China Unicom's 2025 revenue and profit see slight growth, AI revenue soars by 140%, and free cash flow improves significantly | Financial report insights

China Unicom’s 2025 revenue remains steady, with free cash flow increasing by 28.5% year-over-year, and the full-year dividend payout ratio rising to 61.3%. AI business has become the “strongest engine,” with revenue surging over 140%. Amid overall capital expenditure contraction, investment in computing power accounts for over 35%, accelerating the shift toward AI infrastructure.

China Unicom delivers a solid “14th Five-Year Plan” ending, with stable revenue, significant cash flow improvement, and AI business becoming the brightest growth driver.

On Thursday, China Unicom announced its 2025 full-year results, with operating revenue up 0.7% year-over-year to 392.2 billion yuan, and pre-tax profit slightly up 0.8% to 25.5 billion yuan. Free cash flow soared 28.5% YoY to 36 billion yuan, marking the most notable cash improvement in recent years, highlighting the company’s ongoing efficiency gains while controlling capital expenditure.

In terms of shareholder returns, the board recommends a final dividend of RMB 0.1329 per share (tax included). Including the interim dividend already paid, the total annual dividend per share is RMB 0.417, up 3.1% YoY, with a payout ratio rising to 61.3%.

The company also disclosed that capital expenditure in 2026 is expected to be about RMB 50 billion, with over 35% allocated to computing power investments, reflecting an accelerated focus on AI infrastructure.

AI revenue increased over 140% YoY, with computing power becoming the core growth engine.

In the performance report, AI-related business was the fastest-growing segment. The company disclosed that AI revenue grew over 140% YoY, with computing power revenue accounting for more than 15% of service revenue, up 1.1 percentage points from last year. Data center revenue reached 28.1 billion yuan, up 8.5%.

In infrastructure development, the company’s standard rack scale exceeds 1.1 million units, with intelligent computing capacity reaching 45 EFLOPS, and seven 100-megawatt AIDC parks have been built.

For AI applications, the company launched Yuanjing MaaS platform, Yuanjing Wanzu Intelligent Body platform, and Yuanjing Wanjie Data Engineering platform, accumulating over 400TB of high-quality datasets, offering more than 140 mainstream models, and engaging over 10,000 developers.

Unicom Cloud is accelerating its evolution toward AI cloud, with revenue up 5.2% YoY, supporting the construction of cloud services for over 180 provinces and cities, empowering nearly 400,000 enterprise customers in digital transformation.

Cash flow hits a new high in recent years, with computing power investments exceeding 35%.

Free cash flow increased 28.5% YoY to RMB 36 billion, a key highlight of this performance. This improvement mainly results from effective control of capital expenditure: in 2025, total capital expenditure was RMB 54.15 billion, with the ratio of capital expenditure to service revenue decreasing to 16%.

Meanwhile, the company deepened shared infrastructure and built a minimalistic network, saving RMB 1.35 billion annually in operating expenses. Depreciation and amortization decreased 3.1% YoY to RMB 80.83 billion, partly due to adjustments in depreciation periods for 4G wireless equipment.

Looking ahead to 2026, the company expects capital expenditure of about RMB 50 billion, further down from 2025, with over 35% allocated to computing power investments, indicating a further shift from traditional network infrastructure to intelligent computing.

Connectivity services remain the mainstay, with user base surpassing 1.2 billion.

Connectivity continues to form the core of revenue and profit. By the end of 2025, total users exceeded 1.2 billion, an increase of 110 million from last year. Mobile billing users exceeded 357 million, net increase of 13.32 million; broadband users exceeded 129 million, net increase of 7.61 million.

In integrated services, penetration rate rose to 78.3%, with ARPU of bundled packages remaining above RMB 100. IoT connections reached 720 million, with nearly 98.33 million new connections; 5G private network revenue was RMB 12.3 billion, over 50% YoY growth. 5G-A base stations are deployed in over 330 cities, with 10G PON pilot commercial deployments in more than 100 cities.

International business revenue reached RMB 13.6 billion, up over 9% YoY, with flagship projects in ASEAN smart manufacturing, Middle East smart warehousing, and Africa smart mines.

Profit structure remains stable, with a lower tax rate supporting net profit growth.

Net profit attributable to equity holders was RMB 20.82 billion, up 1.0% YoY, with basic earnings per share of RMB 0.68. EBITDA was RMB 99.42 billion, with EBITDA margin at 28.6%.

Operating profit increased 16.0% YoY to RMB 18.59 billion, significantly outpacing revenue growth, mainly due to lower depreciation and expense control. The effective tax rate was 17.8%, with some subsidiaries benefiting from a 15% preferential tax rate.

On the balance sheet, as of December 31, 2025, the debt-to-asset ratio was 44.6%, down 1.2 percentage points from the end of last year; interest-bearing loans were only RMB 5.48 billion, with net debt-to-capital ratio at just 2.2%, maintaining a healthy financial structure.

VAT rate adjustment as a potential 2026 uncertainty

The company disclosed a potential impact in its earnings announcement: according to an announcement issued by the Ministry of Finance and the State Taxation Administration in January 2026, from January 1, 2026, the VAT rate for mobile data services, SMS/MMS, and internet broadband access will increase from 6% to 9%, with the applicable tax category changing from value-added telecommunications services to basic telecommunications services.

The company stated that this tax category adjustment will affect revenue and profit, but specific quantitative impacts were not disclosed.

This policy change will be a key variable for investors assessing China Unicom’s 2026 outlook. The company’s annual general meeting is scheduled for May 26, 2026, with the final dividend expected to be paid on June 24, 2026.

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