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China Telecom

China Telecom posts solid third-quarter earnings, helped by strong subscriber gains

The company says it added 25.6 million new mobile users between January and September this year

PUBLISHED : Friday, 27 October, 2017, 7:11pm
UPDATED : Saturday, 28 October, 2017, 10:18am

China Telecom Corp, the country’s third-largest mobile network operator, posted solid financial results in the quarter ended September 30, thanks to strong subscriber growth and higher service revenue.

Shares of China Telecom rose to as high as HK$4 in early trading on Friday before closing at HK$3.96, a modest 0.25 per cent increase.

The company, which also runs the country’s biggest fixed-line network, reported a 1.9 per cent increase in third-quarter net profit to about 6 billion yuan (US$904 million), up from 5.9 billion yuan in the same period last year.

Chris Lane, a senior analyst at Bernstein Research, said China Telecom’s net profit came in slightly below the market’s consensus estimate of 6.1 billion yuan and Bernstein’s own 6.5 billion yuan prediction.

Earnings before interest, tax, depreciation and amortisation (Ebitda) – representing net cash flows from the company’s businesses – rose 3.7 per cent to 26.4 billion yuan from 25.5 billion yuan a year earlier.

Total revenue climbed 4.1 per cent to 90.6 billion yuan from 86.9 billion yuan the previous year. That was driven by a 7.2 per cent increase in combined mobile and fixed-line services revenue to 83.9 billion yuan from 78.3 billion yuan a year ago.

Yang Jie, the chairman and chief executive of China Telecom, said in a regulatory filing that the company added 25.6 million new mobile subscribers between January and September this year, despite “intensified market competition coupled with a complicated and changing industry environment”.

At the end of September, China Telecom estimated it had 240.6 million total subscribers. Of that number, 167.5 million had signed up as 4G network users.

China Telecom, China Mobile and China Unicom removed all domestic long-distance and mobile roaming fees from September 1 this year, while significantly cutting internet connection and leased line charges for small and medium-sized enterprises and reducing international long-distance tariffs.

That move was implemented a month ahead of schedule, following a call made by Chinese Premier Li Keqiang in early March for the telecommunications industry to speed up the pace of network performance upgrades and tariff reductions.

Chinese telecom firms scrap roaming fees from September

China Unicom, the world’s sixth-largest mobile network operator by subscribers, also reported solid third-quarter earnings. It had 276.9 billion mobile users at the end of September, including 160.3 million 4G subscribers.

Its net profit reached its highest level in the past seven quarters at 1.6 billion yuan, up from 160 million yuan a year earlier, amid a steady increase in both mobile and fixed-line revenue.

Ebitda grew 6.6 per cent to 21.8 billion yuan from 20.5 billion yuan a year earlier, while revenue rose 1.1 per cent to 67.6 billion yuan from 66.9 billion yuan the previous year.

Shares of Unicom gained 1.7 per cent to close at HK$11.40 on Friday.