Basic HTML Version
Management’sDiscussionandAnalysis of Financial Conditions andResults ofOperations
/ Annual Report 2011 /
1
Direct Personnel Costs
In 2011, direct personnel costs were RMB8,473.66 million, representing 15.8% of our total revenues and an
increase of 13.6% over RMB7,459.67 million in 2010. With the rapid growth in business volume in 2011, the Group
consistently applied reasonable control over its total headcount and subcontracted our low-end tasks, thereby
minimizing the staff costs, avoiding related risks and effectively mitigating the impact of wage increase in the
society. The proportion of direct personnel costs of our total revenues decreased by 0.6 percentage points compared
to 2010.
Depreciation and Amortization
In 2011, depreciation and amortization amounted to RMB393.15 million, representing 0.7% of our total revenues
and an increase of 7.8% over RMB364.74 million in 2010. Its proportion of our total revenues was maintained at the
relatively similar level as in 2010.
Purchase of Materials and Telecommunications Products
In 2011, the cost of materials and telecommunications products purchase was RMB16,195.98 million, representing
30.3% of our total revenues and an increase of 19.9% over RMB13,506.74 million in 2010. In 2011, the distribution
of telecommunications services and products business of the Group grew rapidly, and so the corresponding cost of
telecommunications products purchase, including the telecommunications machineries and handsets, also grew in
a faster pace. Cost of construction materials in respect of our telecommunications infrastructure business remained
relatively stable over last year. The cost of materials and telecommunications products as a percentage of our total
revenues increased by 0.6 percentage points compared to 2010.
Subcontracting Charges
In 2011, subcontracting charges were RMB14,525.99 million, representing 27.2% of our total revenues and an
increase of 22.2% over RMB11,883.57 million in 2010. The increase in subcontracting charges was mainly derived
from the telecommunications infrastructure services. As the business volume increased significantly in 2011, we
outsourced certain of the specialized tasks required by domestic non-operator customers and low-end tasks after
taking into consideration of efficiency and benefits. Its proportion of our total revenues increased by 0.9 percentage
points compared to 2010.
Operating Lease Charges and Others
In 2011, operating lease charges and others were RMB5,409.55 million, representing 10.1% of our total revenues
and an increase of 12.5% over RMB4,809.17 million in 2010. Its proportion of our total revenues decreased by 0.5
percentage points compared to 2010.