China Telecom reports 2009 results

23 Mar 2010

China Telecom, the People’s Republic’s largest fixed line operator, reported a jump in full-year net profit as a result of the company’s 2008 result being impacted by an impairment loss associated with its mobile business. Net profit for the twelve months ended 31 December 2009 rose to RMB14.42 billion (USD2.11 billion), from RMB884 million a year earlier, when the company booked a RMB24.17 billion impairment loss on property, plants and equipment mainly associated with the mobile business. Stripping out the one-off impairment loss and amortisation of non-cash connection fees, the company said its adjusted profit for 2009 was RMB13.27 billion, down 34% from an adjusted profit of RMB20.07 billion in 2008. Revenue rose 12% to RMB209.37 billion from RMB186.53 billion.

China Telecom said it plans to increase its capital spending slightly this year on high-growth broadband and value-added mobile services amid rising competition, which it said poses serious challenges for it. China Telecom plans capital spending of RMB39 billion in 2010, up slightly from RMB38.04 billion in 2009.

In terms of customers, China Telecom ended 2009 with 188.56 million access lines in service, down 9.5% year-on-year. Mobile customers more than doubled from 27.91 million to 56.09 million, while wireless average revenue per user (ARPU) fell to RMB59.50 per month compared to RMB63.40 in 2008 because of tough competition, the company said. In 2008 handset subsidies accounted for 33.6% of China Telecom’s mobile revenue, lower than the company’s previous guidance of 37%. The firm plans subsidies of more than RMB10 billion in 2010 to meet its target of adding 30 million mobile subscribers in 2010, including eight million 3G users.

China, China Telecom Group