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Little Smart loss erodes profit

CHINA Telecom Corp's net profit tumbled 90 percent in 2008 as it wrote off a loss of the Little Smart business, which will end by 2011, the carrier said yesterday.

The country's biggest fixed-line phone operator will invest 47 billion yuan (US$6.91 billion) this year to expand its mobile-phone network, acquired from China Unicom in an industry restructuring, and 3G, or third generation, network.

China Telecom's net profit last year plunged to 884 million yuan from 24.2 billion yuan a year earlier after the carrier booked a 24-billion-yuan impairment charge on its Little Smart limited-range wireless service.

The Little Smart services will be suspended in order to leave sufficient telecommunications frequency bandwidth for 3G development. By 2011, the current Little Smart frequency bandwidth will be taken up by China Mobile's 3G network, according to the Ministry of Industry and Information Technology, the industry regulator.

"It will force carriers to compete back-to-back as every player wants to attract former Little Smart users and it may be an opportunity for China Telecom," said Sandy Shen, an analyst at Gartner Inc, a United States-based IT consulting firm.

By the end of last year, there were 69.83 million Little Smart users versus 84.54 million a year ago. About three years ago, there were about 100 million, said the ministry.

China Telecom will use the investments to build more 3G networks and offer wireless services to more than 300 cities by July, Chairman Wang Xiaochu said in Hong Kong yesterday. The firm aims to lure 100 million mobile-phone users by 2011, he added.

China Telecom is boosting spending in the cell-phone business acquired from China Unicom last year to compete against China Mobile in the world's biggest phone market by users.

China Telecom gained 1.9 percent to HK$3.19 (41 US cents) in Hong Kong against a 3.44-percent increase in the Hang Seng Index.



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