China Telecom to Boost AI Spending Amid Capex Cut and Slowing Growth
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A China Telecom logo in Guangzhou, Guangdong province. Photo: VCG
China Telecom Co. Ltd. will cut its overall capital expenditure in 2026 while sharply increasing spending on artificial intelligence computing power, marking a major strategic pivot as the state-owned carrier confronts stagnating growth.
The company plans to spend 73 billion yuan ($10.6 billion) on capital expenditure in 2026, down 9.2% from 80.4 billion yuan in 2025, Chairman Ke Ruiwen said at an earnings briefing Tuesday.
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- China Telecom will cut 2026 capital expenditure by 9.2% to 73 billion yuan, while boosting AI computing power spending by 26% to 35% of the budget.
- 2025 revenue and net profit growth slowed to 0.1% and 0.5%, with cloud and digitalization businesses also decelerating.
- AI-related revenue reached 12.3 billion yuan, and the board proposed a full-year dividend of 0.2720 yuan per share, up 4.7%.
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Who’s Who
- China Telecom Co. Ltd.
- China Telecom Co. Ltd. plans a significant strategic shift, reducing overall capital expenditure in 2026 while substantially increasing investment in AI computing power. Facing stagnating growth and a slowdown in its cloud division, the state-owned carrier aims to transition from a "traffic-based" to "token-based" operation, focusing on AI-driven services. This move follows minimal revenue and profit growth in 2025.
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What Happened When
- 2023：
- China Telecom's revenue grew by 6.7% and net profit grew by 10.3%.
- 2023：
- Tianyi Cloud unit's revenue grew by 67.9%.
- 2024：
- China Telecom's revenue growth slowed to 3.1% and net profit growth slowed to 8.4%.
- 2024：
- Tianyi Cloud unit's revenue grew by 17.1%.
- By 2025：
- Computing power capacity reached 46 EFLOPS, up 30% year on year.
- 2025：
- Network infrastructure spending accounted for 51% of capital expenditure; computing power made up 25%.
- 2025：
- China Telecom reported 12.3 billion yuan in AI-related revenue.
- 2025：
- Revenue rose just 0.1% to 523.9 billion yuan, with net profit increasing 0.5% to 33.2 billion yuan.
- 2025：
- Industrial digitalization business revenue increased 0.5%, and Tianyi Cloud revenue rose 6% to 120.7 billion yuan.
- 2025：
- Capital expenditure was 80.4 billion yuan.
- Tuesday, March 24, 2026：
- At an earnings briefing, Chairman Ke Ruiwen announced a capital expenditure plan for 2026.
- Tuesday, March 24, 2026：
- China Telecom’s Shanghai-listed shares closed up 1.04% at 5.85 yuan, while its Hong Kong-listed shares fell 1.61% to HK$4.89.
- 2026：
- China Telecom plans to reduce capital expenditure to 73 billion yuan, a 9.2% decrease from 2025.
- 2026：
- Investment in computing power infrastructure will increase by 26% and account for 35% of total capital expenditure; spending on traditional network infrastructure will fall by 26% and represent 41% of the budget.
- 2026：
- China Telecom’s board proposed a final dividend of 0.0908 yuan per share, bringing the full-year payout to 0.2720 yuan per share, up 4.7% from a year earlier and lifting the payout ratio to 75%.
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