When high-speed, 3G mobile telephone services finally launched on the mainland in October last year, fixed-line network market leader China Telecom Corp appeared at a disadvantage against the more established wireless operators, China Mobile and China Unicom.
Beijing's revamp of the domestic telecommunications industry in May 2008 created a sector in which all three carriers offered both fixed and wireless network services. But everyone knew competition would be the most intense in the potentially lucrative mobile broadband market segment.
Since tossing its hat into the 3G ring last year, China Telecom has emerged as a formidable challenger to the two larger and more experienced domestic mobile network operators.
'It seems to be fighting above its weight class,' Macquarie Securities analyst Lisa Soh said, noting that China Telecom grew by 76.4 per cent the number of its 3G subscribers to 7.18 million as of June 30 this year from 4.07 million at the end of last year.
With the 3G segment becoming a steady revenue contributor, China Telecom now has some precious elbow room to strike up further expansion in the fixed-line broadband arena.
Chairman and chief executive Wang Xiaochu yesterday said the carrier would boost capital spending this year to step up its nationwide broadband coverage after posting solid earnings in the first six months of the year to beat analysts' estimates.
China Telecom recorded a 4.7 per cent increase in first-half net profit to 8.81 billion yuan (HK$10.06 billion) from 8.41 billion yuan a year earlier on solid gains from its mobile and fixed-line broadband businesses. Soh said net profit was above the market consensus and Macquarie's own estimate of 7.5 billion yuan.
