China Telecom, the country’s third largest mobile operator, reported steady revenue growth in Q1, but a significant hike in tower usage charges and selling costs limited its profit growth.

The company’s operating revenue for Q1 rose 6.1 per cent to CNY86.4 billion ($13.3 billion), with service revenue increasing 5 per cent to CNY76.4 billion. Those are improved results and fairly robust given the weakness of the Chinese economy over the past three quarters.

But operating expenses rose 7.3 per cent to CNY79 billion, due mainly to a 16.4 per cent jump in network operating and support expenses. The operator said its tower usage fees have risen significantly since it handed over its tower assets to China Tower last year. Selling and administration expenses also were up 14.6 per cent.

Its net income for the quarter was up 1.4 per cent to CNY5.1 billion.

The operator continued to add 4G subscribers at a brisk pace, signing up nearly 16.5 million during the quarter — a 28 per cent jump that takes its 4G total to 75 million, or 37 per cent of its total user base of 203 million.

While it still lags market leader China Mobile by a large margin, it widened its 4G lead on number two China Unicom, which has 59 million 4G connections, representing 23 per cent of its user base.

China Telecom recently appointed a new chairman and CEO, Yang Jie, who in late December took over as interim leader, following the resignation of Chang Xiaobing.