Tech

3G helps China Telecom beat profit forecasts

By Kelvin Soh (China Daily)
Updated: 2010-08-26 14:43

HONG KONG - China Telecom, the smallest of China's three wireless carriers, reported an 11 percent year-on-year rise in second-quarter profit, beating expectations, as it aggressively promoted its new 3G network to gain market share.

A security guard stands behind a door displaying a China Telecom logo in Beijing. David Gray / Reuters

China Telecom made a net profit of 4.81 billion yuan ($707 million) in the April-June quarter, according to Reuters calculations using company data, versus 4.3 billion yuan a year ago and better than expectations for 3.45 billion yuan, according to a Reuters poll of three analysts.

China Telecom is a relative newcomer to China's mobile market, the world's largest, but it also operates the country's largest fixed-line network and is aggressively promoting broadband over that channel.

"The company is also facing the challenges of intensifying competition in the telecommunications sector," Chairman Wang Xiaochu said in a statement to the Hong Kong stock exchange, adding that it would focus on "accelerating the promotion of broadband access and mobile services".

China Telecom's earnings before interest, taxes, depreciation and amortization margin, a key indicator for profitability in the telecom sector, fell 0.7 percentage points to 42.5 percent from the first quarter.

Its 3G user base grew to 7.18 million from 5.6 million at the end of the first quarter, still smaller than rival China Mobile's 10.5 million and China Unicom's 7.5 million at the end of June.

Average revenue per user (ARPU) for China Telecom's mobile services, a widely watched industry benchmark, remained relatively stable, the company said without giving a figure. It had monthly ARPU of 59.50 yuan for the full year of 2009.

China Telecom has been aggressively pushing its mobile service since it received a mobile license in early 2009, and purchased a network based on the CDMA standard from rival China Unicom.

It is currently China's smallest mobile operator with some 77 million users at the end of July, just under 10 percent of the country's 795 million users.

Reuters