China Telecom Corp., the country’s biggest fixed-line carrier, reported second-quarter profit rose 12 percent as its mobile-phone unit increased its subscriber base by almost half.
Profit excluding gains from connection fees rose to 5.09 billion yuan ($796 million) in the three months ended June 30, from 4.54 billion yuan a year earlier, the Beijing-based company said in a statement on its website today. That was in line with the 5.05 billion-yuan average of six analysts’ estimates compiled by Bloomberg.
Chairman Wang Xiaochu has taken advantage of his Code Division Multiple Access, or CDMA, international network standard to attract new subscribers with smartphones including Samsung Electronics Co.’s Galaxy Ace and Motorola Mobility Holdings Inc.’s Moto XT800. Wang may strike a deal by the end of this year to become the second Chinese carrier after China Unicom (Hong Kong) Ltd. to offer Apple Inc.’s iPhone, according to UBS AG analyst Wang Jinjin.
“The CDMA business continued to drive up revenue growth,” Wang wrote in a report to clients on Aug. 8. “Compared with two to three years ago when China Telecom first started the CDMA business, the ecosystem of CDMA handsets has largely improved owing to China Telecom’s efforts.”
China Telecom rose 4.8 percent to HK$4.60 at the 4 p.m. close in Hong Kong trading today. The benchmark Hang Seng rose 2 percent.
Second-quarter sales rose 12 percent to 61.4 billion yuan, beating the 59.7 billion-yuan average of six analysts’ estimates.
The company now offers more than 100 smartphone models for the third-generation network, with many priced around 1,000 yuan, Wang said in the statement.
“In the first half of the year, we have achieved a critical breakthrough in 3G smartphones,” Wang said. “We closely followed the market momentum of mobile Internet services, leveraging the convergence of wireline and mobile services and riding on smartphone handset terminals.”
In the second quarter, the company’s mobile unit added 8.12 million users, boosting its subscriber base to 108.4 million at the end of June, up from 74.5 million a year earlier.
The company ranks third in wireless users in the Asian nation, behind China Mobile Ltd. (941) and China Unicom.
China Telecom entered the wireless market in 2008 by acquiring the smaller of China Unicom’s two mobile divisions in a government-led revamp of the Chinese mobile-phone industry.
China Mobile on Aug. 18 posted a 7 percent gain in second- quarter profit that beat analysts’ estimates after data traffic rose on demand for games and videos from smartphone users. China Unicom will report earnings tomorrow.
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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