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China Telecom H1 net profit down 8.2%

(Agencies)
Updated: 2008-08-28 18:14

China Telecom Corp Ltd said its first half to June net profit fell 8.2 percent to 12.63 billion yuan ($1.85 billion) from 13.76 billion a year earlier because of another significant decline in its core fixed-line voice services.

Excluding amortization of upfront connection fees, net profit amounted to 11.61 billion yuan, down 4 percent year-on-year.

Operating revenue rose to 90.43 billion yuan from 89.76 billion, and earnings before interest, taxes, depreciation and amortization (EBITDA) was 45.30 billion yuan, with an EBITDA margin of 50.1 percent.

Revenue from fixed-line voice services fell 11.8 percent to 50.51 billion yuan, while revenue from internet and data services rose 27.3 percent to 24.53 billion yuan.

Broadband access revenue was 19.28 billion yuan, up 31.3 percent.

Value-added and integrated information application service revenue was 11.99 billion yuan, up 31.6 percent.

In the first half, the total number of access lines in service was 215 million, down 2.5 percent from the end of 2007. The total number of broadband subscribers in the period rose 12.1 percent to 39.95 million.

First half capital expenditure was down 9.5 percent to 18.78 billion yuan, and free cash flow was 21.67 billion yuan, up 11.3 percent.

Natural disasters such as last winter's blizzards in the south of the country and May's disastrous Sichuan earthquake added 1.7 billion yuan to network operation costs, with an after-tax effect of 1.28 billion yuan, in the first half.

Chairman Wang Xiaochu said the severe imbalances in the competitive landscape will begin to disappear as telecommunications sector reform and restructuring deepens.

"However, there will be short-term downward pressure on our profit as the market share of wireline subscribers will continue to shrink in the near term while our forthcoming mobile services operation will need significant investment at the initial stage," he said.

Wong said the company would coordinate its existing fixed-line services with its new mobile network resources to create synergies and improve network utilization.

"We firmly believe that the full-services offering will greatly enhance our core competitiveness," he said.

China Telecom agreed earlier this year to acquire the CDMA wireless network of China Unicom.