China Telecom, the mainland's largest fixed-line operator by subscriber numbers, yesterday reported slower than expected net profit growth for last year, at 9.3 per cent.
While the company added subscribers for mobile and broadband services, average revenue per user (arpu) - a barometer of long-term growth for telecoms firms - for mobile services fell 9 per cent, and more for its fixed-line business.
China Telecom, also the country's third-largest wireless network operator, said it would purchase code division multiple access (CDMA) networks next year from its state-owned parent company, China Telecommunications.
Chairman Wang Xiaochu said the company's free cash flow of 27 billion yuan (HK$32 billion) by the end of 2010 was more than enough, but China Telecom would consider issuing bonds to accumulate funds for the purchase.
Wang said the parent company bought the CDMA networks for about 110 billion yuan in 2008 from China Unicom. They are now valued at less than 100 billion yuan.
The company's ratio of total liabilities to capitalisation was 23.6 per cent, and Wang believed the figure would remain lower than 45 per cent after the purchase. 'For a telecommunications company, 45 per cent is still healthy,' Wang added.
Arpu fell to 54.20 yuan last year from 59.50 yuan in 2009. Wang said the figure would further decline this year due to an increase in the number of less wealthy rural users.