China Netcom 1H profit slips 7.7%; completes sale of Asia Netcom

23 Aug 2006

China Netcom, the People’s Republic’s second-largest fixed-line operator, has posted a 7.7% drop in first half profit. Net income for the period ended 30 June 2006 declined to CNY7.1 billion (USD891 million), from a restated CNY7.7 billion a year earlier. Sales rose 0.9% to CNY43.2 billion. According to government statistics, in the first six months of the year China Netcom and bigger rival China Telecom signed up just half as many new customers as wireless operators China Mobile and China Unicom, as the cellcos slashed prices. China gained 14.9 million new fixed line users in the first six months of the year, compared to 32.9 million new mobile subscribers; at the end of June China had 365.3 million fixed line customers and 426 million mobile phone subscribers.

In a separate announcement China Netcom confirmed it has completed the sale of Asia Netcom to an investor group led by Ashmore Investment Management, Spinnaker Capital and Clearwater Capital Partners. The deal will raise USD402 million for Netcom: USD169 million from the international service unit of Asia Netcom and USD233 million for the company’s pan-Asian submarine cable network.

China, China Netcom