Earnings boost for ‘big three’ telecoms operators as tower lease fees reduced

China’s “big three” telecommunications network operators have wrapped up separate agreements for lower tower leasing fees, which analysts predict will boost their earnings this year.

China Mobile, China Unicom and China Telecom Corp disclosed the five-year lease deals for telecommunications towers and related assets from China Tower Corp, the infrastructure-sharing joint venture they formed two years ago, in separate filings on Friday with the Hong Kong Stock Exchange.

According to analysts, the impact on all three companies will be an increase in annual earnings before interest, tax, depreciation and amortisation – a measure of corporate operating performance – as lease costs are reduced, based on the pricing formula adopted by all the parties concerned.

The rates paid on each tower take into account the cost of the site and other factors, including depreciation and maintenance expenses, co-sharing discount and mark-up cost.

Nomura analyst Huang Leping has calculated the savings for China Mobile, Unicom and China Telecom this year of 2.4 billion yuan, 1.9 billion yuan and 1.8 billion yuan, respectively.

In terms of ebitda, Huang estimated China Mobile would record a 1 per cent year-on-year increase while both Unicom and China Telecom could see a 2 per cent gain.