China Telecom books solid 9M as cost-cutting and data users fuel growth

28 Oct 2014

China Telecom has booked solid revenue and profit growth for the nine months ended 30 September 2014, aided by subscriber expansion and alterations to its sales and marketing strategy. Turnover for the period grew 2.2% year-on-year to CNY243.61 billion (USD39.69 million), whilst profits surged by 9.4% to CNY16.22 billion. Coinciding with the shift from business tax to VAT and with a view to offsetting the negative impact of the change, from 1 June 2014 Telecom altered its marketing model to reinforce control over marketing initiatives, in particular handset subsidies, and to more efficiently utilise its resources. Consequently, the operator saw a 17.0% annual decline in revenue from mobile terminals to CNY23.32 billion, but the related cost of sales also fell, leading to a 13.8% decrease in other operating expenses.

Telecom saw a marginal increase in mobile subscribers compared to 30 September 2013, up 430,000 at 181.57 million a year later, although 3G subscriptions grew by 16.03 million over the same period. Wireless take-up slowed in 2014 primarily due to increased competition with China Mobile’s Time Division Long Term Evolution (TD-LTE) services. China Telecom had rolled out its own hybrid 4G offering to 40 cities by the end of September, whilst Mobile’s TD-LTE network was present in five times as many locations by mid-2014. The fixed broadband segment continued to see strong growth, however, with Telecom registering 105.71 million users at end-September 2014, compared to 98.04 million twelve months earlier.

China, China Telecom Corporation