Rivalry hurts China Telecom's H1 profit
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China Telecom Corp cited "intensifying competition" and huge investment in marketing and broadband network construction for the 0.9 percent rise in its first-half net profit from a year ago, the country's No. 3 telco said Wednesday.
The firm also disclosed that it would expand spending on broadband in 2010 to 44 billion yuan (US$6.47 billion) from earlier expectations of 39 billion yuan.
In the first six months, the telco's net profit was 9.08 billion yuan, compared with 9 billion yuan a year ago. Revenue rose 4.5 percent to 107.82 billion yuan.
"The company faces the challenges of intensifying competition in the telecommunications sector," Wang Xiaochu, chairman and chief executive of China Telecom, said in a statement.
"The company will continue to deepen integrated operations by focusing on the development, and accelerate the promotion of broadband access and mobile services, particularly in the 3G development."
By the end of June, China Telecom had a total of 74.5 million mobile subscribers, with one-tenth of them being 3G subscribers.
But the company's ARPU (average revenue per user), a key measure of a telecom operator's profitability and development potential, dropped to 58.1 yuan in the first half from 63.6 yuan a year ago.
During the country's telecom industry revamp in 2008, China Telecom, a fixed-line phone operator, acquired China Unicom's CDMA (code division multiple access) business to become the country's No. 3 mobile carrier behind China Mobile and China Unicom.
"With the development of the economy, the era of mobile Internet and the three network convergence, the company is embracing another major period of strategic opportunities," Wang said.
The company said it aims to add more than 20 million broadband subscribers by 2011. It had 59.23 million broadband subscribers at the end of July, up from 53.46 million at the end of last year.
China's broadband market has still much room to grow as its penetration rate is only 28 percent.
