In 2021, driven by the state strategies of “Cyberpower”, “Digital China”, and “dual carbon”, China Tower Corporation Limited (the “Company” or “we”) actively seized the opportunity to deepen our “sharing” philosophy and fully implement our “One Core and Two Wings” (一體兩翼) strategy. We have seen encouraging development in each of our business segments, alongside steady and continuous growth in our overall performance.
Our revenue maintained a healthy growth and increased steadily in 2021 and our profitability continued to improve. In 2021, we recorded operating revenue of RMB86,585 million, with a year- on-year increase of 6.8%. Our EBITDA reached RMB63,017 million, up by 5.9% year-on-year, with an EBITDA margin of 72.8%. Profit attributable to owners of the Company amounted to RMB7,329 million, up by 14.0% year-on-year, with a net profit margin of 8.5%.
We maintained a stable and abundant cash flow. In 2021, net cash generated from operating activities amounted to RMB60,503 million, while capital expenditures reduced by 32.1% year-on- year to RMB25,192 million, resulting in our free cash flow increasing 72.9% year-on-year to reach RMB35,311 million. Our debt leverage ratio was stable and manageable, and our financial position remained healthy. As of 31 December 2021, our total assets amounted to RMB323,259 million, and our interest-bearing liabilities stood at RMB101,304 million, representing a gearing ratio of 33.4%.
Aligned with our commitment to providing good returns to our shareholders, the board of directors of the Company (the “Board”) recommends paying a final dividend of RMB0.02624 per share (pre-tax) for the year ended 31 December 2021, equivalent to a payout ratio of 70% of our annual distributable net profit.
In 2021, we continued to strengthen our core advantage in resource coordination and sharing to drive innovation and enhance efficiency and performance. Under the “One Core and Two Wings” strategy, our TSP business consistently achieved a stable growth, while our Smart Tower and Energy businesses continued their rapid growth.
Supporting the construction of 5G network in an intensive and effective manner, our TSP business continued to grow steadily
Our belief in sharing and creating synergy continued to prevail as the coverage and depth of the 5G networks extended constantly at an even faster rate. Based on the new features of 5G network construction, we fully leveraged our advantages in resource coordination and sharing, as well as expertise in operations, to launch innovative and cost-effective products and solutions. We integrated these products and solutions to speed up the launch of our integrated wireless communications coverage solutions and DAS sharing solutions to meet the network coverage demands of our customers by offering a low-cost, highly efficient and quality service. In 2021, we completed approximately 552,000 5G construction projects, supporting the large-scale construction of 5G networks in an economic and efficient manner. Meanwhile, 5G has become an increasingly key driver for the growth of our TSP business, which in turn propelled our overall business to grow steadily, cementing our position as the market leader in the construction and operation of telecommunications infrastructure.
As of the end of 2021, the total number of our tower sites had reached 2.038 million, representing a net increase of 15,000 compared to the end of 2020. The total number of TSP tenants amounted to 3.260 million, 85,000 more than at the end of 2020. Our TSP tenancy ratio increased from 1.57 at the end of 2020 to 1.60. In terms of our DAS business, we covered buildings with a cumulative area of 4.99 billion square meters, up by 22.9% year-on-year, while the cumulative length of high- speed railway tunnels and subways covered reached 16,906.0 kilometers, an increase of 33.1% year-on-year.
In 2021, our TSP business revenue recorded a year-on-year increase of 4.3% to RMB80,197 million, of which tower business revenue increased by 3.4% year-on-year to RMB75,857 million and DAS business revenue increased by 23.0% year-on-year to RMB4,340 million.
Focused on boosting new growth momentum, the development of Two Wings business started to show remarkable results
We seized the opportunities brought by the development of the digital economy and actively responded to the national “dual carbon” goals. Leveraging our unique advantages in resources and capabilities, we maintained a clear focus on product innovation and platform optimization to fortify our core competencies and expand our market. As a result, the Two Wings business continued to scale rapidly, helping to strengthen the multi-pillar development structure and create new growth momentum for the Company. In 2021, our Two Wings business recorded revenue of RMB6,131 million, or an increase of 55.6% year-on-year. It accounted for 7.1% of overall operating revenue and contributed 40.0% to the incremental revenue in the year.
Focused on key sectors, the Smart Tower business sustained a rapid growth
We seized the opportunity of digital transformation across the society, drawing on our abundant site resources and our largest domestic tower sharing and practical Internet of Things platforms to focus on key sectors centered around our Tower Monitoring service to drive the transformation of telecommunications towers into digital towers. With a coordinated approach, we continued to delve into key sectors including forestry, water conservation, agriculture and environmental protection, which are connected to major national projects such as the conservation of the Yangtze River, and forest and grassland fire prevention. As a result, we achieved a rapid growth and established our brand as a company that serves people’s livelihoods and makes contribution to social governance. We developed our innovative national “Tower Monitoring” platform and deepened strategic cooperation with industry partners in the areas of algorithms, cloud resources, transmission and terminals, in order to grow together with our partners. In 2021, our Smart Tower business achieved revenue of RMB4,060 million, a year-on-year increase of 35.2%, of which 51.6% was contributed by our Tower Monitoring business. Our Tower Monitoring business achieved revenue of RMB2,096 million. This reflects a continued shift of our business from resource leasing towards digital applications with higher value.
Further strategic planning helped our Energy business grow in scale
Drawing on our expertise in energy operations and securing power supply, we continued to expand the scale of operations of our Energy business, centering around core areas such as battery exchange and power backup. We accelerated the economical and efficient establishment of internet-connected, environmentally friendly and smart battery exchange facilities, with a focus on key sectors such as finance, healthcare and transportation. We also introduced four-in-one power security solutions that cover power backup, power generation, monitoring and maintenance, which drove rapid growth in the number of users and revenue. As of the end of 2021, we had developed a cumulative 612,000 users for our tower battery exchange services, an increase of 311,000 from the end of 2020, making us the largest operator of battery exchange services for light electric vehicles in China. Our Energy business recorded revenue of RMB2,071 million in 2021 with a year-on- year increase of 121.5%, of which the tower battery exchange business accounted for revenue of RMB1,243 million, representing a growth of 239.6% year-on-year.
Corporate Governance and Social Responsibility
We have always placed great importance on corporate governance, proactively putting in place sound governance systems and mechanisms, and constantly strengthening our risk management and internal control systems and compliance management. In doing so, we aim to enhance our ability to prevent and control risk. As a result, we can maintain a high standard of corporate governance, which helps to safeguard the Company’s healthy and sustainable growth.
We have received wide recognition for our commitment to corporate social responsibility and our efforts to ensure that enterprises and society can develop in harmony. In 2021, we helped to build wireless communications infrastructure in remote areas to build the “information highway”, bridging the digital divide caused by the different pace of development in urban and rural areas. By doing so, we laid the foundation for the development of digital villages. We also tailored measures to local conditions and devised long-term strategies to support rural industries, enabling the digitalization of agriculture and village development. Building on efforts to consolidating the achievement of overall poverty alleviation, we helped channel the outcomes to further drive rural revitalization. Responding to natural disasters, such as extreme rainstorms in Henan, and major public security incidents, we participated in rescue and disaster relief, successfully completing various missions to construct and maintain contingency communications facilities to secure emergency communications, as well as safeguarding national development and ensuring people’s health and safety. In addition, we implemented green development policies and promoted energy saving across our operations in innovative ways. We actively explored the use of clean energy, as part of our commitment to green and low-carbon development and our support for China’s “Carbon Peak, Carbon Neutrality” goals.
Looking ahead, we will further our “One Core and Two Wings” strategy to seize opportunities arising from the development of 5G new infrastructure and the digital economy, as well as the “dual carbon” goals. Our position as a “world-class integrated information and communications infrastructure service provider and a highly competitive information and new energy applications provider” will see us developing an operating system that is professional, intensive, delicate, efficient and digitalized. We will use this to build an enterprise centered around sharing, service, innovation, technology and value creation. We will sustain the stable growth of our operating results and strive for value growth and the sustainable and high-quality development of the Company.
Dual growth engines of “5G + DAS” continue to cement industry leadership
Our TSP business will remain as the fundamental and cornerstone of our development. In view of the ample opportunities arising from the construction of 5G networks to improve their scale, 5G will continue to drive the growth of our TSP business. Adhering to the philosophy of sharing, we will continue to consolidate and enhance our resource coordination and sharing capabilities, in order to uncover and satisfy customer demand. Strengthening our market-oriented approach will lead to further innovation in products, solutions and services, aligning with the 5G construction features and customer demand. By precisely allocating resources, we can better support the increasing depth and breadth of TSPs’ 5G network in an intensive and effective manner with our qualified services. As the 5G network extends to indoor areas, we will seize the opportunity and focus on key scenarios such as new construction demand, as well as site alternation demand. Our advantages in coordinating resources and site entries will help us deliver scenario-specific and integrated active and passive DAS solutions to scale up our business and gain market share, which will accelerate the development of our DAS business.
Focusing on scale and efficiency to drive better and faster development of our Two Wings business
The thriving digital economy and progress towards the “dual carbon” goals have brought forth valuable opportunities for the development of our Two Wings business. Centered around our resource sharing and coordination capabilities, we will continue to strengthen our product innovation and support for platform operations, to boost the scale and efficiency of our Two Wings business.
Focusing on key sectors to enhance our Smart Tower business
Leveraging our rich tower resources across China, we will speed up the transformation of telecommunications towers to digital towers and continue to deepen our penetration into industry customers, with a focus on key sectors including environmental protection, forestry, agriculture, land, water resources, transportation, emergency response, and township governance. We will also strengthen our control and innovation across areas such as business integration, applications, platforms, algorithms, storage and terminals. By doing so, we will speed up the research, development, iteration and optimization of our application products with a clear focus on responding to market demand. We will develop and optimize our unified marketing and sales system across the country, with the aim of further enhancing the impact of our brand as an information applications provider building on Digital Towers.
Focusing on key products to develop specialized Energy business
China’s “dual carbon” goals have presented ample opportunities for the development of our specialized Energy business, with a focus on key offerings such as battery exchange and power backup. We will increase our investment in the research and development of core hardware/ terminals and critical software/platform to enhance our platform capabilities. We will also strengthen our smart customer service by building up service supervision and evaluation systems to deliver premium services. Finally, we will exercise more delicate operations over our assets. This will see our operating approach shift from focusing on rapid network construction and the swift uptake of customers to a dual focus on scale and efficiency enhancement. By doing so, we will further establish the advantages that differentiate us and become a highly competitive energy applications provider.
I would like to take this opportunity to express my heartfelt gratitude to Mr. Tong Jilu, who recently retired from the role of Chairman. During his term of service, Mr. Tong oversaw the formation and incorporation of the Company and led it to achieve its rapid growth, laying a solid foundation for our future development. On behalf of the Board, I sincerely thank Mr. Tong for his remarkable achievements and contributions to the Company. I would also like to express our sincere gratitude to Mr. Fan Cheng and Mr. Tse Yung Hoi, who have resigned as directors, for their outstanding contribution to the development of the Company. In addition, on behalf of the Board, I would like to extend my warmest welcome to Mr. Liu Guiqing, Mr. Zhang Guohou and Mr. Hu Zhanghong, who have joined the Board as new directors.
We would not have achieved the results we have today without the dedication of our employees, the support of our customers, the confidence of our shareholders and the encouragement of the general public. On behalf of the Board, we are most grateful and look forward to continuing our journey together.
Beijing, China, 9 March 2022