Event: The company released its 2025 interim results. In H1 2025, it achieved operating revenue of 200.2 billion yuan, up 1.5% year-on-year, net profit attributable to shareholders of 6.35 billion yuan, up 5.1% year-on-year, and adjusted net profit attributable to shareholders of 5.58 billion yuan, up 10.3% year-on-year. Our commentary is as follows:

Business Structure Continues to Optimize, Network Communications Shows Steady Progress, Computing Network and Digital Intelligence Capabilities Upgraded

Network communications revenue reached 131.9 billion yuan in H1 2025. In H1 2025, the number of connected users exceeded 1.2 billion, with mobile and broadband users adding over 11 million net new customers, reaching a record high for the same period in recent years, with a total of 480 million users. The penetration rate of converged services exceeded 77%, and average revenue per user exceeded 100 yuan. IoT connections increased by over 60 million net new connections, totaling 690 million, including 86 million vehicle IoT connections, further consolidating its leading advantage.

Computing network and digital intelligence revenue reached 45.4 billion yuan in H1 2025, with its proportion increasing to 26%. Among these, China Unicom Cloud achieved revenue of 37.6 billion yuan in H1 2025. Data center intelligent transformation showed significant results, with more internet platform companies and financial institutions such as banks moving into China Unicom data centers. Revenue reached 14.4 billion yuan, up 9.4% year-on-year, with AIDC contract value growing 60% year-on-year, steadily improving market position. 5G private network revenue grew 60% year-on-year in H1 2025. The company promoted deep integration of 5G, AI, and industrial internet, cumulatively building 7,500 5G factories.

Additionally, international business revenue reached 6.8 billion yuan in H1 2025, up 11% year-on-year. Strategic emerging industries accounted for 86% of revenue, becoming a new driver for the company's high-quality development.

Network Construction Improves Quality and Efficiency, Computing Power Network Provides Innovative Supply

In H1 2025, the company's precise network construction and intelligent network management showed significant results, with capital expenditure of 20.2 billion yuan, down 15% year-on-year. Full-year expected fixed asset investment is around 55 billion yuan. The simplified network progressed in an orderly manner, saving nearly 1 billion yuan in annualized OPEX, with data center resource utilization exceeding 70%. Adhering to high-standard construction and high-efficiency operations, comprehensively deepening co-construction, co-sharing, co-maintenance, and co-optimization, achieving more comprehensive network layout, significantly enhanced network capabilities, and more secure network architecture.

The company optimized the integrated layout of computing power infrastructure, constructing and operating 10,000-card intelligent computing centers in Shanghai Lingang, Hohhot, Ningxia Zhongwei, and Qinghai Sanjiangyuan, promoting the integrated development of advanced computing power and green electricity. Data center capacity reserves reached 2,650MW, with total intelligent computing scale reaching 30EFLOPS. The company strengthened the AI-enabled computing power network (AINet), accelerating evolution toward 800G and 1.2T ultra-high bandwidth, achieving high-speed, secure, and lossless interconnection of computing power hub nodes.

High Attention to Shareholder Returns, Interim Dividend Increased Year-on-Year

While achieving steady growth in operating performance, the company is committed to sharing development dividends with shareholders. This year, it will continue to distribute interim dividends, with a proposed dividend of 0.1112 yuan per share (including tax), up 16.0% year-on-year. In the future, the company will better coordinate current operations with long-term development, actively bringing better returns to shareholders.

Profit Forecast and Investment Recommendation:

The company seizes strategic opportunities, effectively responds to challenges, comprehensively promotes integrated innovation, cultivates and strengthens new quality productive forces, maintains good momentum in operational development, with a more stable foundation, stronger momentum, and better quality for high-quality development. We are optimistic about the company's future development. Considering factors such as uncertainties in new business development, we expect the company's net profit attributable to shareholders for 2025-2027 to be 9.727/10.421/11.014 billion yuan (previous estimates were 9.873/10.770/11.712 billion yuan), maintaining a "Buy" rating.

Risk Warning: Intensified industry competition, new business progress falling short of expectations, cost growth exceeding expectations, etc.