Insider Brief

• China Telecom identified quantum as a key growth driver in 2025, reporting 65.4% revenue growth while integrating the technology into its broader cloud, AI, and security strategy.
• The company’s quantum business is expanding primarily through communication services, with 6.8 million subscribers and deployments across government and enterprise sectors, though most use cases focus on secure networking rather than computing.
• Absolute quantum revenue remains undisclosed and likely small, highlighting early-stage commercialization despite rapid growth and increased strategic emphasis.

China Telecom is elevating quantum technology to a core growth driver, reporting rapid expansion in the segment even as its absolute financial contribution remains unclear and likely small relative to the company’s overall business.

China Telecom reported full-year 2025 service revenues of RMB 485.4 billion, or about $70 billion US, up 0.7% year over year, with net profit rising 0.5% to RMB 33.2 billion, about $4.8 billion (US), according to the company’s annual report. The headline numbers reflect a mature telecommunications operator with modest growth.

The report indicates that its emerging business lines are picking up momentum,. China Telecom reports, for example, that quantum revenue grew 65.4% in 2025, following 238.7% growth the previous year.

Company officials at China Telecom also place quantum alongside cloud, artificial intelligence, security, satellite and IoVT as a core component of its “five-in-one intelligent cloud system,” signaling that the technology has moved from research positioning into a defined commercial category.

Growth Rates Outpace Scale

While that sounds impressive, China Telecom did not disclose absolute quantum revenue figures, even as it provided detailed numbers for other segments such as cloud and security. According to the annual report, quantum and satellite were the only emerging business lines reported without revenue totals, suggesting the category remains small in absolute terms.

Market estimates referenced in the report indicate that China Telecom’s quantum revenue may fall in the low billions of RMB, though the company did not confirm those figures. Even at that level, quantum would represent only a small share of total service revenue.

The growth pattern reflects early-stage commercialization. China Telecom reports that the high growth rates stem from expansion off a low base, with growth naturally moderating as the segment begins to scale.

Executives underscored the importance of the segment in their presentation, dedicating multiple sections to quantum capabilities and applications.

Focus on Communication Over Computing

China Telecom describes its quantum strategy as spanning three pillars: communication, computing, and precision measurement. According to the company, quantum communication is currently the primary revenue driver.

The company reports a quantum communication subscriber base of more than 6.8 million users across more than 40 cities. Services include encrypted voice calls, secure messaging and enterprise-grade data protection tools designed for government and corporate users.

According to the annual report, China Telecom has deployed more than 50 “quantum+” solutions across industries including government administration, energy, finance, and emergency services, and has recorded more than 46 million cumulative accesses to its quantum computing cloud platform.

In computing, the company highlights its Tianyan-287 superconducting quantum computer and a cloud-based platform that allows users to run quantum workloads remotely. However, the report provides limited technical detail on performance benchmarks or commercial usage levels.

The third pillar, quantum precision measurement, remains at an earlier stage. China Telecom reports applications such as single-photon radar and cold atom-based sensing, aimed at use cases like mineral exploration and environmental monitoring, as well as — potentially — national defense uses.

A key technical development outlined in the report is the integration of quantum key distribution with post-quantum cryptography.

According to China Telecom, it has developed a distributed cryptographic system combining these two approaches, enabling secure communication over distances exceeding 1,000 kilometers.

Quantum key distribution uses properties of quantum physics to secure encryption keys, while post-quantum cryptography relies on classical algorithms designed to withstand future quantum attacks. The combined approach reflects broader industry interest in layered security rather than reliance on a single method.

China Telecom also reports integration between its quantum services and its broader security and AI offerings, including tools designed to protect enterprise systems and large-scale data environments.

Vertical Integration and Enterprise Uptake

China Telecom acquired a controlling stake in QuantumCTek in 2024 for approximately RMB 1.9 billion (about $260 million), strengthening its position in China’s quantum technology sector. The company develops quantum key distribution (QKD) equipment, quantum random number generators, and quantum networking products. According to the company, the investment enables closer integration of network infrastructure, cloud platforms, and hardware into a unified service offering.

Adoption appears concentrated in government and state-linked sectors. China Telecom reports more than 5,000 industry customers using quantum services, with deployments in public administration, policing, energy systems, financial institutions and emergency response operations.

Most of these use cases involve secure communication networks rather than computational applications, underscoring the current commercial focus of quantum technology.

Outlook

China Telecom is adjusting its capital allocation to support computing and emerging technologies. According to the annual report, total capital expenditure declined to RMB 80.4 billion in 2025 and is expected to fall further to RMB 73 billion in 2026, with a growing share directed toward computing infrastructure.

The company reports that its proprietary computing capacity reached 46 exaflops, with total accessible capacity of 91 exaflops, reflecting broader investments in cloud and AI systems that complement its quantum strategy.

For 2026, China Telecom projects stable growth in its core financial metrics and faster expansion in emerging segments. According to the company, quantum is grouped with areas such as 6G and embodied intelligence as part of its future growth portfolio.

Open Questions

There are several open questions about how effectively the report reflects the current position of China’s quantum technology ecosystem along the implementation timeline. As mentioned, the lack of disclosed revenue makes it difficult to assess the material impact of quantum on China Telecom’s financial performance. Growth rates alone do not indicate scale.

Many of the deployments described in the report may also be incremental extensions of existing telecommunications services, particularly in secure communications, rather than new capabilities driven by quantum technology.

It should also be noted that technical claims regarding system performance are not accompanied by detailed benchmarks, limiting independent evaluation.

Finally, adoption remains concentrated in government and state-linked sectors, raising questions about how broadly quantum services will expand into private enterprise markets.