China Telecom profit dives 34%
China Telecom said its net profit fell 33.9% year on year in 2009, due to heavy investment in 3G and increased cost on network operations and support.
The fixed-line carrier reported a net profit of 13.3 billion yuan ($1.95 billion), compared to 20 billion yuan in 2008. Full-year operating revenues rose 12.9% to 208 billion yuan, while ebitda shrank 4.4% to 82.1 billion and ebitda margin declined 7.2 points to 39.4% from a year earlier.
Chairman and CEO Wang Xiaochu said the company would halve mobile network investment this year to 27.7 billion yuan, and would restrict handset subsidies to less than 33% of its revenue.
“When we took over the CMDA network [from China Unicom], we said our business would go through a “V” shape transition. We were at the bottom of the “V” shape in 2009.” he said. “We expect to see an increase in our profit this year and our target to make our mobile business profitable in 2011 remained unchanged.”
Operations and support costs rose 18.9% to nearly 43 billion yuan, largely due to increased investment in transformation services and an increase in CDMA network leasing fees, which amounted to 8.4 billion yuan.