China Telecom reported an impressive 51.9% hike in net profit for 2003, from CNY11 billion to CNY16.8 billion, and promptly issued a statement that it was to sell 8.32 billion new shares – 11% of its share capital – to raise most of the USD3 billion needed to buy ten provincial networks from its parent. China Telecom’s 2003 performance was driven by the success of its limited mobility PAS wireless service, Xiaolingtong (Little Smart), which witnessed a 153% rise in subscriber numbers to 18.35 million. In addition, the telco reported a two-fold increase in its broadband subscriber base to 5.63 million, and a significant improvement in fixed lines in service, to 118 million. The gains helped push full year revenues up by 9.5% to CNY111 billion.
China Telecom expects to pay USD3.3 billion for the ten provincial networks, and aims to complete the transaction by the middle of this year. The infrastructure covers poorer regions of China such as Gansu, Xinjiang and Guizhou, and in acquiring the assets, Telecom is expected to assume a similar amount of debt from the individual businesses. However, it has decided not to purchase its parent company’s loss-making Tibet operation.