China Telecom Profits Slump 96.3% on Write-Downs
Published on: 23rd Mar 2009
Note -- this news article is more than a year old.
China Telecom has reported a 96.3 percent slump in its full year profits after making a RMB 24 billion (USD3.5 billion) write down of its legacy XiaoLingTong wireless network which faces closure. Both China Telecom and China Unicom have been ordered to shut down their low cost XiaoLingTong mobile telephone system in order to free up the radio spectrum for 3G services. The two companies have been given three years to shut down the networks.
According to government figures, China had 68.9 million Xiaolingtong users last year, a decrease of 15.6 million from 2007. In comparison, mobile phone users in the country grew 94 million to 641 million last year.
The company's operating revenues grew 3.3 percent to RMB 186.8 billion (USD27.4 billion) in 2008, while net profit fell to RMB 884 million (US$129.6 million) in 2008, from RMB 24.2 billion (USD3.54 billion) in 2007.
Following the shake-up of the telecoms market, China Telecom acquired China Unicom's CDMA network and ended February with 30.63 million mobile subscribers. The company lost a net 60,000 CDMA subscribers in 2008 under the previous owners - but reported that it had gained over 1 million new customers in January this year.
The company has a target of 100 million mobile subscribers by 2011.
The company also said that its parent plans to spend RMB 47 billion (USD6.88 billion) this year to expand its mobile- phone network and roll out 3G services to over 300 cities by July. Plans to seek a "strategic investor" to help finance the expansion have been deferred due to the ongoing economic climate. The firm will be able to tap government-backed banks for debt to roll out the 3G networks.