Operating expenses hit China Telecom’s profits

29 Oct 2012

China Telecom Corporation has reported a 7.8% year-on-year decline in profit for nine months to end-September 2012 on the back of climbing operating expenses, attributed to an 11.1% increase in the cost of handset sales. Total revenues for the period were CNY209.98 billion (USD33.37 billion), up by 15.1% from CNY182.48 billion a year earlier. Total operating expenses climbed by 18.5% to CNY192.08 billion however, leading to a 12.2% y-o-y decline in earnings before interest and tax (EBIT) to CNY17.90 billion. Profit for the nine month period was CNY12.65 billion, compared to CNY13.72 billion in the corresponding period of 2011.

In terms of subscribers, China Telecom continued to see strong growth in the 3G market, with 3G users increasing to 59.72 million from 28.43 million a year earlier, representing nearly 40% of its total wireless customer base of 152.62 million as at 30 September 2012. Data use led the way in the fixed segment as well, with broadband users increasing by 18.0% y-o-y to 86.96 million, whilst fixed telephony subscriptions fell by 5.0 million on an annualised basis to 165.96 million.

China, China Telecom Corporation