Cost controls helped boost by 25 per cent the first-half core profit of China Communications Services Corp, a mainland telecommunications engineering service provider. The figure does not take into account asset devaluation from a year ago. Including the devaluation amount of 105 million yuan, net profit jumped 93 per cent to 374 million yuan from 194 million yuan year on year. Earnings per share increased 40.8 per cent to 6.9 fen as revenue rose 15.6 per cent to 7.365 billion yuan. No interim dividend was declared. The company increased turnover while reducing selling and administrative costs to 820 million yuan, up 3.1 per cent from a year earlier. 'The results were in line with expectations, and in the second half they will be better as revenue from the TD-SCDMA trials will be on the books then,' said China Everbright Securities analyst Wong Chi-man. China Mobile Communications Corp and fixed-line telephone operators China Netcom and China Telecom together will launch a trial of the domestic TD-SCDMA technology for third-generation mobile phones early next year in 10 cities. The results will aid the government in fixing a timetable for issuing 3G operating licences, expected to be before next August. Personnel costs at China Communications increased 12.5 per cent to 1.77 billion yuan, accounting for 24.1 per cent of total revenue, down from 24.8 per cent a year ago. Net margin rose 0.4 of a percentage point to 5.1 per cent. Gross profit margin dropped to 17.4 per cent from 18.3 per cent a year earlier. Chief executive Li Ping said it would improve to 20 per cent. The company reduced its reliance on major shareholder China Telecom for revenue by adding new contracts from other operators such as China Mobile and China Unicom. China Telecom's contribution declined to 45.6 per cent of revenue from 51.4 per cent last year even as China Communications' sales to the company rose 2.9 per cent to 3.35 billion yuan. China Mobile's contribution to revenue soared 59 per cent to 1.09 billion yuan, making up 14.8 per cent of group sales, up from 10.7 per cent a year ago. China Unicom brought in revenue of 247 million yuan, up 2.9 per cent. Government and corporate customers contributed 2.6 billion yuan of revenue in the period, up 22.2 per cent from last year. 'The strong growth in China Mobile's contracts was mainly due to its capital expenditure on the network capacity expansion and other related businesses,' chief operating officer Zhang Zhiyong said. 'Contracts from TD-SCDMA network construction were an insignificant proportion.' Mr Li said progress in setting up networks for the TD-SCDMA commercial trials was going well. He did not indicate details of a possible timetable for the 3G licensing. 'It would be the responsibility of the three operators to decide when the service rolls out,' Mr Li said. The company would continue to expand before the licences were issued, he said. 'With the back-up of the fast-growing economy, we have established dedicated teams for our major customers to handle their service requirements,' he said.
