Increased competition impacts hard on China Telecom

20 Sep 2007

China’s largest fixed line telephony provider China Telecom Corp has reported its first drop in subscribers, as users switched to wireless services provided by rival operator China Mobile. In August, China Telecom said about 380,000 users defected, leaving it with 224.17 million customers at the end of the month. By contrast, China Mobile added 5.59 million net additions in August to end the period with 343.6 million.

China Telecom is struggling to shore up its sales in the face of fixed-to-mobile substitution in the world’s most populous nation. The company’s chairman Wang Xiaochu has looked to expand internet access services to spur growth and plans to enter the mobile phone market once 3G licences are awarded. China Telecom added 540,000 broadband internet users in August. The company has added 5.02 million high speed internet users so far this year, for a total of 33.34 million.

In a separate story, China Telecom has denied rumours that it plans to spend CNY4 billion (USD531 million) to purchase Beijing Telecom from its parent company, the China Telecom Group. ‘China Telecom hasn’t held any discussions on the asset purchase with the parent company yet,’ William Li, a senior manager from China Telecom’s investor relations department, told China Securities Journal, a newspaper run by Xinhua News Agency. The company’s denial followed press reports on Tuesday which said China Telecom planned to purchase Beijing Telecom from its parent by the end of this year, the leading branch under the China Telecom Group in terms of revenue. Any plan by China Telecom to purchase the assets of Beijing Telecom would be regarded as China Telecom’s first major move into the territory of rival, China Netcom.