In addition to "new infrastructure", what else can operators do for "stability and security"

Solidly carrying out the "six stability" and "six guarantees" work is the key task of all industries, including operators. The current hot spot of "new infrastructure" has long been the focus of all industries, and various beneficial operations have been actively started for this purpose. In the case of a not so prosperous macroeconomic situation, in addition to undertaking the "new infrastructure" task, what else can operators do for the "six stability" and "six guarantees"?

1. Help effectively shorten the capital turnover of partners

The upstream and downstream enterprises associated with operators include engineering construction industries such as design, production, construction, and maintenance, as well as marketing industries such as publicity, promotion, and sales. Many of these industries can absorb a large number of people. In the case of a weak macro-economy, having a stable job or a job opportunity can solve the living problems of a family.

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In order to help upstream and downstream enterprises successfully overcome the difficult period, operators should not only increase infrastructure investment, increase marketing efforts, and expand procurement scale, but also try to effectively shorten the capital turnover of upstream and downstream enterprises. In the case of poor macroeconomic conditions, long payment periods have become the main bottleneck restricting the development of some small and medium-sized enterprises. Recent news reports said that the kidnapping of the head of a well-known electrical appliance manufacturer was caused by overdue payments to suppliers.

How much money do operators owe to their partners? According to statistics from a research institute, in 2019, China Mobile's accounts payable reached 164.8 billion yuan, while China Telecom and China Unicom's accounts payable were also at the 100 billion level, at 93.8 billion yuan and 102.7 billion yuan respectively, with a total of 361.3 billion yuan. Although companies often owe each other money, this 361.3 billion yuan is enough to support hundreds of companies.

In fact, regulators push state-owned enterprises and institutions, including operators, to clear outstanding debts every year. Data from research institutions show that despite the regulators’ continuous push to clear outstanding debts for many years, the debts of communications companies, including equipment vendors and operators, still need to be cleared up in a big way. Although the current problem of mutual debts is not as serious as the triangular debts in the 1990s, the current macroeconomic situation has greatly magnified the impact of debts.

2. Can the reduction of agent remuneration be slowed down?

According to the clear requirements of the regulators in 2019, operators must completely cancel agency remuneration by 2022. The decision made by the regulators a year ago was originally intended to prevent or weaken incentive competition among operators, prevent the loss of state-owned assets, and effectively avoid various illegal problems. The three major operators all significantly reduced the corresponding remuneration scale in 2019.

The situation this year has changed greatly compared to last year. The total number of agents at all levels of operators is hundreds of thousands, or even millions. As downstream service companies of operators, agents at all levels rely on the remuneration of operators to survive. If the economic situation is still good, then these agents' transformation will still have some support, but the current situation has made it difficult for them to move forward, and they are even facing the risk of bankruptcy.

Although 5G is approaching, the industries related to it are in the early stages of explosive growth. Operators' businesses are still focused on traditional businesses such as 4G and broadband. The operators' reduced marketing expenses cannot be paid to agents in the form of developing new businesses, which means that the reduced expenses are difficult to pass on to agents.

According to the data of the past three years, the marketing expenses of the three major operators have exceeded 130 billion yuan. A large part of this is paid to agents in the form of remuneration. If it is reduced by 50 billion yuan in 2020, it means that the overall income of agents will decrease by at least 30 billion yuan, which will most likely lead to the closure of tens of thousands of agents, which will inevitably involve the employment stability of a large number of people.

As a stabilizer connecting upstream and downstream enterprises, operators should consider the production and operation issues of enterprises from a more macro perspective and a higher position. Although the "new infrastructure" itself means that operators need to expand investment and provide more capital flow to society, in addition to the increase, we believe that operators must also solve the problem of existing funds from more dimensions.

At present, funds have become the driving force for development that all kinds of market players, including operators, urgently need. Although they have long bid farewell to the image of being rich in the past, compared with other private enterprises, the social credit of operators can provide more convenience for their financing. On the one hand, the regulatory authorities need to urge operators to assume more social responsibilities, and on the other hand, they should also provide more policy conveniences for the development of operators.