OCBC Investment Research
Date of Report: 26 August 2025
China Tower Corporation: Dividend Growth, Cash Flow Recovery, and Sector Comparisons – A Comprehensive Equity Analysis
Executive Summary: China Tower’s Solid Position Amid Evolving Industry Dynamics
China Tower Corporation, the largest telecommunications tower infrastructure provider globally and a near-monopoly in China, stands at a critical juncture. With robust dividend growth, improving free cash flow, and strategic expansion into smart and energy segments, the company is poised for shareholder value enhancement. However, uncertainties around future depreciation and pricing power, coupled with sector-wide risks, warrant close investor scrutiny.
Investment Thesis: Dominance in Chinese Telecom Infrastructure
China Tower Corporation leverages its commanding 97% revenue market share in the Chinese telco tower space, underpinning its role in supporting China’s ambition for world-class telecommunications infrastructure. Despite slow growth prospects and high global interest rates dampening enthusiasm for dividend-focused stocks, China Tower’s focus on shareholder returns and its diversified growth strategy remain key positives.
Key Highlights and Financial Performance
- Dividend Payout Strength: FY24 dividend per share (DPS) was CNY0.42, up 11.5% YoY, with a payout ratio of 76%. Interim DPS for 1H25 increased 21.6% YoY to CNY0.13. Full-year DPS for FY25 is expected to grow 9% to CNY0.46, with a payout ratio of 77%.
- Revenue and Profitability: Tower segment revenues remain stable, while Distributed Antenna System (DAS) and Two Wings (Smart Tower and Energy) segments deliver double-digit growth.
- Cash Flow Dynamics: 1H25 free cash flow (FCF) fell 14.7% YoY to CNY16.3b but improved sequentially from 2H24. Management expects cash collection and CAPEX to stabilize, aiming for FCF at least in line with 2024.
- Depreciation Outlook: Lack of FY26 depreciation guidance creates investor uncertainty about future earnings and dividend sustainability.
| Metric |
FY24 |
FY25E |
FY26E |
| Revenue (CNY m) |
97,772 |
101,350 |
104,874 |
| Operating Profit (CNY m) |
16,330 |
17,570 |
25,098 |
| Net Profit (CNY m) |
10,729 |
11,502 |
17,296 |
| EPS (CNY cts) |
61.4 |
65.8 |
98.9 |
| DPS (CNY cts) |
41.7 |
45.6 |
69.5 |
| Operating Margin (%) |
16.7 |
17.3 |
23.9 |
| Net Profit Margin (%) |
11.0 |
11.3 |
16.5 |
| Dividend Payout Ratio (%) |
75.5 |
77.0 |
78.0 |
China Tower: Segment Breakdown and Geographic Reach
- Business Segments:
- Tower Business: 77.4%
- DAS (Distributed Antenna System): 8.6%
- Smart Tower: 9.1%
- Energy: 4.6%
- Others: 0.3%
- Geographic Revenue: 100% from Mainland China
Financial Review: Income Statement, Margins, and Profitability
| Metric |
FY2020 |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
| Revenue (CNY m) |
81,099.0 |
86,585.0 |
92,170.0 |
94,009.0 |
97,772.0 |
| Gross Profit (CNY m) |
76,197.0 |
81,424.0 |
85,966.0 |
88,095.0 |
91,476.0 |
| Operating Income (CNY m) |
12,126.0 |
13,035.0 |
13,312.0 |
14,502.0 |
16,330.0 |
| Net Income (CNY m) |
6,428.0 |
7,329.0 |
8,787.0 |
9,750.0 |
10,729.0 |
| Operating Margin (%) |
14.95 |
15.05 |
14.44 |
15.43 |
16.70 |
| Net Income Margin (%) |
7.93 |
8.46 |
9.53 |
10.37 |
10.97 |
| Return on Equity (%) |
3.49 |
3.90 |
4.59 |
4.98 |
5.40 |
Comparative Valuation: Global Tower Leaders
China Tower’s valuation and profitability are compared against leading global peers: American Tower Corp (AMT), Crown Castle Inc (CCI), and Cellnex Telecom SA (CLNX.MC).
| Company |
P/E |
P/B |
EV/EBITDA |
Dividend Yield (%) |
ROE (%) |
| China Tower (0788.HK) |
16.1 (FY25E)
11.2 (FY26E) |
0.9 (FY25E)
0.9 (FY26E) |
4.1 (FY25E)
4.0 (FY26E) |
4.4 (FY25E)
6.4 (FY26E) |
5.9 (FY25E)
8.2 (FY26E) |
| American Tower (AMT) |
39.2 (FY25E)
29.9 (FY26E) |
28.5 (FY25E)
33.1 (FY26E) |
20.1 (FY25E)
19.1 (FY26E) |
3.2 (FY25E)
3.4 (FY26E) |
63.4 (FY25E)
87.2 (FY26E) |
| Crown Castle (CCI) |
136.5 (FY25E)
34.9 (FY26E) |
N.A. |
24.7 (FY25E)
23.5 (FY26E) |
4.6 (FY25E)
4.1 (FY26E) |
(55.3) (FY25E)
(61.4) (FY26E) |
| Cellnex Telecom (CLNX.MC) |
N.A.
187.3 (FY26E) |
1.6 (FY25E)
1.7 (FY26E) |
13.0 (FY25E)
12.3 (FY26E) |
1.2 (FY25E)
2.3 (FY26E) |
(0.2) (FY25E)
8.1 (FY26E) |
Risks and Catalysts: What Could Shift the Narrative?
Potential Catalysts:
- Better-than-expected tower demand growth
- Acceleration of 5G network roll-out in China
- Faster expansion of non-telco businesses
Key Investment Risks:
- Delays in Chinese telco CAPEX deployment
- Pricing pressure or contract renewals with major customers
- Customer concentration and the risk of potential mergers among key clients
Company Overview and Market Position
Founded in Beijing in July 2014 and listed on the Hong Kong Stock Exchange in August 2018, China Tower Corporation raised HKD58.8 billion at IPO and is a constituent of the Hang Seng Index. The company’s core activities include tower construction, maintenance, operation, and ancillary services such as shelters, power supply, and air conditioning for base stations. The group also outsources maintenance for base station equipment.
Security Information and Shareholder Structure
- Ticker: 0788.HK
- Market Cap: USD 26.6 billion
- Free Float: 27%
- Shares Outstanding: 17,601 million
- Top Shareholder: GIC Private Limited (6.0%)
Dividend and Operating Income Track Record
| Year |
Dividends per Share (CNY cts) |
Operating Income (CNY b) |
| 2019 |
14.6 |
11.3 |
| 2020 |
22.5 |
12.0 |
| 2021 |
26.4 |
13.0 |
| 2022 |
32.3 |
13.3 |
| 2023 |
37.4 |
14.5 |
| 2024 |
41.7 |
16.3 |
Credit Ratios and Capital Structure
| Metric |
FY2020 |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
| Total Debt/EBIT |
8.61 |
7.29 |
5.36 |
6.35 |
5.86 |
| Net Debt/EBIT |
8.22 |
6.82 |
5.01 |
6.09 |
5.69 |
| EBIT to Interest Expense |
3.31 |
3.71 |
4.92 |
5.27 |
5.99 |
| Long-Term Debt/Total Assets |
13.00 |
17.71 |
15.18 |
19.62 |
17.02 |
| Net Debt/Equity |
0.58 |
0.50 |
0.38 |
0.46 |
0.45 |
Final Thoughts: China Tower’s Outlook and Broker Rating
OCBC Investment Research maintains a BUY rating on China Tower Corporation, with a fair value target of HKD 14.50 (last close at HKD 11.83). The rating reflects expectations of total returns exceeding 10% over a 12-month horizon, supported by strong dividend growth, stable core business, and improving cash flow metrics.
Investors should monitor developments in depreciation guidance, customer contract renewals, and CAPEX trends, while recognizing China Tower’s strategic importance in China’s telecom infrastructure and its attractive yield profile relative to global peers.
Broker Rating Definitions
- BUY: Expected total returns (excluding dividends) exceed 10% for large cap stocks; 30% for small cap stocks.
- HOLD: Expected total returns between +10% and -5% for large caps; +/-30% for small caps.
- SELL: Expected total returns below -5% for large caps; below -30% for small caps.
About OCBC Investment Research
OCBC Investment Research Private Limited is the publisher of this analysis, providing independent and objective research for investors and market participants.
