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

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.”