China Telecom

Data business powers China Telecom

Growing use of smartphones and tablets boosts the carrier's profit 17pc

PUBLISHED : Tuesday, 29 October, 2013, 2:43am
UPDATED : Tuesday, 29 October, 2013, 2:57am

China Telecom, the operator of the mainland's largest fixed-line network, posted a 17.1 per cent increase in net profit for the first three quarters of the year, thanks to continued robust growth in data consumption as users spent more time on smartphones and tablets.

Net profit reached 14.7 million yuan (HK$18.7 million), while revenue grew 13.4 per cent to 238.2 billion yuan, the company said in a filing to the Hong Kong stock exchange.

China Telecom said it would focus on accelerating the expansion of "strategic 3G services and [fixed-line] broadband services".

The carrier had 181 million mobile subscribers, of whom 96.48 million were high-speed 3G users, the company said. The net addition of mobile subscribers was 20.52 million for the first three quarters.

It ranks behind China Mobile and China Unicom in number of wireless users in the world's largest mobile-phone market. China Mobile had 755 million while Unicom had 273 million, the carriers said this month.

China Telecom said it was facing challenges from new internet applications. On the mainland, many people have switched to free chat applications on their smartphones from the short message services provided by the operators. They also use apps such as Skype to make long-distance calls, cutting the time spent on the carriers' voice-call services.

But the firm said growth in data services had helped offset the decline in such businesses.

Ricky Lai, an analyst at Guotai Junan International, said the traditional operators were all facing challenges in their voice-call and messaging services. "They have to transform from focusing on traditional business to data business," he said.

China Telecom is the last operator to release its quarterly report. China Mobile earlier posted an 8.8 per cent drop in profit to 28.4 billion yuan in the quarter.

Lai said China Mobile would be under pressure in the next two to three years because of its heavy investments in 4G networks.

China Telecom said it would "proactively participate in discussions" to strive for the most favourable regulatory policies, "especially on the issuance of LTE [long-term evolution] licences".

It said in August that full-year capital expenditure would be increased by 5 billion yuan to 80 billion yuan this year as it built a 4G trial network.