China's telecommunications regulator has lifted its forecasts on fixed-line subscriber growth for the next four years. The Ministry of Information Industry's (MII) recently released China Telecom Market Development Guide 2003 estimates that between 32 million and 35 million new fixed-line subscribers will be added each year until 2006. This represents an average annual growth rate of almost 13 per cent compared with earlier forecasts of growth just short of 10 per cent. The MII had previously estimated that between 22 million and 25 million fixed lines would be added each year. The report marginally revised down projections on mobile subscriber growth. The MII expects the country's two cellular carriers to sign up 50 million new users by end of this year, but forecasts the annual increase in cellular subscribers to gradually decline to only 36 million in 2006. ABN Amro regional equity analyst Helen Zhu said in a research report that the telecom regulator's revised forecast showed the market had underestimated the potential for fixed-line growth on the mainland. 'We think the optimistic expectation stems from strong business line demand, increased adoption of second lines for residential use, and removal of regulatory overhang for PAS [xiaolingtong or Little Smart service] expansion,' Ms Zhu said. ABN Amro put an add recommendation on China Telecom with a target price of HK$1.64, and was neutral on China Mobile. The MII's revised forecasts say China will have 247 million fixed-line users and 257 million mobile users by end of this year.