() The operating comments of the Board of Directors in 2023 are as follows:
I. The industry in which the company is located during the reporting period.
The company shall comply with the disclosure requirements of "communication-related business" in the Guidelines for Self-regulation of Listed Companies of Shenzhen Stock Exchange No.4-Information Disclosure of Growth Enterprise Market Industry.
The company is positioned as the escort of China communication network, a leading digital intelligent operation and maintenance service provider and a comprehensive communication technology service enterprise. The company is at the leading level in the field of digital operation and maintenance, and has reformed the traditional manual operation and maintenance business with digital management ability, greatly improving operation and maintenance efficiency and reducing operating costs. The company has undertaken the task of communication guarantee for major international and domestic events for many times. With stable and high-quality service capabilities, it has established a good reputation and influence in the industry and established a long-term and stable cooperative relationship with core customers.
In 2023, in the face of the severe and complicated international situation and the gradual recovery of the domestic market, Yuandao Communication continued to consolidate its internal strength of operation, anchored its development strategy to experience its own competitiveness, made steady and steady progress in the external environment where multiple factors were intertwined, and actively grasped the development opportunities, striving to take the initiative in the rapidly changing market. Through the concerted efforts and breakthroughs of all parties, Yuandao Communication has maintained a steady and good development trend, with outstanding business toughness, breakthrough in technical attack and expansion of market territory, and achieved a certain degree of business results in general.
(1) Industry situation
In 2023, China’s communications industry fully implemented the spirit of the 20th Party Congress, conscientiously implemented the decisions and arrangements made by the CPC Central Committee in the State Council, adhered to the general tone of striving for progress while maintaining stability, fully promoted the construction of a network powerhouse and a digital China, and promoted the deep integration of the digital economy and the real economy. The main operating indicators of the whole industry grew steadily, the network infrastructure such as 5G and Gigabit optical networks became increasingly complete, the popularization of various applications accelerated in an all-round way, and the high-quality development of the industry steadily advanced.
1. Telecom business revenue maintained growth.
According to preliminary accounting (Note 1), in 2023, the telecom business revenue totaled 1.68 trillion yuan, an increase of 6.2% over the previous year. According to the price of last year, the total telecommunications business increased by 16.8% year-on-year.
2. The income from emerging businesses maintained a relatively high growth rate.
Emerging businesses such as data center, cloud computing, big data and Internet of Things have developed rapidly. In 2023, the total business income was 356.4 billion yuan, up by 19.1% over the previous year, and its proportion in telecom business income increased from 19.4% in the previous year to 21.2%, which boosted the telecom business income growth by 3.6 percentage points. Among them, the revenue of cloud computing and big data business increased by 37.5% over the previous year, and the revenue of Internet of Things business increased by 20.3% over the previous year.
3. Investment in fixed assets remained stable.
In 2023, the three basic telecom enterprises and China Tower Co., Ltd. completed a total investment of 420.5 billion yuan in telecom fixed assets, an increase of 0.3% over the previous year. Among them, the investment in 5G reached 190.5 billion yuan, a year-on-year increase of 5.7%, accounting for 45.3% of the total investment.
4. All-optical network construction is advancing rapidly.
In 2023, the length of new optical cable lines was 4.738 million kilometers, and the total length of national optical cable lines reached 64.32 million kilometers; Among them, the length of long-distance optical cable lines, local network relay optical cable lines and access network optical cable lines reached 1.14 million, 23.1 million and 40.08 million kilometers respectively. By the end of 2023, the number of Internet broadband access ports had reached 1.136 billion, a net increase of 64.86 million over the end of last year. Among them, FTTH/O ports reached 1.094 billion, a net increase of 69.15 million compared with the end of last year, and the proportion increased from 95.7% at the end of last year to 96.3%. By the end of 2023, the number of 10G PON ports with gigabit network service capacity reached 23.02 million, a net increase of 7.792 million over the end of last year.
5. The construction of 5G network has been further promoted.
By the end of 2023, the total number of mobile communication base stations in China reached 11.62 million, of which 3.377 million were 5G base stations (Note 2), accounting for 29.1% of the total number of mobile base stations, accounting for 7.8 percentage points higher than that at the end of last year.
6. The number of racks in the data center has increased significantly.
By the end of 2023, the number of Internet data center racks provided by the three basic telecommunications companies to the public reached 970,000, with a net increase of 152,000.
Note 1. The data in 2023 are preliminary statistics, and the final accounts of the annual report are used in 2022 and before. The statistics do not include Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Province. Due to rounding, some data are not equal to the total of sub-items.
Note 2. Since March 2023, the statistical caliber of indoor base stations in the existing 5G base stations has been adjusted from being counted by baseband processing units to being converted by radio frequency units. Since the data of base stations with conditions for use are dynamically updated, the previous data cannot be adjusted retroactively.
Note 3. The above data comes from the Statistical Bulletin of Communication Industry in 2023 of the Ministry of Industry and Information Technology.
(2) Industry policies
II. Main businesses of the Company during the reporting period
The company shall comply with the disclosure requirements of "communication-related business" in the Guidelines for Self-regulation of Listed Companies of Shenzhen Stock Exchange No.4-Information Disclosure of Growth Enterprise Market Industry.
(1) Main business
The company is a leading communication technology service enterprise, which mainly provides communication technology services including communication network maintenance and optimization and communication network construction for communication operators (), (), China Unicom and other communication infrastructure operators, China Tower, as well as communication equipment manufacturers, so as to ensure the effective operation of all links of the information communication network and provide a stable and high-quality network environment for end users. Communication network maintenance and optimization service is to operate and optimize the existing communication network facilities and equipment, so as to ensure the stability and reliability of the communication network and prolong the service life of the communication infrastructure; Communication network construction service is the construction and reconstruction of communication network facilities to improve network coverage, expand network carrying capacity and improve network speed.
(2) Main products
1, communication network maintenance and optimization services
(1) Communication network maintenance service
Communication network maintenance services mainly include professional technical services such as operation and management of communication network room environment, base station equipment, transmission lines and ancillary facilities, routine maintenance and fault handling, as well as communication guarantee services such as solving communication network faults, responding to emergencies, and ensuring major social activities, and integrated communication maintenance services.
The company has been deeply involved in the field of communication network maintenance services for many years, and has accumulated rich industry experience, providing services for customers such as China Mobile, China Tower and China Unicom, which has been recognized by customers. The company has Grade A qualification for comprehensive maintenance of communication network (outsourcing) enterprises, Grade A qualification for base stations and Grade A qualification for communication lines, with strong professional strength and high service efficiency, which can effectively guarantee the reliability and stability of communication networks operated by customers. The company has undertaken the task of communication guarantee for major international and domestic events for many times. With stable and high-quality service capabilities, it has established a good reputation and influence in the industry and established long-term and stable cooperative relations with core customers in major business areas. In the future, the company will take multiple measures and take a multi-pronged approach to consolidate its long-term development competitiveness and consolidate its leading position in the market, so as to continuously increase its market share, expand its business categories and improve its operating efficiency. On the whole, the company has a broad future development space by building its core competitiveness in a multi-dimensional and three-dimensional way.
(2) Communication network optimization service
Communication network optimization service is to test, analyze and evaluate communication network equipment and network indicators, so as to cope with network and environmental changes, improve signal quality, and ultimately enhance terminal communication user perception.
Communication network optimization service is one of the core businesses of the company. The company has a professional optimization team and accumulated rich project experience, which can provide various professional optimization work such as engineering network optimization and special network optimization.
2. Communication network construction services
Communication network construction services include network system equipment installation and debugging, transmission system installation and debugging, wireless equipment installation and debugging, optical (electric) cable line installation, communication infrastructure construction, etc. The construction services provided by the company mainly include pipeline engineering, equipment engineering, supporting facilities construction and sporadic projects, excluding civil construction services.
The company has professional and technical qualifications such as Grade A qualification of communication construction enterprise service ability and Grade I qualification of general contracting of communication engineering construction, and has formed a full-service engineering construction service system. With the construction cycle of 5G network, the company’s order acquisition ability has been gradually improved.
3. Information and communication software and hardware products
While carrying out communication technology services, the company actively carries out technological innovation, breaks through the profit model that traditional communication technology services only provide technical services to communication operators, and develops customized information and communication software and hardware products for customers. This kind of business is beneficial for the company to grasp the development trend of the industry and open up new growth points in the 5G era. During the reporting period, the company’s information and communication software and hardware products mainly include:
(1) Digital management solutions
The company deeply cultivates the industry, has profound industrial endowment, and has a deep understanding of the operation and maintenance needs of government and enterprise customers. According to its successful experience in digital management, the company exports digital integrated solutions and customizes an integrated platform for the operation and maintenance projects of government and enterprise customers. The company builds a business-oriented service, meets the construction needs of operators, provides end-to-end operation and maintenance solutions for customers and services, and uses a self-developed integrated platform to realize the management, monitoring and analysis capabilities of various government and enterprise businesses and comprehensively improve the operation and maintenance capabilities.
The company provides customers with application system design and tailor-made new development services, introduces leading information solutions for different industries and organizations, and also provides comprehensive services such as intelligent building system integration, computer network system integration and security system integration. Among them, the operation and maintenance integrated cloud platform products have the functions of multidimensional visual management, data audit, full-service customization, customer self-help, full-cycle management and control, and scenario analysis and evaluation, which can provide integrated solutions for customers’ digital operation and maintenance and management systems.
(2) Software products
Yuan Dao Jing Wei camera This APPlication is packaged by the field management function in the company’s comprehensive operation management system, and it is a work watermark camera APP that helps enterprises to manage the work of field workers. Through this app, the time and address information, latitude and longitude information, environment (weather) information and job scene information are innovatively combined and displayed on each job photo, and the mechanism that the time and address are true and unchangeable ensures the authenticity and effectiveness of management work. Through the self-built organization system in the application, the real-time management of personnel’s work situation helps small and medium-sized enterprises or teams to explore information management models at low cost; Combined with PC management background, enterprises can manage personnel, attendance, workload and photos in a unified way, which can help enterprises innovate management methods and realize information, intelligence and platform management.
Yuandao vehicle cloud platform. The platform is based on the vehicle management module in the integrated operation management system and the Internet of Things +GIS technology, and provides customers with a vehicle management cloud system that integrates vehicle management, vehicle management, vehicle monitoring, fuel consumption management and data reporting.
(3) Smart projects
The company will expand the service scope of communication technology applications to smart parks, smart cities, digital industries and other fields, seize the market opportunities of industry applications in the smart field brought by 5G, and form new business growth points.
(3) the position of the communication industry chain where the company is located
The upstream of the company is mainly labor service providers, leasing service providers and suppliers of materials and equipment, which are mature and fully competitive. The downstream of the company is the communication industry, with high industry concentration; The company’s customers are mainly communication operators, China Tower and communication equipment manufacturers. These enterprises are well-known, with large procurement scale, strong comprehensive strength and standardized internal management. The procurement of communication technology services is only a link in their supply chain and their position is relatively strong.
The pattern of China’s communication operation industry and the position of the company’s main business in the industrial chain determine that the company mainly conducts various businesses around the needs of downstream communication operators, China Tower and communication equipment manufacturers. Communication technology services purchased by communication equipment manufacturers are also the ultimate service for communication operators. Therefore, communication operators and China Tower are the ultimate main service targets of the industry, and the company’s main business model is deeply influenced by the above customers.
(4) Business model
The company mainly provides communication technology services including communication network maintenance and optimization and communication network construction for communication operators, communication infrastructure operators and communication equipment manufacturers, and its downstream customers are relatively stable. The company’s main customers choose communication technology service providers through public bidding and invitation bidding, so the company mainly obtains orders through participating in customer bidding, and at the same time, some of them obtain business through single-source procurement and commercial negotiation.
During the reporting period, the company mainly purchased labor services, and settled accounts with labor service suppliers according to the workload.
The company’s main profit model is to charge customers for communication technology services based on workload. The maintenance business is to maintain the base station, indoor distribution, transmission lines and pipelines, and to test and optimize the equipment. Customers regularly check the workload with the company and assess the service quality, and settle the fees with the company based on the contract service unit price and the approved workload after assessment and adjustment. Network optimization business is that the company carries out signal testing and optimization adjustment to improve signal performance and ensure smooth signal, and customers settle fees with the company with the confirmed workload and service unit price. The construction business is the installation and debugging of network, transmission and wireless equipment, the installation of optical cable lines and the construction of supporting facilities, with large scale and long construction period. Several specific contracts (sites) are signed in the framework agreement, and specific services and delivery projects are implemented on the basis of sites, and customers organize acceptance on the basis of sites.
(5) Market position
Since its establishment, the company has been focusing on the communication technology service business, and has deepened its efforts to establish the first-Mover advantage in the segmentation field, especially in the field of communication network maintenance services. The company is one of the few enterprises in the industry with Grade A qualification of communication network maintenance (comprehensive maintenance, base station specialty and communication lines) and Grade A qualification of communication information network system integration, and its comprehensive service capability is in the forefront of the industry. After more than ten years of development, the company has grown into a leading national and comprehensive communication technology service enterprise. The core business of the company is to provide communication network maintenance services for China Mobile. In recent years, the company’s business advantages have been constantly revealed, and it has won the bid share in the forefront of the industry, and has successively opened up new customers for comprehensive generation peacekeeping and network optimization services in Guangdong and other regions, reflecting the company’s strong market competitiveness. The number of network operation and maintenance execution blocks of the company in China Mobile ranks in the top.
(VI) Main performance drivers
1. Industry factors
The communication technology service industry in which the company is located ultimately provides services for communication operators, which is closely related to the development of the communication industry. The development trend of communication technology service industry is related to the pace of communication technology update, the procurement policy of communication operators, the network demand of end customers, the expenditure scale of communication operators, the market competition in this industry, the application of new technologies and other factors. The communication technology service industry is deeply influenced by the downstream communication industry, especially by the continuous expenditure of communication operators. In recent years, China’s mobile communication technology has been upgraded rapidly, and the difficulty of communication network operation and maintenance has risen sharply, which has brought broad market space to the industry. In November 2021, the Ministry of Industry and Information Technology issued the "14th Five-Year Plan for the Development of Information and Communication Industry", which stated that by 2025, the number of 5G base stations per 10,000 people would reach 26. This means that by 2025, the number of 5G base stations in China will be nearly 3.67 million.
With the continuous increase in the construction of 5G, the market opportunities for industrial applications in the smart field brought about by the construction of 5G, industrial Internet and big data are also constantly improving. The government work report of the two sessions in 2024 pointed out that since 2023, relying on innovation to lead industrial upgrading and enhance the new kinetic energy of urban and rural regional development. The digital economy has accelerated, and the penetration rate of 5G users has exceeded 50%. In the future, we will further promote the innovative development of the digital economy. Formulate policies to support the high-quality development of the digital economy, actively promote digital industrialization and industrial digitalization, and promote the deep integration of digital technology and the real economy. Deepen the research and development of big data, artificial intelligence and other applications, carry out the "artificial intelligence+"action, and build an internationally competitive digital industrial cluster. Implement the digital transformation of manufacturing industry, accelerate the large-scale application of industrial internet, promote the digitalization of service industry, and build smart cities and digital villages. Appropriately advance the construction of digital infrastructure and accelerate the formation of a national integrated computing system.
It can be seen that the increasing demand for communication and information technology services in various industries has also provided a broader market prospect for this industry. Our company’s communication network construction service, communication network operation and maintenance, optimization and innovation will gain a broad market space. It puts forward higher requirements for the technical level and scale strength of communication technology service enterprises, which is conducive to improving the highly decentralized industry state and making the industry head enterprises gain greater competitive advantages. After the completion of communication network infrastructure construction, continuous operation and maintenance services are needed, so the company’s operation and maintenance business has strong stability and continuity.
Looking forward to the future, "centralized procurement" has gradually become the mainstream, and market competition is constantly standardized; User needs are more diverse, and the importance of this industry is increasingly prominent; Service standards continue to improve, and information management and control has become a trend; High-end talents are relatively scarce, and laborers are widely used; Customer groups extend across borders, and customized product development has become a new growth point.
2. Internal factors
Since its establishment, the company has focused on communication technology services, especially in the field of communication network operation and maintenance services, and has established a clear leading edge through years of in-depth breakthroughs. The company is one of the few enterprises in the industry with Grade A qualification of communication network maintenance (comprehensive maintenance, base station specialty and communication lines) and Grade A qualification of communication information network system integration, and its comprehensive service capability is in the forefront of the industry. After more than ten years of development, the company has grown into a leading national and comprehensive communication technology service enterprise, with obvious advantages in service quality, industry experience, corporate brand, business scale and management business model.
With stable and high-quality service capabilities, the company has a good brand image in the industry and established long-term and stable cooperative relations with core customers in major business areas. The company is an important communication technology service provider of China Mobile in Xinjiang, Heilongjiang and Hebei. The company provides stable and high-quality communication technology services for China Mobile in mountainous areas, forest areas, deserts, high altitudes, borders and other areas with complex geographical and meteorological conditions, which are difficult to carry out business, and has been recognized by customers.
Companies adhere to the "professional, dedicated, dedicated" as the core of the enterprise spirit, rooted in the field of communication network operation and maintenance for more than ten years, with rich industry experience. After years of development, the company will enrich the project management and practical experience, and share, optimize and inherit it among teams through the comprehensive operation management system independently developed, so that the company’s technical strength and standardization level will be continuously improved and it will be in the leading position in the industry in terms of service quality, corporate culture and technical strength. With professional technical ability and stable service quality, the company has maintained a long-term and stable cooperative relationship with communication operators, and established location advantages and first-Mover advantages in major service areas.
By deeply integrating new technologies such as Internet and data analysis with daily business activities, the company has independently developed an integrated operation management system that is leading in the industry and has completely independent intellectual property rights. Taking this system as the core, the company has built a centralized management model and a flat sales model under the unified responsibility of the headquarters, so that the headquarters of the company can reasonably control the core business links online.
(seven) technical indicators and business data
Key technologies or performance indicators applicable to the product or business.
Key technologies or performance indicators for supporting communication services.
The network technical indicators mainly involved in the comprehensive maintenance service of communication network of the company include work order indicators, network indicators, resource indicators, etc. The operator’s comprehensive maintenance service of the network takes the completion of the above technical indicators as the assessment of the maintenance company.
Third, the core competitiveness analysis
Since its establishment, the company has always been engaged in the communication technology service industry. With years of hard work and deep breakthrough, the company has established profound technical advantages, industrial endowments and business experience, and built a clear leading position in the industry. With a large scale and rapid development, the company is a national and comprehensive communication technology service enterprise in the top ranking, with obvious advantages in technology research and development, online digital platform, performance brand, industry experience and platform organization.
(A) technological research and development advantages
The company attaches great importance to scientific and technological innovation and always adheres to the market demand and business development-oriented technology research and development work. At present, the company has R&D centers in Shenzhen and R&D bases in Shijiazhuang, Xi ‘an and Urumqi, and has the standard certification of CMMI3 management system and process. In recent years, the company has continuously improved its R&D capability and technological innovation capability by increasing R&D investment year by year, and accelerated its digital transformation. At present, the company has more than 180 kinds of intellectual property rights such as patents and soft works.
The company’s R&D goal is to enhance the company’s digital capabilities, build big data analysis capabilities, help front-line personnel improve efficiency with AI, and enhance cross-regional personnel deployment capabilities to empower all aspects of the company’s overall operation. The company’s R&D system focuses on serving its own information management and control needs and solving the difficulties and pain points in business management. Its responsibility is to increase the R&D and application of new technologies, serve the company’s business needs, help reduce costs and increase efficiency, and accelerate the company’s digital transformation; At the same time, research and development work is carried out around the main business and surrounding areas, and digital integrated solutions are exported to realize self-incubation and evolution.
The company pays attention to the transformation of general technical achievements in technology research and development, and puts some modules in the integrated operation management system into independent products after scenes, and constantly optimizes them, so that the company can quickly form new products when facing similar needs of customers. In addition, the company can optimize products and accumulate experience by comparing with competitive products, so that the developed products can better meet the needs of the company and customers.
By formulating scientific project management and quality evaluation index system, the company has realized all-round process management and internal control of R&D projects. Focusing on the direction of "technical innovation and support of operation and maintenance business" and "meeting customers’ digital transformation needs", the company has continuously increased its R&D investment in digital platforms, digital services and other fields. Strong innovation and R&D capabilities enable the company to have strong business innovation and expansion capabilities, rapidly improve the company’s network operation and maintenance capabilities, improve the company’s efficiency, and lay the foundation for the company’s business development.
(B) advantages of online digital platform
The company deeply integrates new technologies such as Internet and data analysis with daily business activities, and independently develops a series of platform softwares such as Digital Operation and Maintenance Management Platform, Network Optimal Intelligent Inspection System, Big Data Vehicle Intelligent Management Cloud Platform 2.0, Yuandao Jingwei Camera APP and Intelligent Planning and Scheduling Technology for Base Station Power Generation.
The digital operation and maintenance platform automatically collects operation and maintenance data, and analyzes it through AI algorithm to realize intelligent asset management, equipment interconnection monitoring, fine inspection, intelligent operation and maintenance, data analysis, hidden trouble diagnosis, fault prediction, etc. of the system and equipment, and at the same time realize intelligent scheduling of offline operation and maintenance personnel and resources. At present, the system has iterated over several versions, deeply integrating the company’s many years of communication network operation and maintenance business management experience, and its design concept is leading the industry. For example, the patrol management module can automatically record the patrol route of service personnel, count the patrol time, working time and other parameters, and locate abnormal conditions, so as to realize intelligent audit of outdoor patrol work and effectively improve service efficiency; The workload management module, combined with the company’s many years of industry experience, establishes standard measures for each specific service, thus reducing the dependence on the quality of front-line personnel, unifying service quality nationwide and improving customer satisfaction. During the reporting period, the platform added or upgraded functional modules such as oil engine monitoring, emergency support, personnel portrait, project and regional portrait, and resource prediction, and the digital management capability was improved.
The company uses the integrated operation management system to open up the "information island" between the traditional business systems, so that information can be shared and circulated among the main subsystems, and the core business links such as personnel and vehicles can be reasonably controlled. In the future, for the company’s core communication network operation and maintenance business, the integrated operation management system will have the function of big data analysis, which can use the collected data to mine, clean and analyze the key data of each subsystem, and provide the basis for business management decision. The company’s R&D personnel regularly communicate with the front-line team to iteratively update the system functions and optimize the operation and maintenance to better meet the business development needs.
(C) Performance brand advantage
With stable and high-quality service capabilities, the company has a good brand image in the industry and established long-term and stable cooperative relations with core customers in major business areas. The company is an important communication technology service provider of China Mobile in Xinjiang, Heilongjiang and Hebei. The company provides stable and high-quality communication technology services for China Mobile in mountainous areas, forest areas, deserts, high altitudes, borders and other areas with complex geographical and meteorological conditions, which are difficult to carry out business, and has been recognized by customers.
During the reporting period, the company won 67 awards and commendations from customers. The company ranks among the best in the ranking of comprehensive assessment and scoring of technical service providers by communication operators and post-service evaluation and scoring.
In 2023, the company was rated as "the most socially responsible listed company in the word-of-mouth list of listed companies in China in 2023" by national business daily; In March 2023, the company was awarded the plaque of "Four-Star Maintenance Unit of China Tower in 2022" by China Tower Co., Ltd. and "membership certificate of China Communication Enterprise Association" by China Communication Enterprise Association.
In May, 2023, the company took an active part in the communication skills competition, and won the second prize in the 2023 optical cable connection skills competition of China Mobile Communications Group Beijing Co., Ltd., the second prize in the emergency skills competition group of China Mobile Communications Group Hebei Co., Ltd..
In July 2023, affected by heavy rainfall, flash floods and geological disasters, parts of Beijing, Hebei, Heilongjiang and other places were seriously affected, and the communication network was facing a severe test. In order to get through the "lifeline" of communication between the disaster-stricken areas and the outside world as soon as possible, Yuandao Communication, under the overall command of customers and in accordance with the unified deployment of customers on restoring communication in the disaster-stricken areas, made careful arrangements and multi-disciplinary cooperation, went all out to carry out communication rescue and emergency repair work. Recover the site with emergency repair conditions as quickly as possible, and send a signal to the people in the disaster area. In August 2023, the company was rated as "23-7" advanced unit for flood control by the full-service delivery operation center of China Mobile Communications Group Beijing Co., Ltd.
With the popularization of the policies of "group centralized procurement" and "provincial centralized procurement" by communication operators, the importance of the company’s performance brand advantage is increasingly prominent, which will effectively enhance the company’s business expansion ability and customer retention ability. The company always insists on hard work, improves efficiency through innovation, and provides customers with better and more efficient services.
(D) Industry experience advantages
Since its establishment, the company has been engaged in communication technology service business, adhered to the enterprise spirit of "professionalism, concentration and dedication", and has been rooted in the field of communication network operation and maintenance for more than ten years, with rich industry experience. After years of development, the company will enrich the project management and practical experience, and share, optimize and inherit it among teams through the comprehensive operation management system independently developed, so that the company’s technical strength and standardization level will be continuously improved and it will be in the leading position in the industry in terms of service quality, corporate culture and technical strength. With professional technical ability and stable service quality, the company has maintained a long-term and stable cooperative relationship with communication operators, and established location advantages and first-Mover advantages in major service areas. The company’s managers and core team are industry experts who have worked for many years. Years of technical accumulation can ensure that the company follows the development trend of the industry and continuously meets customer needs.
(E) the advantages of a platform-based organization that quickly responds to the market.
The company’s service outlets have covered more than 30 key provinces, and the widely distributed service outlets make the company have the advantages of territorial operation and maintenance services. Through big data analysis and intelligent deployment, the service outlets in various places have achieved business superposition, resources and personnel have been reused, and operation and maintenance efficiency and operational efficiency have been continuously improved. The widely distributed offline service outlets have also enabled the company to have excellent business innovation and expansion capabilities and efficient landing capabilities. The market share of communication network operation and maintenance business has continued to increase, and it has been rapidly replicated and promoted through local service outlets.
The company’s business organization is divided into front desk, middle desk and back office: the back office provides strategic planning and management support; China and Taiwan provide R&D and technical support to build a professional and large-scale competitive foundation with core technological advantages; The front desk is the operation end, and a powerful organizational system and digital means are implemented from top to bottom to continuously improve service capacity and operation efficiency. The three coordinate and cooperate to form a scientific and efficient platform organization.
Fourth, the main business analysis
1. Overview
In 2023, the company achieved an operating income of 1.779 billion, a year-on-year decrease of 15.70%; Among them, the revenue of communication network maintenance and optimization services decreased by 22.85% year-on-year, mainly due to: First, the comprehensive maintenance service of China Mobile in 12 provinces of the company expired in March 2023, and in September 2023, China Mobile re-tendered, and the company won the bid for services in Heilongjiang, Hebei, Xinjiang and other provinces, and the business income decreased during the transition period from March to September; Second, in order to improve the overall operating efficiency and follow the development trend of customers and industries, the company appropriately reduced bidding for some projects with relatively low operating efficiency, and concentrated some funds and personnel to expand emerging businesses such as base station photovoltaics. In 2023, the net profit attributable to shareholders of listed companies was 69 million, down 44.73% year-on-year, mainly due to: First, customers reduced costs and increased efficiency, which reduced the income of some projects, but the costs, especially labor costs, could not be adjusted in time; Second, the credit impairment loss and asset impairment loss increase due to the extension of customer payment cycle and aging migration; Third, due to the expansion of original business and emerging business, the expansion of sales and management team, sales expenses and management expenses increased year-on-year. In 2023, the overall gross profit margin was 15.05%, which was basically the same as that of the previous year.
In 2023, R&D investment decreased by 21.14% year-on-year, accounting for 3.87% of operating income; The company insists on promoting the development and management of enterprises by science and technology. In view of the characteristics of scattered communication technology service locations, large number of people and great differences in personnel quality, the company insists on independent research and development and innovation. The company constantly develops and improves the operation system, and realizes reasonable control and high-quality service through the integrated operation management system. On the basis that the platform of integrated business management system has been basically built, the annual research and development focuses on promoting the application integrity and adaptability of the system. Reduce the development of new projects and concentrate on strengthening the existing system to form productivity as soon as possible.
In 2023, the company’s market share in many provinces and professional types has been continuously improved, comprehensive energy management and other business categories have been expanded, and refined management has been implemented by relying on the digital operation and maintenance platform. The company’s strategic layout and R&D investment effects have been outstanding. With the support of the business model of "online digital platform+offline technical services", strong innovative R&D capabilities and efficient and flexible platform-based organizations, new orders for the company’s operation and maintenance business have quickly landed, forming a good business cooperation ecology, and the scale effect has gradually emerged, and its market position has continued.
In 2023, the company’s orders remained stable, and in the centralized procurement activities of China Mobile Daiwei Project Group, it won the framework contracts for 23-26 years in 10 provinces of Hebei, Heilongjiang, Jilin, Xinjiang, Yunnan, Chongqing, Ningxia, Anhui, Shanxi and Hubei; In the centralized procurement activities of China Mobile Network Optimization Project Group, it won the framework contract of Heilongjiang, Zhejiang, Fujian, Guizhou and Anhui provinces for 23-26 years; The company is one of the few suppliers in the same industry with the ability to provide services for mobile base station photovoltaic. In terms of base station photovoltaic construction project business, it won the bid for base station photovoltaic construction in Anhui, Shaanxi and Hebei provinces; In the aspect of tower maintenance business, we won the bid for three-year tower maintenance in Hebei and Inner Mongolia provinces; In the engineering business, we obtained large engineering orders for China Mobile, China Tower and China Mobile. The above orders are of great significance to consolidate the company’s layout and influence in the national market.
During the reporting period, the company newly added energy management system certification certificate, construction enterprise qualification certificate, specialized and innovative small and medium-sized enterprise certificate, design, construction and maintenance qualification registration certificate of membership certificate and Guangdong safety technology prevention system units outside the province, and information system construction and service capability grade certificate (CS2). By the end of the reporting period, the company had 19 major qualifications.
V. Prospect of the Company’s Future Development
(A) the future development plan
Yuandao Communication will continue to adhere to the core business philosophy of "professionalism, concentration and dedication", constantly improve the service quality and customer satisfaction, and it is Yuandao Communication’s eternal commitment to escort the communication industry in China. To this end, the company has formulated the strategic development direction for the next three years "(1) to consolidate the base of traditional communication technology services, and follow the development direction of the new quality productivity of the intelligent computing center of China Mobile, the main customer, to provide customers with all-round services in the field of intelligent computing; (2) Take the construction of new energy in the communication field as a new business growth point ". After years of development and accumulation, the company’s current service area has covered 30 provinces (autonomous regions and municipalities directly under the Central Government) such as Xinjiang, Beijing, Hebei, Guangdong and Heilongjiang, and the regional layout in western China, North China, South China and Northeast China is becoming more and more perfect. In the next step, the company will further enhance its technical strength and innovation ability, deepen the scope and connotation of communication services, actively expand new regions and fields, and provide customers with professional and thoughtful products and services.
1, communication network service and optimization and innovation.
The company will continue to focus on customer needs, give full play to the synergistic advantages of national and comprehensive communication technology service enterprises, and promote the comprehensive and coordinated development of network maintenance, network construction and optimization business through the competitive advantages in the field of communication network operation and maintenance business of the company. By continuously improving the quality of communication technology services, the added value of services and the efficiency of operation and maintenance, the market share of all localities will be further enhanced and the market share will be expanded.
In the future, based on existing projects, the company plans to actively consolidate existing customer relationships, continuously increase the development of new customers such as China Telecom and China Unicom, and increase the development of new markets, strive for market share in more regions, continuously deepen cooperation with strategic customers, and nurture new customer systems in more regions.
With the continuous development of cloud computing, big data and artificial intelligence, communication operators can not only provide network infrastructure, but also provide intelligent computing services based on computing power. To this end, operators are increasing their investment in computing power construction, and the company will seize business opportunities, closely focus on the construction goal of China Mobile Intelligent Computing Center, and explore and promote the development plan of "Intelligent Computing Service+Communication Convergence". Efforts will be made to build a system platform for computing power grid connection and scheduling with the support of information technologies such as 5G, blockchain, big data, Internet of Things, cloud computing, DICT, big model and artificial intelligence, expand the software and hardware ecological services of the intelligent computing industry, strengthen in-depth cooperation in network resources, information services, channel resources, technological innovation and talent team, provide the best services and solutions for corporate customers, and promote the development of intelligent computing and empowerment. By cooperating with operators, Yuandao Communication can make full use of partners’ market, infrastructure, operation and other resources, promote the scale of public services as soon as possible, reduce investment risks and strengthen the all-round cooperative relationship with operators.
2. New energy business
As an important direction of energy development in the future, new energy has great potential and broad application prospects. Driven by technological progress and the goal of "double carbon", the company focuses on customers’ demand for energy conservation and emission reduction and the goal of double carbon, and plans to give consideration to computer rooms, office buildings, data centers, etc. that meet the transformation conditions in the base station photovoltaic power generation transformation service. In 2023, it won the bid for the photovoltaic power supply service project of Anhui Mobile’s base station and gathering room, the solar photovoltaic green energy of Shaanxi Mobile’s own computer room and the self-owned base station computer room of Hebei Mobile in 2023. The company is one of the few suppliers in the same industry capable of providing services for mobile base station photovoltaic. In the future, it will give full play to the advantages of intelligent operation and base station maintenance, and provide efficient software and hardware services for base station photovoltaic transformation.
With the rapid development of renewable energy (such as wind energy and solar energy), the important role of energy storage technology in the energy system will continue to be recognized and valued, and the energy storage market will maintain rapid growth. The energy storage power station industry has huge development potential and market demand. The company seized the opportunity of expanding market scale, and invested in the establishment of Shenzhen Huayuan, a holding subsidiary, in the first half of 2023, and started the energy storage base station business with the battery energy storage business as the breakthrough point. For power users who need to pay more capacity fees, the company will provide customers with comprehensive solutions such as peak-valley price difference, demand electricity fee management, demand response compensation, etc., saving capacity fees and base station electricity costs.
In terms of distributed photovoltaic installation and power station operation and maintenance services, the company plans to make use of the distributed photovoltaic solutions and construction delivery management system of the dominant enterprises in the photovoltaic industry, taking the company’s many years of communication engineering construction experience as the cornerstone, and give full play to the advantages of the company’s personnel in the company’s business coverage area to engage in the construction delivery business of distributed photovoltaic projects. The company will promote the installation of small distributed photovoltaic power generation systems from schools, hospitals, party and government organs, institutions, residential buildings and structures. At the same time, the company plans to provide customers with an intelligent operation and maintenance solution of "remote centralized monitoring, regional maintenance and station security" by cooperating with the dominant enterprises in the photovoltaic industry, using the perfect operation and maintenance management system and intelligent management platform of the dominant enterprises in the photovoltaic industry, and giving full play to the advantages of the company’s intelligent digital service management means, maintaining a broad regional market and sufficient maintenance service personnel.
(II) Risks that the company may face and countermeasures
1, the market competition risk
The company is a leading national and comprehensive communication technology service enterprise. In recent years, China’s communication technology service industry has formed a diversified and market-oriented competition pattern, with a large number of enterprises, including large state-owned enterprises born out of operators, service teams formed by communication equipment manufacturers, and numerous third-party private communication technology service enterprises. In recent years, with the implementation of the "centralized procurement" policy of communication operators and the improvement of service quality, medium and large communication technology service enterprises have continuously seized the market, and small and medium-sized enterprises have been integrated. In addition, the competition among downstream communication operators in this industry is becoming increasingly fierce. While "reducing costs and increasing efficiency", the quality standards of communication technology services are constantly improved, resulting in a decline in the profit level of some regions.
Countermeasures: The company will give full play to the advantages of technology research and development and online digital platform, accelerate the expansion of key business areas, improve operation and maintenance efficiency, and continuously improve the overall profitability of the company.
2. Risk of high concentration of customers
The final customers of communication technology service industry are mainly communication operators, and the high customer concentration is the characteristic of this industry. During the reporting period, the total sales revenue of the company’s top five customers (consolidated under the same control) accounted for 91.46% of the sales revenue, which was in line with the characteristics of the industry. Among them, the sales revenue from China Mobile (consolidated caliber), the largest customer, accounted for 73.23%, and the company relied on China Mobile to some extent.
Countermeasures: The company will maintain its competitive advantage in the mobile market in China, effectively expand the markets of customers such as China Telecom, China Unicom, China Tower and communication equipment manufacturers, reduce customer concentration and reduce dependence on major customers.
3. Management risks brought by the rapid development of the company.
The company has a wide range of businesses and services all over the country, which requires higher and higher management requirements in business decision-making, business implementation, human resource management and risk control. If the company can’t further improve its management level, co-ordinate its personnel and business scale, it may face management risks brought by its wide business scope.
Countermeasures: The company actively responds to the requirements of business development and changes, effectively manages the team in the new business area, and makes the update speed of the integrated operation management system match the company’s operation management needs. The company will further fully expand and apply the standardized, standardized and streamlined management concept through the digital platform, so as to realize the intelligence of operation and maintenance business, data analysis, analysis and judgment, auxiliary decision-making, efficiency improvement, hidden danger diagnosis, fault prediction, etc. of the operation of systems and equipment, and realize the intelligent scheduling of offline operation and maintenance personnel and resources.
4. Risks of technology and product update
The company is faced with the demand in many fields, and the technology and products of various industries are constantly upgrading. The original technology and products of the company also need to be updated. If the technology and products of the company fail to keep up with the development of industry technology and cannot maintain their applicability and advancement, it will affect the market competitiveness and profitability of the company.
Countermeasures: The company will increase investment in R&D and deeply integrate communication technology services with new technologies, so as to improve service quality, meet customers’ needs and enhance competitive advantage. Through the company’s continuous research and development, we can quickly respond to and meet customer needs.
5, production safety risk
Safety accidents may occur during the development of communication technology services, poor road traffic conditions and complex and changeable weather during field operations may also lead to accidents during operations, transportation and engineering.
Countermeasures: The company pays attention to strengthening the team management, perfecting the system, implementing responsibilities, strengthening safety technical disclosure, organizing safety technical training and other measures to improve the safety production awareness of all employees and strengthen safety production management, and the company has signed safety responsibility clauses with labor outsourcing suppliers.
