China Telecom profits take a hit despite revenue growth

20 Mar 2013

China Telecom has booked a 9.5% drop in net profits for 2012 to CNY14.925 billion (USD2.375 billion) despite recording 15.5% growth in operating revenues. Total revenues for 2012 were CNY283.073 billion, of which CNY117.826 billion derived from wireless services, whilst the remaining CNY165.247 billion came from the telco’s fixed line business. Operating expenses grew by 18.5% to CNY261.887 billion, driven by increasing handset subsidies and network costs. CAPEX for the year was CNY72.525 billion and is expected to increase to CNY75 billion in 2013.

The telco’s 3G subscriber base almost doubled in 2012, rising from 36.29 million at end-2011 to 69.05 million as at 31 December 2012 and resulting in a 47.3% increase in wireless data revenues to CNY43.637 billion. More than 60% of the CDMA handsets purchased in 2012 were smartphones. Meanwhile, growth in the broadband market has offset the decline in fixed telephony, with broadband revenues increasing by 8.3% to CNY121.912 billion, whilst income from fixed voice dropped 12.9% to CNY43.335 billion. Investment in the company’s ‘Broadband China, Fibre Cities’ programme saw broadband-related spending remain high, representing 66.9% of the year’s CAPEX, compared to 66.8% in 2011. Broadband subscriptions reached 90.12 million at end-2012, whilst the telco added 40 million broadband access ports over the course of the year. In terms of voice usage, domestic and international long-distance (DLD, ILD) traffic fell from 52.937 billion minutes to 41.234 billion minutes and 1.130 billion minutes to 965 million minutes respectively.

China, China Telecom Corporation, China Telecom Group