Telecom books 4.0% dip in profit despite strong 4G, FTTH growth

21 Aug 2015

China Telecom has registered a 0.6% year-on-year drop in turnover for the six months ended 30 June 2015, as growth in the fixed and mobile data segments failed to offset declines in its voice and device businesses. Operating revenue for H1 2015 was CNY164.95 billion (USD25.77 billion), with service revenue accounting for CNY147.02 billion. EBITDA was up by 0.4% compared to H1 2014 at CNY50.74 billion, although net profit dipped by 4.0% to CNY10.98 billion.

Following the licensing of Telecom’s preferred 4G technology, Frequency Division Duplex Long Term Evolution (FDD-LTE), earlier this year, the cellco has seen a massive increase in the number of 4G terminal users, claiming 29 million at end-June 2015, compared to 17 million in March and just seven million at the end of 2014. The growth has helped stabilise ARPU and bolster falling mobile service revenues, the telco reporting mobile data revenue of CNY37.41 billion (+17.5%) whilst voice service revenue dropped to CNY24.89 billion (-17.4%). In terms of ARPU, Telecom reported that 4G ARPU was around CNY86, helping lift overall ARPU to CNY55.1 from CNY53.1 in H2 2014, although due to the impact of competition, this still represented a decline from CNY56.5 in H1 2014.

Elsewhere, Telecom reported subscriber growth in the fixed broadband space, claiming 109.56 million users, of which 54.00 million utilised fibre-to-the-home (FTTH) connections, up from 104.13 million and 33.00 million, respectively, a year earlier. Broadband service revenue crept up 3.2% y-o-y as a result, to CNY37.56 billion, although ARPU fell to CNY57.9 from CNY59.4 in the first six months of 2014. Nevertheless, Telecom noted that there was ‘huge development opportunity’ as a result of the growing demand for high speed internet services – both FTTH and 4G – and it would continue to promote its ‘Smart Family’ products, whilst also pushing the development of dual-SIM 6-mode handsets and other terminals.

China, China Telecom Corporation