China Telecom (Hong Kong) will spend about US$6 billion in the next two years to expand its mainland mobile phone business, according to a senior official. The bulk of the money will be spent on improving its network coverage and capacity in six provinces - Guangdong, Zhejiang, Jiangsu, Fujian, Henan and Hainan, chief financial officer Ding Donghua said. The capital expenditure is part of China Telecom's plan to meet the needs of the mainland's fast-growing mobile market and to counter increasing competition after Beijing's expected World Trade Organisation entry. Part of the US$6 billion will be used for investing in wireless Internet and wireless application protocol capabilities, Mr Ding said, but it would not be a substantial amount. China Telecom has already carried out trial runs for wireless Internet services on a limited number of subscribers in Guangdong, Fujian and Zhejiang provinces. Contributions from these value-added services are 'very low', Mr Ding said. He said the company will also apply for a licence to operate third-generation mobile phone services - a technology that enables multimedia services through cellular phones. Speaking at a Credit Suisse First Boston seminar, Mr Ding said China Telecom would consider acquiring further mainland mobile networks to enhance external growth. 'Acquisition is our basic business strategy,' he said. 'However, at present, we haven't got a specific plan or fixed timetable.' Analysts expect China Telecom to announce further acquisitions in the second half to boost its earnings profile. In October, it announced a US$6.4 billion plan to buy three mobile telephone networks from its parent - China Telecom (Hong Kong) Group - in Fujian, Henan and Hainan. The parent still owns mobile networks in 26 mainland provinces. With full earning contributions from the newly acquired mobile networks, analysts expect China Telecom's net profit this year to reach HK$13.39 billion, according to IBES Earnings Estimates. Analysts forecast last year's profit, due to be announced next month, to reach HK$8.89 billion, compared with HK$6.89 billion previously.