China Tower (OTCM: CHWRF) is still growing even as the largest tower company in the world. For the first half of 2024, the company reported a portfolio of 2.07 million towers, adding roughly 9,000 towers in the past year. Unlike other large independent tower companies such as American Tower (NYSE: AMT), Cellnex (BMEX: CLNX), Indus Towers (XNSE: INDUSTOWER) and privately-held edotco, China Tower is 94 percent owned by the predominant Chinese mobile network operators, China Mobile, China Unicom and China Telecom which collectively serve over 1.7 billion mobile subscribers, according to Inside Towers Intelligence.
China Tower reported 1H24 operating revenue of $6.7 billion, up four percent year-over-year. EBITDA grew three percent to $4.6 billion. Operating free cash flow was nearly $4.6 billion, a 184 percent YoY increase as the company achieved operating efficiencies. Tenants on towers were up two percent to over 3.7 million for a tenancy ratio of 1.8. China Tower increased its capital expenditures by seven percent YoY to $1.9 billion in 1H24.
The company says it is making progress with its “One Core and Two Wings” strategy. The One Core business provides shared infrastructure – towers and distributed antenna systems – to its telecommunication service provider (TSP) customers, namely, the big three Chinese MNOs and China Broadcasting Network. The Two Wings consist of Smart Towers and the Energy, primarily for non-telecom customers.
TSP revenues for 1H24 were $5.9 billion, up three percent YoY and accounted for over 87 percent of total revenues. TSP also accounted for $1.6 billion or 82 percent of 1H24 capex for new site construction and augmentation, and site replacement and improvements.
5G cell site deployments are driving the company’s new infrastructure builds. Through 1H24, China Tower completed construction for 329,000 5G base stations compared to 325,000 in 1H23. At the end of June, China Tower sites supported nearly 2.7 million 5G cell sites. The company points out that 95 percent of the 5G deployments are being achieved through sharing of existing site resources.
China Tower is using DAS to provide in-building wireless service and coverage inside subways and high-speed railway tunnels on a large scale. At the end of June, the company reported it covered over 124 billion square feet of building space, adding 15 billion sq ft in 1H24. It also covered nearly 7,800 miles of subway and close to 8,800 of high-speed railway tunnels. DAS revenues for 1H24 reached $580 million, up 22 percent YoY.
Of the Two Wings activity, Smart Towers are used for monitoring land use such as at mining sites, environmental protection in farmlands, surveillance for unauthorized fishing and agricultural activity, water resource usage, transportation rights-of-way, and to provide early warning for emergency response. Smart Towers produced roughly $554 million in 1H24 revenue, up 18 percent YoY from 238,000 tenants.
The Energy business comprises a vehicle battery exchange business focused on courier and delivery markets. A power backup component is focused on key industries such as communications and finance, providing professional products and service. The Energy business grew over two percent YoY to reach $281 million in 1H24.
By John Celentano, Inside Towers Business Editor
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