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October 28, 2010, 5:35 AM EDT
By Bloomberg News
(Updates with comment from analyst in fourth paragraph.)
Oct. 28 (Bloomberg) -- China Telecom Corp., the country?s biggest fixed-line carrier, posted third-quarter profit that beat analyst estimates as the company?s mobile-phone unit added subscribers.
Profit excluding gains from connection fees rose 27 percent to 3.78 billion yuan ($565 million) from 2.98 billion yuan a year earlier, the Beijing-based company said in a statement on its website today. Income was projected to be 3.54 billion yuan, according to the median estimate of five analysts surveyed by Bloomberg News.
Chairman Wang Xiaochu has used handset subsidies and promotional calling rates to boost mobile subscribers 77 percent in the past year and grab share from market leader China Mobile Ltd. China Telecom is holding on to customers in the fixed-line phone business by offering the service as a package with broadband Internet.
?The results are quite good and it?s mainly about the bundling strategy that, so far, is working,? said Marvin Lo, a Hong Kong-based analyst at Daiwa Securities Capital Markets. He rates the shares ?outperform? and doesn?t own any. ?The company is migrating, even for fixed-line, to more of a data orientation and that helps offset the decline in voice on the fixed-line side.?
China Telecom rose 0.2 percent to close at HK$4.15 in Hong Kong trading. The stock has gained 28 percent this year compared with a 6.1 percent rise in the benchmark Hang Seng Index.
Gaining Market Share
Third-quarter sales rose 6.5 percent to 55.6 billion yuan, from 52.2 billion yuan. That was below the analysts? 55.8 billion-yuan median estimate in the Bloomberg News survey.
The number of mobile subscribers increased to 82.98 million at the end of September, from 46.78 million a year earlier, China Telecom said Oct. 25. The company still ranks third in wireless users in China, behind China Mobile and China Unicom (Hong Kong) Limited.
China Telecom entered the wireless market in 2008 by acquiring the smaller of China Unicom?s two mobile divisions in a government-led revamp of the Chinese mobile-phone industry.
Beijing-based China Telecom?s share of the nation?s mobile market rose more than 3 percentage points in the past 12 months to 10 percent of China?s total 833.3 million subscribers. China Mobile?s market share declined to 68 percent from 71 percent a year earlier. China Unicom?s share dropped to 19 percent from 20 percent a year earlier.
China Telecom spent 6.1 billion yuan on handset subsidies in the first half this year, or about 27 percent of the mobile- phone division?s revenue, Wang said in August. The proportion will be lower than 30 percent for the full year, he said at the time.
China Mobile, the world?s biggest phone carrier by market value, on Oct. 20 posted third-quarter net income that rose 3.5 percent to 29.6 billion yuan. China Unicom will announce results tomorrow.
--Edmond Lococo. Editors: Anand Krishnamoorthy, Young-Sam Cho.
To contact Bloomberg News staff on this story: Edmond Lococo in Beijing at elococo@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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(Updates with comment from analyst in fourth paragraph.)
Oct. 28 (Bloomberg) -- China Telecom Corp., the country?s biggest fixed-line carrier, posted third-quarter profit that beat analyst estimates as the company?s mobile-phone unit added subscribers.
Profit excluding gains from connection fees rose 27 percent to 3.78 billion yuan ($565 million) from 2.98 billion yuan a year earlier, the Beijing-based company said in a statement on its website today. Income was projected to be 3.54 billion yuan, according to the median estimate of five analysts surveyed by Bloomberg News.
Chairman Wang Xiaochu has used handset subsidies and promotional calling rates to boost mobile subscribers 77 percent in the past year and grab share from market leader China Mobile Ltd. China Telecom is holding on to customers in the fixed-line phone business by offering the service as a package with broadband Internet.
?The results are quite good and it?s mainly about the bundling strategy that, so far, is working,? said Marvin Lo, a Hong Kong-based analyst at Daiwa Securities Capital Markets. He rates the shares ?outperform? and doesn?t own any. ?The company is migrating, even for fixed-line, to more of a data orientation and that helps offset the decline in voice on the fixed-line side.?
China Telecom rose 0.2 percent to close at HK$4.15 in Hong Kong trading. The stock has gained 28 percent this year compared with a 6.1 percent rise in the benchmark Hang Seng Index.
Gaining Market Share
Third-quarter sales rose 6.5 percent to 55.6 billion yuan, from 52.2 billion yuan. That was below the analysts? 55.8 billion-yuan median estimate in the Bloomberg News survey.
The number of mobile subscribers increased to 82.98 million at the end of September, from 46.78 million a year earlier, China Telecom said Oct. 25. The company still ranks third in wireless users in China, behind China Mobile and China Unicom (Hong Kong) Limited.
China Telecom entered the wireless market in 2008 by acquiring the smaller of China Unicom?s two mobile divisions in a government-led revamp of the Chinese mobile-phone industry.
Beijing-based China Telecom?s share of the nation?s mobile market rose more than 3 percentage points in the past 12 months to 10 percent of China?s total 833.3 million subscribers. China Mobile?s market share declined to 68 percent from 71 percent a year earlier. China Unicom?s share dropped to 19 percent from 20 percent a year earlier.
China Telecom spent 6.1 billion yuan on handset subsidies in the first half this year, or about 27 percent of the mobile- phone division?s revenue, Wang said in August. The proportion will be lower than 30 percent for the full year, he said at the time.
China Mobile, the world?s biggest phone carrier by market value, on Oct. 20 posted third-quarter net income that rose 3.5 percent to 29.6 billion yuan. China Unicom will announce results tomorrow.
--Edmond Lococo. Editors: Anand Krishnamoorthy, Young-Sam Cho.
To contact Bloomberg News staff on this story: Edmond Lococo in Beijing at elococo@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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