China Telecom, the country’s third largest mobile operator, posted strong overall results for 2016 with mobile sales rising 10.5 per cent and 4G subs doubling, but a one-off gain in 2015 led to a double-digit drop in its 2016 profit.
The operator’s net profit fell 10.2 per cent to CNY18 billion ($2.6 billion). However, excluding a CNY5.2 billion gain in 2015 from the disposal of its tower assets, its profit was up 11.6 per cent. EBITDA inched up 1.1 per cent to CNY95.1 billion.
Operating revenue increased 6.4 per cent to CNY352 billion, while service turnover rose 5.6 per cent to CNY309.6 billion. Mobile revenue was CNY137.6 billion.
China Telecom chairman and CEO Yang Jie said 2017 is a crucial year for the company to implement its transformation strategy, and 4G and fibre upgrades. Despite facing a more complicated external environment and intensifying market competition, he said the company “is confident looking into the future”, due to the continuous improvement of the macro environment and its strong development fundamentals.
Yang noted the steady improvements in operating results came while proactively responding to the impact of regulatories policies including speed upgrades and tariff reductions requested by the government.
Strong data growth
Revenue from mobile internet services grew 39.4 per cent over the previous year to CNY70.7 billion. Mobile voice revenue dropped 9.9 per cent to CNY44.1 billion.
While mobile ARPU increased 2.6 per cent year-on-year to CNY55.50, 4G ARPU fell 7 per cent to CNY72.80.
Its 4G user base more than doubled last year to 122 million, accounting for 57 per cent of its total user base at the end of 2016 (up from 30 per cent the previous year). After losing subscribers in 2015, it added 17 million in 2016, taking its total to 215 million.
China Telecom said the subscriber gains led to a 0.7 percentage point rise in its overall mobile market share to 16.2 per cent. Its 4G market share rose nearly 2 percentage points to 16 per cent.
Wireline revenue increased 3.1 per cent to CNY172 billion. The company said emerging businesses accounted for 40 per cent of service revenue, up 5 percentage points over 2015 due to “continual rapid optimisation in business structure”.
Its capex declined 11.3 per cent to CNY96.8 billion as its 4G network rollout nears competition.
Rival China Unicom last week reported a 94 per cent drop in its net profit to CNY625 million ($90.6 million), on total revenue of CNY274 billion, which was down 1 per cent year-on-year in 2016.
Market leader China Mobile is due to release 2016 results later this week.