China’s telecom giants warn of earnings impact from tariff cuts, in compliance with Beijing directive

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Rising mobile data usage is expected to help mainland carriers offset income losses from lower tariffs imposed by regulators in Beijing. Photo: Reuters

Published: 12:30pm, 7 Mar 2017Updated: 10:20pm, 7 Mar 2017

China’s three major telecommunications network operators expect their financial performance this year to be affected by the implementation of further tariff reduction measures directed by Beijing.

In separate regulatory filings late on Monday, operators China Mobile, China Unicom and China Telecom each pledged to substantially reduce internet private line access tariff for small and medium-sized enterprises (SMEs), cut international long-distance call tariffs, and from October 1, cease to charge domestic long-distance and roaming fees on their mobile handset subscribers.

They made those commitments following Premier Li Keqiang’s presentation of the 2017 Government Work Report at the 12th National People’s Congress on Sunday.

Li renewed his call to the country’s three telecommunications network operators to “raise speed, drop prices”.

He specifically asked them to completely remove domestic long-distance and roaming charges within this year, lower internet access and leased line fees for SMEs, and reduce international long-distance voice tariffs.

Both China Mobile and Unicom pointed out in their respective filings that further tariff reduction measures would have an impact on their revenue and net profit “to a certain extent”, without elaborating.

China Telecom said the measures would impact, in general, its “business operation ... to a certain extent”.