China Telecom is betting on increased marketing initiatives and sales of Apple's iPhone to help expand its 3G mobile operations despite weak first-quarter net profit.
In a filing with the Hong Kong stock exchange yesterday, chairman and chief executive Wang Xiaochu said the company's 3G service 'is entering into a phase of accelerated growth'.
Telecom, the country's biggest fixed-line network operator and third-largest wireless carrier, reported a 6.5 per cent drop in first-quarter net profit to 4.27 billion yuan (HK$5.8 billion), from a restated 4.57 billion yuan a year earlier, because of higher handset subsidies, marketing and other support expenses.
It was the only one among the mainland's three major telecommunications network operators to post a decline in net profit for the three months to March 31.
Operating costs last quarter swelled 19 per cent to 61.78 billion yuan from a restated 51.78 billion yuan the previous year. That included selling, general and administrative costs of 14.18 billion yuan.
Revenue was up 15.7 per cent to 67.93 billion yuan from a restated 58.72 billion yuan a year ago.
'China Telecom appears to be making a large loss on handset sales,' Macquarie Securities analyst Lisa Soh said in a report. She said its resolve to boost iPhone 4S sales, while also supporting mid-priced to low-end handsets, pressured profits.