China Telecom Industry Newsletter

About this issue

The following are the recent development, hot topics and interpretations on the latest policies and regulations, as well as opportunities and challenges in the industry:

1. Analysis of operational data and financial data of China's top 3 telecom operators

• While traditional voice service revenue continues to decrease, mobile data and Internet services become the main driver of the industry revenue growth;
• The industry was affected by the policy of "Speed Upgrade and Tariff Reduction", but things were looking up in the first quarter of 2016. Top 3 telecom operators saw year-on-year revenue increase and could expect a healthy and steady growth of performance in the long run;
• Operational pressure is still climbing up for the global telecom industry. 5G service is entering into the preparation stage of commercial use bringing new growth models and challenges.

2. Insights into tax

• Hong Kong's telecom industry is facing impact of tax policy on cable construction, leasing, and spectrum fee;
• The comprehensive implementation of pilot programs of replacing business tax with VAT ("VAT reform") in Mainland China will lead to more deductions of input VAT in telecom industry.

3. Down to earth and make the leap to cloud - cloud computing and telecom operators

• Various types of cloud computing services are emerging and will develop from single cloud service to multiple cloud service;
• Telecom operators should focus on cloud computing based on their existing advantages and develop relevant strategies to win an advantageous position in the cloud service market.

4. Security and legal compliance in the use of cloud service

• An introduction to safety models under major technical types and delivery modes of cloud computing;
• Cloud service is facing user concerns over its safety as well as challenges of legal compliance;
• Cloud security standards and regulatory requirements adopted globally and domestically, and overall implementation methods of risk oriented cloud security and compliance.

5. IFRS insights: enlightenment from new leasing standards in telecom industry

• New leasing standards have brought a great deal of new assets and liabilities to lessees' balance sheets, and have affected the profits and performance indicators;
• An introduction to the application of the new leasing definition, exemption clauses, and the transition from the old standards to the new.

6. Updated financial report, regulatory system related issue and tax policies