China Telecom lagging; China Mobile booming

September 1, 2016

China Telecom has posted its results for the first half of 2016, with earnings down 8.2% on year due to a decline in the use of fixed line services.

Net profit for the period was $1.85 billion, $0.02 per share, compared to $13.8 billion in the first half of 2015.

Revenues for voice services fell 11.8% to $7.4 billion, whilst revenues from data and internet services increased 27.3% to $3.6 billion. Revenues for business services increased 31.6% to $1.75 billion.

Efforts by the company to expand its fixed line voice customers came under ‘immense pressure’ because of the falling cost of making mobile phone calls.

The company has countered this fall in demand for fixed line voice calls by promoting data services including internet access and web-based television.

China Telecom is the biggest fixed-line provider in the country, with plans to expand into China’s competitive and fast growing mobile phone industry.

Chairman Wang Xiaochu said these plans for structural reform will initially set back the company because of the investment required, but will eventually increase its competitiveness.

Meanwhile, China Mobile reported its first half results with profits up 45% on year due to strong consumer demand and reductions in corporate income tax.

The world’s largest mobile network in terms of subscribers reported a net profit of 54.8 billion yuan ($8 billion), compared to a net profit of 37.9 billion yuan the previous year.

At the end of June China Mobile has 415 million of the country’s 590 million mobile subscribers.