China Telecom profit 'steady'
By Zhu Shenshen |
August 23, 2012, Thursday
|
Print Edition
Print Edition
CHINA Telecom posted better-than-expected net profit in the second quarter of this year despite a decline, the country's third-biggest mobile carrier said yesterday.
Net profit was 4.55 billion yuan (US$715 million), down 10 percent from a year ago. But it was higher than analysts' estimates of 4.4 billion yuan.
China Telecom, also the country's biggest fixed-line phone operator, generated 70.1 billion yuan in revenue in the quarter, growing 14 percent year on year.
China Telecom's profit was "steady" due to growth in fixed-line phones and broadband and especially a rise in smartphone income while the margin dilution from Apple's iPhone 4S debut in March should be "manageable" given controlled iPhone sales, Morgan Stanley said in a note.
China Telecom's earnings fell because of rising handset subsidy on iPhones. But in the longer term, new iPhone users will help the carrier to generate profit and compete with bigger rivals such as China Mobile and China Unicom, industry insiders said.
China Telecom jumped 4.5 percent in Hong Kong to close at HK$4.17 (66 US cents) yesterday, compared with a 1.06 percent decline of the Hang Seng Index.
The near-term price target of China Telecom is HK$4.28, according to Morgan Stanley.
China Telecom began offering subsidized iPhone 4S in March, based on CDMA technology.
For a long time, China Telecom lacked competitive CDMA models in the market. The introduction of the iPhone 4S is helping it win high-end users.
By the end of June, China's mobile phone user base reached 1.05 billion, with 140 million 3G users, or 16.7 percent of the total user base. The 3G penetration rate will hit 20 percent by the end of this year, which generates huge market potential for carriers, including China Telecom, according to Analysys International, a Beijing-based research firm.
Net profit was 4.55 billion yuan (US$715 million), down 10 percent from a year ago. But it was higher than analysts' estimates of 4.4 billion yuan.
China Telecom, also the country's biggest fixed-line phone operator, generated 70.1 billion yuan in revenue in the quarter, growing 14 percent year on year.
China Telecom's profit was "steady" due to growth in fixed-line phones and broadband and especially a rise in smartphone income while the margin dilution from Apple's iPhone 4S debut in March should be "manageable" given controlled iPhone sales, Morgan Stanley said in a note.
China Telecom's earnings fell because of rising handset subsidy on iPhones. But in the longer term, new iPhone users will help the carrier to generate profit and compete with bigger rivals such as China Mobile and China Unicom, industry insiders said.
China Telecom jumped 4.5 percent in Hong Kong to close at HK$4.17 (66 US cents) yesterday, compared with a 1.06 percent decline of the Hang Seng Index.
The near-term price target of China Telecom is HK$4.28, according to Morgan Stanley.
China Telecom began offering subsidized iPhone 4S in March, based on CDMA technology.
For a long time, China Telecom lacked competitive CDMA models in the market. The introduction of the iPhone 4S is helping it win high-end users.
By the end of June, China's mobile phone user base reached 1.05 billion, with 140 million 3G users, or 16.7 percent of the total user base. The 3G penetration rate will hit 20 percent by the end of this year, which generates huge market potential for carriers, including China Telecom, according to Analysys International, a Beijing-based research firm.
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