Research On Debt Financing And Risk Control Of Three Chinese Major Telecom Operators

After several splits and merges, the Chinese telecommunication companies finally took some steps towards capital internationalization.In recent years, the heterogeneous competitions and conflicts between mobile internet and traditional telecom industry have been exacerbated. The developing space of traditional telecom service has suffered severe impacts. With the volume of the voice, the SMS and the MMS continuously shrinking, Chinese telecom industry has come into the low-profit era. Because of the sharp decline of profits, the demand of telecom operators for funds is increasingly growing, and the strong demand for funds is gradually becoming the primary element of promoting the development of telecom industry. Thus, diversified financing becomes the significant method of the telecom operators to finance. The debt financing is more and more popular among Chinese operators with its unique leverage effects.The paper selects the three Chinese major telecom operators—China Mobile(CMCC), China Unicom(CUCC) and China Telecom(CTCC)—as the research objects(research data come from the financial reports that are disclosed by the Hong Kong-listed companies of the three major telecom operators). From the perspective of the financial leverage, the paper focuses on the situations of debt financing and the effects of financial leverage, and makes assessments of the financial risks of the three major operators. Through the research, the paper concludes that China Mobile does better than China Unicom and China Telecom in the aspect of company management; in the period of short-term borrowing for long-term use, China Unicom achieves self-sufficiency in the aspect of the cash flow of the main business and has good profits; though the operation status of China Telecom is lower than that of China Mobile, China Telecom is expected to exceed China Unicom in the long term.The research in the paper plays a certain guiding significance in the company’s debt financing and the control of financial risks.