{"text":[[{"start":8.6,"text":"As report cards go, it probably rated a C+. That’s our assessment of a new earnings preview from telecoms software provider AsiaInfo Technologies Ltd. (1675.HK), which shows the company’s revenue deteriorated sharply in the second quarter after appearing to stabilize last year and into the start of 2026."}],[{"start":30.25,"text":"That slippage comes as China’s three major telecoms carriers, which are AsiaInfo’s biggest customers, cut back their overall spending. Making matters worse, the carriers are making especially big cuts on traditional network spending, which is AsiaInfo’s main focus."}],[{"start":46.25,"text":"The company is racing to develop new products and services tailored for the emerging AI computing and satellite networking sectors to replace fading demand for its traditional products. But the transition has been far from smooth, as gains for its newer business are failing to offset the sharper contraction of the company’s main traditional telecoms business."}],[{"start":68.35,"text":"AsiaInfo said it expects to report revenue of 2.1 billion yuan ($310 million) to 2.3 billion yuan for the first half of this year, down 11.5% to 19.2% year-on-year. The company reported a milder 6.9% revenue decline in the first quarter, meaning the situation deteriorated in the three months to June. Some calculations based on the first-quarter numbers and the latest half-year forecasts show the company’s revenue tumbled by 15.6% to 28.6% in the second quarter."}],[{"start":103.8,"text":"The bottom-line trends were slightly better, which saved AsiaInfo from getting an even lower grade on our report card. The company said it expects to report a first-half net loss of 460 million yuan to 490 million yuan, more than double the 202 million yuan loss a year earlier. But it already reported a 308 million yuan loss in the first quarter, showing its loss narrowed sharply to about 167 million yuan in the second quarter on a sequential basis."}],[{"start":136.45,"text":"AsiaInfo cited a number of factors behind the weak forecasts, led by reduced spending by China’s major telecoms carriers. That group has been reining in their capex spending over the last few years, following a major buildup with the rollout of 5G networks in 2019. Spending by the country’s four largest players fell 10.3% last year to 315 billion yuan from 351 billion yuan in 2024. They are on track to spend about 290 billion yuan this year, which would represent another 7.9% decline."}],[{"start":172.79999999999998,"text":"The company also blamed the revenue decline on its own decision to scale back or discontinue some of its less profitable businesses, including “certain inefficient ICT projects for government and enterprise clients” as well as other highly labor-intensive businesses. Its bottom line also took a hit from layoffs, as well as heavy spending on its newer initiatives related to AI, space and low altitude economy products and services."}],[{"start":198.6,"text":"Investors gave a strong thumbs-down to AsiaInfo’s latest preliminary results, and have been relegating its stock to the back of the class for quite some time now. The shares fell 4.9% on Friday, the day after the forecast came out, and are down 63.6% over the last 52 weeks. The decline is somewhat ironic coming during the current AI boom, since telecoms stocks were some of the biggest beneficiaries during the last big boom for internet stocks during the dot-com bubble of the 1990s."}],[{"start":229.6,"text":"AI infrastructure shift"}],[{"start":232.15,"text":"AsiaInfo is racing to cater not only to a new generation of AI and space telecoms infrastructure builders, but also to its traditional telecoms carrier base that is shifting its spending priorities in that direction. In their latest discussions, China’s four leading carriers have indicated they are reallocating about a third of their capex budgets for the remainder of 2026 away from traditional network spending and into newer areas like AI computing and cloud infrastructure."}],[{"start":260.85,"text":"At the same time, a newer generation of private companies like Alibaba, Tencent and Baidu are spending heavily to build up their AI capabilities, including major spending on infrastructure. Finally, even newer companies like DeepSeek and Moonshot AI are developing their own open-source AI models and also spending on supporting infrastructure."}],[{"start":283.15000000000003,"text":"To address that changing landscape, AsiaInfo launched its “AI First” strategy earlier this year, which breaks out two new product segments – smart digital business and smart connectivity products – to complement its traditional telecoms software. The smart digital business has been the most promising so far, involving cultivation of relationships with key major clients on data, models, applications and other operations. In its first quarter update in April, AsiaInfo revealed that partners under that segment include big names like Alibaba Cloud, Volcengine and Moonshot’s Kimi, while it also has ecosystem partnerships with Nvidia and ABB."}],[{"start":322.35,"text":"The company’s core telecoms system business was the clear laggard last year, dropping 8.9% to 4.78 billion yuan, though even at that level it still accounted for about three-quarters of total revenue. The smart digital business moved in the other direction, rising 34% last year to 807 million yuan, accounting for 12.8% of revenue. That contribution has almost certainly grown even higher this year, as the company disclosed that revenue from the smart digital business nearly doubled in the first quarter of this year, even as overall revenue fell 6.9% during the three-month period."}],[{"start":361.1,"text":"The smart connectivity segment, which includes space and low altitude economy products and services, has taken off more slowly. But it got a major lift earlier this year with the launch of AsiaInfo’s “Satellite-Terrestrial Intelligent Connectivity” product portfolio, which includes satellite gateway core networking equipment, spaceborne base stations and spaceborne core networking software and hardware."}],[{"start":385.1,"text":"In its first-quarter report, AsiaInfo said it is working with low-earth satellite companies like Gesi Aerospace and Spacecom. But the segment is still quite small, generating just 125 million yuan in revenue last year, about 2% of the total, and only up 6.2% year-on-year."}],[{"start":405.05,"text":"The company’s uphill road is reflected in its bottom line, including a 79% profit decline to 114 million yuan last year. The first half of the year tends to be a weak period for the company, so it’s quite possible AsiaInfo could still report a profit this year despite losing money in the first six months. The company is also largely ignored by the analyst community, with zero coverage among the large pool of market watchers surveyed by Yahoo Finance."}],[{"start":433.15000000000003,"text":"While a C+ isn’t great, it’s certainly still a passing grade and, in our view, could signal potential for improvement. But AsiaInfo certainly has its work cut out, and will need to make faster progress in its AI and space transition to win back investors and regain some of its former dot-com bubble glory of earlier days."}],[{"start":460.45,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785158419_8539.mp3"}