Telecom Lead Asia: China Telecom has posted 16 percent increase in sales to 72 billion yuan in the third quarter of 2012.
China Telecom has reported 8 percent drop in net profit in the first three quarters of 2012.
The significant decrease in net profit is largely due to heavy subsidies on smartphones such as Apple Inc’s iPhone handsets.
Its net income in the third quarter fell to 3.75 billion yuan ($601 million) from around 4.05 billion yuan a year earlier.
For the first three quarters, China Telecom logged a net profit of 12.6 billion yuan, down 8 percent from the same period last year. Its operating revenue increased 15.1 percent to 210 billion yuan in the first nine months.
China Telecom saw a rapid increase in mobile customers and revenue thanks to its aggressive strategies for the wireless business. The company offered subsidy plans for mobile phones, including the iPhone 4S, to attract more 3G network service users.
“Following the launch of iPhone to expand the high-end market during the period, the group made an appropriate increase in marketing initiatives,” said Wang Xiaochu, chairman and chief executive officer of China Telecom.
Revenue from sales of mobile terminals was 18.4 billion yuan in the first three quarters, an increase of 82.5 percent from the same period last year.
China Telecom added 26 million new mobile subscribers in the first three quarters, giving it a total user base of 153 million. Of these, around 60 million, or 39 percent, were 3G subscribers.
The figure also showed that China Telecom has a higher 3G penetration rate than its domestic rivals. For example, China Mobile Ltd, China’s biggest telecom operator, had 698.5 million mobile subscribers by September, while only 75.6 million were 3G users.
As a result of the rapid rise in mobile service revenue, other operating expenses increased too.
CDMA network capacity lease fees increased significantly, leading to the growth rate of network operations and support expenses being higher than the revenue growth rate.