China Telecom, the smallest of China’s trio of cellular operators but the nation’s largest provider of fixed broadband and telephony services by subscribers, has registered a 2.1% year-on-year decline in turnover for the three month period ended 31 March 2015, booking revenues of CNY81.45 billion (USD13.31 billion), of which service revenues made up CNY72.70 billion (down 0.4% y-o-y). Meanwhile, a 34.4% drop in selling and administrative costs to CNY12.14 billion – driven by changes to the company’s approach to handset subsidies – more than offset increases in network operations and support and personnel costs, leading to an overall decline in operating expenses by 1.1% to CNY73.67 billion. Net profit for the period was down 9.2% annually to CNY5.06 billion. Tax expenses fell by 9.4% to CNY1.60 billion, but in its press release China Telecom points out that the replacement of business tax with value-added tax (VAT) programme on 1 June 2014 negatively impacted the operator’s revenues and profit.
In operational terms, Telecom’s mobile subscriber base grew to 188.82 million, representing net additions of 3.2 million, whilst its 3G/4G customer base expanded by 6.22 million users during the three-month period to 124.85 million. In the fixed space, the number of broadband subscriptions reached 108.30 million compared to 106.95 million in December 2014. The telco’s fixed voice user base continues to decline, however, falling to 141.41 million as at 31 March 2015 from 143.56 million in Q4 2014 and 146.31 million three months before that, the operator having completely wiped out the remnants of its fixed-wireless user base during the quarter, which had totalled 1.36 million at end-September 2014, and around 400,000 by December 2014.
Looking forward, China Telecom commented that it will ‘seize the crucial opportunities from the issuance of 4G licences and the sharing of tower resources,’ referring to long-delayed allocation of Frequency Division Duplex Long Term Evolution (FDD-LTE) concessions in March this year and the launch of China Tower, a tower-sharing joint venture between Telecom, China Mobile and China Unicom.