issued by the IASB which are not yet effective for the accounting period ended on 31 December 2020. So far
the Group believes that the adoption of these new and amendments to standards is unlikely to have a significant impact on its
financial position and the results of operations.
50. EVENTS AFTER THE REPORTING PERIOD
(i) NYSE determination to delist American Depositary Shares of the Company
The New York Stock Exchange LLC (the “NYSE”) announced on 31 December 2020 (US Eastern standard time)
that the staff of NYSE Regulation had determined to commence proceedings to delist the securities of three issuers,
including the American Depositary Shares (the “ADSs”) of the Company, on the basis that the Company is no longer
suitable for listing pursuant to the NYSE Listed Company Manual Section 802.01D in light of the Executive Order
issued on 12 November 2020 (as amended on 13 January 2021 (US Eastern standard time)) by the then President of
the United States. On 4 January 2021(US Eastern standard time), NYSE announced that NYSE Regulation no longer
intended to move forward with the delisting action in relation to the ADSs, and then on 6 January 2021 (US Eastern
standard time), NYSE announced that NYSE Regulation determined to re-commence delisting proceedings of the ADSs
(the “Determination”), following which trading of the ADSs was suspended at 4:00 a.m. (US Eastern standard time) on
11 January 2021. In addition, on 8 January 2021 (US Eastern standard time), the US Department of the Treasury’s
Office of Foreign Assets Control (“OFAC”) added the Company to the “Issuer Name” column of a list of companies
identified as a Restricted Company (the “Restricted List”).
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 50. EVENTS AFTER THE REPORTING PERIOD (continued)
(i) NYSE determination to delist American Depositary Shares of the Company
(continued)
In order to protect the legitimate interests of the Company and its shareholders, on 20 January 2021 (US Eastern
standard time), the Company filed with the NYSE a written request for a review of the Determination by a Committee of
the Board of Directors of the NYSE (the “Committee”) and stay of the trading suspension of the ADSs pending review
of the Determination. On 27 January 2021 (US Eastern standard time), OFAC published General License No. 1A in
relation to the Executive Order (“GL 1A”), dated 26 January 2021 (US Eastern standard time), and guidance relating to
two related frequently asked questions (respectively, “FAQ 878” and “FAQ 879”). GL 1A and FAQ 879 provide, among
others, that, pursuant to the Executive Order, the Prohibitions with respect to the Company take effect on the date that
is 60 days after the Company was added to the Restricted List, or 9 March 2021 (US Eastern standard time) (instead of
11 January 2021 (US Eastern standard time)).
The Company will continue to pay close attention to the development of related matters and also seek professional
advice and reserve all rights to protect the legitimate interests of the Company.
(ii) Proposal of share appreciation rights grant for key personnel
On 9 February 2021, the Board of Directors of the Company has considered and approved the resolution in relation to
the “2021 Share Appreciation Rights Grant Proposal for Key Personnel of China Telecom Corporation Limited” (now
renamed as “The Phase II Incentive Scheme for Share Appreciation Rights of China Telecom Corporation Limited” as
instructed by the SASAC) (the “Proposal”). According to the Proposal, the Company proposed to grant a maximum of
approximately 2,412 million share appreciation rights to a maximum of approximately 8,300 Key Personnel (excluding
the Executive Directors, Non-Executive Director, Independent Directors, Supervisors and senior management of the
Company). The Proposal has been approved by SASAC on 3 March 2021.
(iii) Proposed A share offering
On 9 March 2021, the Company announced it plans to apply for the offering and listing of A shares on the Main Board
of the Shanghai Stock Exchange.
51. PARENT AND ULTIMATE HOLDING COMPANY
The parent and ultimate holding company of the Company as at 31 December 2020 is China Telecommunications Corporation,
a state-owned enterprise established in the PRC.
China Telecom Corporation Limited Annual Report 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 31 December 2020 Year ended 31 December
2020
RMB
2019
RMB
2018
RMB
2017
RMB
2016
RMB
393,561
(90,240)
375,734
(88,145)
377,124
(75,493)
366,229
(74,951)
(119,517)
(109,799)
(116,062)
(103,969)
(55,059)
(65,989)
(29,074)
(5,042)
(57,361)
(63,567)
(27,792)
–
(59,422)
(59,736)
(37,697)
–
(58,434)
(56,043)
(45,612)
–
352,534
(67,942)
(94,156)
(56,426)
(54,504)
(52,286)
–
(364,921)
(346,664)
(348,410)
(339,009)
(325,314)
28,640
(3,014)
60
1,701
27,387
(6,307)
21,080
29,070
(3,639)
30
1,573
27,034
(6,322)
20,712
28,714
(2,708)
38
2,104
28,148
(6,810)
21,338
27,220
(3,291)
147
877
24,953
(6,192)
18,761
27,220
(3,235)
40
91
24,116
(5,993)
18,123
Results of operation
Operating revenues
Depreciation and amortisation
Network operations and support
Selling, general and administrative
Personnel expenses
Other operating expenses
Impairment loss on property, plant and equipment
Operating expenses
Operating profit
Net finance costs
Investment income
Income from investments in associates
Profit before taxation
Income tax
Profit for the year
Other comprehensive income for the year
Items that will not be reclassified subsequently to
profit or loss:
Change in fair value of investments in equity instruments
at fair value through other comprehensive income
Deferred tax on change in fair value of investments
(385)
604
(324)
in equity instruments at fair value through
97
(147)
82
other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Change in fair value of available-for-sale equity securities
Deferred tax on change in fair value of
available-for-sale equity securities
Exchange difference on translation of financial statements
of subsidiaries outside mainland China
Share of other comprehensive income of associates
Other comprehensive income for the year, net of tax
–
–
(312)
(4)
(604)
–
–
102
(2)
557
–
–
154
(7)
(95)
–
–
(400)
100
(259)
7
(552)
–
–
(228)
57
190
6
25
Total comprehensive income for the year
20,476
21,269
21,243
18,209
18,148
Profit attributable to
Equity holders of the Company
Non-controlling interests
Profit for the year
Total comprehensive income attributable to
Equity holders of the Company
Non-controlling interests
Total comprehensive income for the year
Basic earnings per share
20,850
230
21,080
20,244
232
20,476
0.26
20,517
195
20,712
21,074
195
21,269
0.25
21,210
128
21,338
21,115
128
21,243
0.26
18,617
144
18,761
18,065
144
18,209
0.23
18,018
105
18,123
18,043
105
18,148
0.22
China Telecom Corporation Limited Annual Report 2020FINANCIAL SUMMARY(Amounts in millions, except per share data) Financial condition
Property, plant and equipment, net
418,605
410,008
407,795
406,257
389,671
As at 31 December of the year
2020
RMB
2019
RMB
2018
RMB
2017
RMB
2016
RMB
Construction in progress
Other non-current assets
Cash and bank deposits
Other current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
48,425
59,206
66,644
73,106
80,386
164,050
160,735
115,938
110,281
108,367
33,092
50,924
24,419
48,763
23,480
49,525
22,510
49,040
27,948
46,186
715,096
703,131
663,382
661,194
652,558
271,142
264,661
258,920
275,408
319,133
77,779
83,430
60,363
59,089
17,077
348,921
348,091
319,283
334,497
336,210
Total equity attributable to equity holders of the Company
363,456
352,510
343,069
325,867
315,377
Non-controlling interests
Total equity
2,719
2,530
1,030
830
971
366,175
355,040
344,099
326,697
316,348
Total liabilities and equity
715,096
703,131
663,382
661,194
652,558
China Telecom Corporation Limited Annual Report 2020FINANCIAL SUMMARY(Amounts in millions, except per share data) SHARE INFORMATION
Share Listing
China Telecom Corporation Limited’s H shares were listed on The Stock Exchange of Hong Kong Limited on 15 November 2002 and
New York Stock Exchange as American Depositary Shares (ADSs) on 14 November 2002. ADSs are issued by The Bank of New York
Mellon. Each ADS traded in the United States represents 100 ordinary H shares.
On 6 January 2021 (US Eastern standard time), New York Stock Exchange, following reversal of a similar decision announced on 31
December 2020 (US Eastern standard time), announced that it had determined to commence delisting proceedings of our ADSs to
comply with Executive Order 13959 signed by the President of the United States, and thereafter suspended trading in our ADSs on
11 January 2021 (US Eastern standard time). On 20 January 2021 (US Eastern standard time), we filed a written request with New
York Stock Exchange for a review of its determination. As of the date of this annual report, the review committee of New York Stock
Exchange has not made its decision on whether to reverse the delisting determination.
Stock Code
The Stock Exchange of Hong Kong Limited
New York Stock Exchange
728
CHA
Share Price Performance
2020 Share Price
HK$ per H Share
High
3.32
Low
2.01
Close
2.15
US$ per ADS
Low
26.66
High
41.55
Close
27.55
Number of issued shares: (as at 31 December 2020)
Market capitalisation: (as at 31 December 2020)
80,932,368,321
HK$174.0 billion
247
China Telecom Corporation Limited Annual Report 2020SHAREHOLDER INFORMATION Share price performance of China Telecom on The Stock Exchange of Hong Kong Limited versus Hang Seng Index (HSI) and MSCI
World Telecom Service Sector Index (MSCI) from IPO on 15 November 2002 to 31 December 2020.
China Telecom (+48%)
HSI (+176%)
MSCI (+118%)
2
0
0
2
/
1
1
3
0
0
2
/
1
1
4
0
0
2
/
1
1
5
0
0
2
/
1
1
6
0
0
2
/
1
1
7
0
0
2
/
1
1
8
0
0
2
/
1
1
9
0
0
2
/
1
1
0
1
0
2
/
1
1
1
1
0
2
/
1
1
2
1
0
2
/
1
1
3
1
0
2
/
1
1
4
1
0
2
/
1
1
5
1
0
2
/
1
1
6
1
0
2
/
1
1
7
1
0
2
/
1
1
8
1
0
2
/
1
1
9
1
0
2
/
1
1
0
2
0
2
/
1
1
600
500
400
300
200
100
0
248
SHAREHOLDER INFORMATIONChina Telecom Corporation Limited Annual Report 2020 Distribution of Shares and Shareholdings
The share capital of the Company as at 31 December 2020 was RMB80,932,368,321, divided into 80,932,368,321 shares of RMB1.00
each. As at 31 December 2020, the share capital of the Company comprised:
Total Number of Domestic Shares:
Domestic shares held by:
China Telecommunications Corporation
Guangdong Rising Holdings Group Co., Ltd.
Zhejiang Provincial Financial Development Co., Ltd.
Fujian Investment & Development Group Co., Ltd.
Jiangsu Guoxin Group Limited
Total Number of H Shares (including ADSs):
Total
Major Shareholders of H Shares
Number of Shares
67,054,958,321
57,377,053,317
5,614,082,653
2,137,473,626
969,317,182
957,031,543
13,877,410,000
80,932,368,321
Percentage of
the Total Number
of Shares
(%)
82.85
70.89
6.94
2.64
1.20
1.18
17.15
100.00
The following table shows the major shareholders that exercised or controlled the exercise of 5% or above of H shares as at 31
December 2020:
Name of Shareholder
GIC Private Limited
BlackRock, Inc.
The Bank of New York Mellon Corporation
Percentage of
the Total Number
of H Shares
in Issue
(%)
10.05
7.03
6.88
Number of Shares
1,394,433,475
976,141,887
955,258,598
249
SHAREHOLDER INFORMATIONChina Telecom Corporation Limited Annual Report 2020 Dividend History
Financial Year
Ex-Dividend Date
Approval Date
Payment Date
per Share (HK$)
Shareholder
Dividend
2002 Final
2003 Final
2004 Final
2005 Final
2006 Final
2007 Final
2008 Final
2009 Final
2010 Final
2011 Final
2012 Final
2013 Final
2014 Final
2015 Final
2016 Final
2017 Final
2018 Final
2019 Final
2020 Final
16 May 2003
20 June 2003
10 July 2003
0.00837*
1 April 2004
3 May 2004
20 May 2004
21 April 2005
25 May 2005
23 June 2005
20 April 2006
23 May 2006
15 June 2006
26 April 2007
29 May 2007
15 June 2007
28 April 2008
30 May 2008
16 June 2008
23 April 2009
26 May 2009
30 June 2009
22 April 2010
25 May 2010
30 June 2010
18 April 2011
20 May 2011
30 June 2011
5 June 2012
30 May 2012
20 July 2012
4 June 2013
29 May 2013
19 July 2013
4 June 2014
29 May 2014
18 July 2014
1 June 2015
27 May 2015
17 July 2015
30 May 2016
25 May 2016
15 July 2016
26 May 2017
23 May 2017
21 July 2017
31 May 2018
28 May 2018
27 July 2018
3 June 2019
29 May 2019
26 July 2019
1 June 2020
26 May 2020
31 July 2020
0.065
0.065
0.075
0.085
0.085
0.085
0.085
0.085
0.085
0.085
0.095
0.095
0.095
0.105
0.115
0.125
0.125
11 May 2021
7 May 2021
1 June 2021
0.125**
*
**
On the basis of HK$0.065 per share, pro-rated based on the number of days the Company’s shares have been listed during the year of 2002.
The dividend proposal is subject to shareholders’ approval at the Annual General Meeting to be held on 7 May 2021.
ANNUAL REPORTS
Our annual reports in both English and Chinese are now available through the Internet at https://www.chinatelecom-h.com.
250
SHAREHOLDER INFORMATIONChina Telecom Corporation Limited Annual Report 2020 2020 Annual Report Survey
Annual Report is a key communication channel between shareholders and the Company. Last year, we received around 100
questionnaires of “Your Views on Annual Report 2019”. Each of these responses benefited us in enhancing and further improving our
annual reports. We are deeply indebted to the respondents for their constructive responses. In accordance with our commitment,
we have to contribute HK$50 to a charitable organisation for each questionnaire received. In this regard, we have given a sum of
HK$10,000 to the charitable organisation, WWF, in 2020. In addition, we have already implemented the suggestion of allowing
shareholders to choose means of receipt and language of corporate communication to enhance environmental protection and cost
savings.
We value and are eager to keep hearing your comments on our annual report for our further improvement in the future. It is highly
appreciated if you could spare your precious time to complete the questionnaire of “Your Views on Annual Report 2020”, as attached
in this annual report, and return it by post or fax to us at +852 2877 0988. You can also fill in the electronic form at our website,
www.chinatelecom-h.com.
Annual General Meeting
To be held at 11:00 a.m. on 7 May 2021 in Grand Hyatt Hong Kong.
Registered office
Address:
Tel:
Fax:
31 Jinrong Street
Xicheng District
Beijing
PRC 100033
86 10 5850 1800
86 10 6601 0728
Any enquiries relating to the strategic development or operations of China Telecom Corporation Limited, please contact the Investor
Relations Department:
Investor Relations Department
Tel:
IR Enquiry:
Fax:
Email:
852 2877 9777
852 2582 0388
852 2877 0988
ir@chinatelecom-h.com
251
SHAREHOLDER INFORMATIONChina Telecom Corporation Limited Annual Report 2020
Any enquiries relating to your shareholding, for example transfers of shares, change of name or address, loss of share certificates,
please contact the H share registrar:
H share registrar
Computershare Hong Kong Investor Services Limited
Address:
Shops 1712-1716, 17th Floor
Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
852 2862 8555
852 2865 0990
Tel:
Fax:
Website:
www.computershare.com/hk/contact
Any enquiries relating to ADSs, please contact the depositary:
ADS depositary
The Bank of New York Mellon
Address:
BNY Mellon Shareowner Services
P.O. Box 505000
Louisville
KY 40233-5000
Tel:
Email:
1-866-240-8333 (toll free in USA)
1-201-680-6825 (international)
shrrelations@cpushareownerservices.com
252
SHAREHOLDER INFORMATIONChina Telecom Corporation Limited Annual Report 2020
CORPORATE CULTURE
Corporate Mission
Let the customers fully enjoy a new information life
Strategic Goal
Be a leading integrated intelligent information services operator
Core Value
Comprehensive innovation, pursuing truth and pragmatism,
respecting people and creating value all together
Operation Philosophy
Pursue mutual growth of corporate value and customer value
Service Philosophy
Customer First Service Foremost
Code of Corporate Practice
Keep promise and provide excellent service for customers
Cooperate honestly and seek win-win result in joint innovation
Operate prudently and enhance corporate value continuously
Manage precisely and allocate resources scientifically
Care the staff and tap their potential to the full
Reward the society and be a responsible corporate citizen
Corporate Slogan
Connecting the World
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DIGITALISING the FUTURE
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ANNUAL REPORT 2020
www.chinatelecom-h.com 50
China Telecom Corporation Limited
31 Jinrong Street, Xicheng District, Beijing, PRC, 100033
Concept, design and printing: iOne Financial Press Limited. Website: www.ione.com.hk