China Telecom reports 12% growth

China Telecom yesterday reported a 12 percent net profit growth for the first half and immediately announced plans to expand its 4G services to more cities and improve its network coverage by year-end.

The country's No. 3 mobile carrier said its net profit reached 11.4 billion yuan (US$1.9 billion) in the first six months — an 11.8 percent growth year on year. The revenue was 166 billion yuan with a growth of 5.3 percent.

Two weeks ago, rival China Mobile posted a net profit drop of 8.5 percent in the first half that it blamed on 4G investment and a tax reform that eroded profit margin. The new value-added tax policy, which came into effect from June, raised the tax rate for telecommunications carriers from 3 percent to about 7 percent.

The new VAT scheme will also affect China Telecom's profit, the company said.

China Telecom plans to expand the new FDD-LTE-based 4G services to 16 cities including Shanghai, Xi'an, Chengdu, Hangzhou, Wuhan and Nanjing. Till the end of June, China Telecom had more than 180 million mobile users, 5.4 million fewer compared with 2013.

Compared with China Mobile's TD-LTE network, China Telecom's FDD-LTE technology is more mature because it has been used in other countries like the US, UK and South Korea for several years.

Unlike rivals China Mobile and China Unicom, China Telecom can offer customers combined 4G phone and broadband services, because it is also the country's biggest fixed-line phone and broadband operator. Till June, China Telecom had 104 million broadband family users.

In Shanghai, China Telecom's 4G network covers 90 percent of the city and the company plans to increase it to 98 percent by the end of next year at a cost of about 4 billion yuan.