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4G/3G/WiFi

Tower Sales Boost China Telecom Profits

Profits have risen at China Telecom thanks to one-off gains from the sale of telecom towers and related assets last year.

The operator, the smallest of China's three big mobile service providers, has seen profits attributable to equity holders rise by 13.4% in 2015, to around 3.94 billion Chinese yuan ($606 million), with sales up by 2.1%, to RMB331.2 billion ($50.9 billion).

While the performance looks encouraging, the operator's share price closed down 0.5% in Hong Kong today, with China Telecom issuing warnings about a slowdown in the Chinese economy as well as competitive and regulatory challenges ahead.

Nevertheless, despite regulatory moves aimed at reducing the price of telecom services, China Telecom Corp. Ltd. (NYSE: CHA) appears to have fared better than market leader China Mobile Ltd. (NYSE: CHL) when it comes to year-on-year financial comparisons, even if it remains far less profitable. (See China Mobile Flags Concerns as Profits Dip.)

In its own annual results statement published last week, China Mobile posted a 1.3% drop in revenues from telecom services, to RMB584.1 billion ($89.8 billion), and a 0.6% fall in net profit, to RMB108.5 billion ($16.7 billion).

Where China Mobile continues to trounce China Telecom is on 4G customer growth.

Although the smaller operator picked up another 51.38 million 4G customers last year, and now serves 58.46 million altogether, this rate of growth pales in comparison with the performance at China Mobile, which added more than 220 million 4G subscribers to end the year with about 312 million altogether.

China Telecom finished 2015 with 198 million mobile customers in total, 12.28 million more than in 2014, while China Mobile's subscriber base increased by 2.4%, to 826 million, over the same period.

Struggling China Unicom Ltd. (NYSE: CHU), meanwhile, flagged the loss of 14.26 million mobile customers in 2015, giving it 252.32 million in December, including 44.16 million 4G users.

Unlike China Mobile, China Telecom was able to prevent average revenue per user (ARPU) from declining last year, although it did not provide details of ARPU figures.

China Mobile's monthly ARPU fell from RMB59 ($9.07) in 2014 to RMB56 ($8.61) last year.


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China Telecom also enjoyed success in the country's fixed-line broadband sector, gaining 6.11 million customers in 2015 to give it 113 million overall.

Investments in 4G and fiber-optic network buildout last year triggered a sharp rise in capital expenditure, which rose from RMB76.9 billion ($11.8 billion) in 2014 to RMB109.1 billion ($16.8 billion).

Spending is expected to fall to about RMB97 billion ($14.9 billion) in 2016, however.

China Mobile is also guiding for a decline in capital expenditure this year, indicating that investments will drop from RMB195.6 billion ($30.1 billion) in 2015 to about RMB186.2 billion ($28.6 billion).

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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