TELECOM
image

China Telecom

China Telecom posts 7.4pc rise in first-half profit on higher mobile service revenue

PUBLISHED : Wednesday, 23 August, 2017, 3:09pm
UPDATED : Wednesday, 23 August, 2017, 10:55pm

China Telecom, the world’s ninth largest mobile network operator by subscribers, reported a 7.4 per cent year-on-year increase in interim net profit on the back of higher service revenue growth.

The operator, which also runs the biggest fixed-line network on the mainland, posted on Wednesday a net profit of 12.5 billion yuan (US$1.9 billion) in the six months ended June 30, up from 11.7 billion yuan in the same period last year, as its mobile service revenue outpaced the industry average.

Earnings before interest, tax, depreciation and amortisation (ebitda) – representing net cash flow from the company’s businesses – advanced 3.7 per cent to 52.4 billion yuan from 50.5 billion yuan a year earlier.

Total interim revenue rose 4.1 per cent to 184.1 billion yuan from 176.8 billion yuan a year ago.

“China Telecom’s net profit was 5.8 per cent above the market’s consensus estimates and ebitda was in-line with consensus, but total revenue was below expectations due to lower [smartphone and fixed-line] equipment sales,” Bernstein Research senior analyst Chris Lane said on Wednesday.

“Service revenue, which is the more important metric, was in-line with consensus estimates. So these are a good set of numbers which we expect the market will like.”

Shares of China Telecom finished up 0.53 per cent to HK$3.78 on Tuesday in Hong Kong. Typhoon Hato forced the city’s bourse to suspend all trading on Wednesday.

China Telecom’s shares on the New York Stock Exchange closed up 0.33 per cent to US$48.54 on Tuesday.

“Taking into consideration the company’s profitability, cash flow level and the capital requirements for future development, the board of directors has decided not to pay an interim dividend this year in order to maintain adequate funding flexibility,” said Yang Jie, China Telecom’s chairman and chief executive, in the company’s regulatory filing on Wednesday.

Yang said the company’s total first-half service revenue rose 6.8 per cent to 165.8 billion yuan from 155.2 billion yuan a year ago, “outperforming the [domestic] industry average growth”.

The company’s mobile service revenue alone grew 12.2 per cent to 75.5 billion yuan.

It added 14.85 million mobile subscribers in the first half of this year, brining its total user base to 229.8 million as of June 30, up from 215 million at the end of December.

Of that number, total 4G mobile network users reached 152 million at the end of June.

China Telecom also had 128.1 million fixed-lined broadband subscribers in the same period.

Yang said the company is exploring 5G network field trials that it plans to conduct in six mainland cities, while joint research and development on 5G applications will be launched in collaboration with partners from various industries.