China Telecom gears up for 4G push
Biggest fixed-line operator will boost spending for a trial network after profit jumps 15.9pc
China Telecom, the world's biggest fixed-line network operator, said it will increase full-year capital expenditure by five billion yuan (HK$6.3 billion) to 80 billion yuan this year as it builds a 4G trial network.
Beijing has announced 4G licences would be issued by the end of this year and expressed clear support for the home-grown time-division long-term evolution (TD-LTE) standard, which has been adopted by market leader China Mobile.
China Telecom earlier said that if it received a licence for the TD-LTE standard, it would rent the network from China Mobile.
Chairman and chief executive Wang Xiaochu said the two sides were in talks about the feasibility of renting the network but the negotiations still had a long way to go.
On Monday, China Telecom jointly launched with NetEase a mobile messaging app, named Yixin, to compete with dominant player Weixin, or WeChat, owned by internet giant Tencent.
"Within 24 hours of the release, the user number broke above one million," said Wang.
As a newcomer, Yixin hopes to lure users with features that Weixin does not support. For example, it allows users to send free voice messages to mobile or fixed-line numbers.
"The growth potential of the traditional telecommunications business is limited," said Wang. "We need to tap into the internet sector."
He said China Telecom would like to provide services including location-based service and mobile payment.
Industry commentator Xiang Ligang said Yixin was not effective in differentiating itself from Weixin and the impact on Weixin should be small.
China Telecom posted a 15.9 per cent increase in net profit in the first half of this year, exceeding the 14.1 per cent growth in revenue.
Net profit rose to 10.2 billion yuan from 8.8 billion yuan last year. Revenue was 157.5 billion yuan, bolstered by an increasing number of 3G subscribers who spent more time watching videos on smartphones.
The number of mobile subscribers jumped 8.6 per cent to 175 million, of whom 87.3 million were 3G users, representing 50 per cent. China Mobile has 19 per cent of its customers on 3G and China Unicom has 38 per cent.
China Telecom decided not to pay an interim dividend, citing policy uncertainties and 3G expansion plans.
The stock rose 1 per cent yesterday, compared with a 0.7 per cent loss for the Hang Seng Index.