China Cellular’s first-half internet revenue dropped 6% year-over-year as Chinese language operators battle market saturation and the influence of a significant tax hike.
And whereas the legacy enterprise contracts, the enormous telco is getting little traction in its AI enterprise.
“The primary half of 2026 introduced its justifiable share of exterior headwinds and multifaceted challenges,” the corporate mentioned in a inventory alternate submitting Thursday night.
Income fell 1.1% to 538 billion Chinese language yuan (US$79.8 billion), with gross sales from its three core segments – communications, computing and AI – declining by 3.1% to RMB453 billion ($67.2 billion). Internet revenue was RMB79 billion ($11.7 billion).
The one progress was from the non-core enterprise, largely handset gross sales, which grew 11%.
Among the many primary enterprise items, solely computing providers expanded, with income gaining 14% to RMB53 billion ($7.9 billion), together with a 13% rise in information heart gross sales.
The AI operation seems to have plateaued. At a time when the market is scaling up exponentially, China Cellular reported progress of lower than 1%. For the token enterprise, which can also be in its high-growth section, it didn’t disclose any particulars.
ARPU down 9%
On the big communications enterprise, which covers broadband, cell and IoT, income contracted by 5.7% to RMB350.4 billion ($52 billion).
Cellular ARPU dropped to RMB45.1 ($6.70), down 9% from a 12 months in the past.
China Cellular mentioned the telecoms companies had been “impacted by components such because the transition from typical to new progress drivers, market setting, and coverage changes to the scope of value-added tax (VAT).”
The VAT hike, launched firstly of the 12 months, raised the tax charge on cell information, SMS and broadband providers from 6% to 9%.
It actually has weighed on Chinese language telco shares this 12 months.
China Telecom and China Unicom have fallen 14% and 18% respectively, whereas China Cellular has declined 1.7%. It closed 1% increased Friday.
In opposition to this backdrop, the banning of on-line third-party gross sales of cell SIMs is maybe no shock – an indication the federal government is eager to bolster the monetary base of the large three telcos.
On-line channels resembling JD.com and Taobao have been the most important supply of extremely low-priced cell SIMs, with bargains resembling 200GB for as little as RMB20 – effectively under the bottom costs from official channels.
These bargains disappeared when the three telcos ended the third-party gross sales at the beginning of the month.
Now prospects eager to order SIM playing cards on-line can solely achieve this by means of the operators’ personal web sites or apps.
In line with China Cellular stats, it now has 1.01 billion cell prospects, of which 687 million are 5G, in addition to 117 million gigabit broadband connections and 1.51 billion IoT connections.
