China Telecom profits plummet 96.3%

24 Mar 2009

China Telecom has reported a 96.3% drop in 2008 net profits after making a RMB24 billion (USD3.37 billion) provision for impairment loss against its Xiaolongtong (Little Smart) PHS network. The company said its underlying results for the year remained solid, however, and that it would be able to perform well this year after acquiring a mobile business in an industry-wide restructuring in 2008. ‘Looking ahead, we are fully confident,’ said Wang Xiaochu, chairman and chief executive. China Telecom’s operating revenues grew 3.3% to RMB186.8 billion in 2008 but net profit fell sharply from RMB24.2 billion in 2007 to RMB884 million.

At the end of 2008 China Telecom had 208.3 million fixed lines in service, a 5.6% decline on the previous year. Traffic on its fixed line network fell across the board, with local, domestic long-distance and international long-distance volumes falling 8.6%, 1.2% and 5.5% respectively during the course of the year. Broadband users climbed 23.9%, or 8.53 million, to end the year with 44.27 million. Mobile subscribers stood at 27.91 million at the end of December 2008. The company is in the process of upgrading its newly inherited CDMA2000 1x network to EV-DO, with planned 3G coverage of 100 cities at the end of March 2008, rising to more than 300 cities at the end of July. CAPEX for its wireless network is expected to double from RMB23.6 billion in 2008 to RMB47 billion in 2009.

China, China Telecom Group