China Telecom鈥檚 profit down in Q2

China Telecom's quarterly profit fell 30 percent but beat analysts' low expectations.

The drop comes as the nation's largest fixed-line carrier faces rising pressure from losses to its core landline subscribers and costs associated with a new 3G service.

The country's three telecom carriers, including China Telecom, will spend $58.5 billion by 2011 on 3G networks. They're expected to incur increased costs from marketing and subsidies as they compete for 3G customers.

China Telecom said yesterday there was “short term pressure” on the company's profitability and that new marketing programs for its mobile services will help future value creation.

It had second-quarter profit of 4.3 billion yuan ($629.6 million). The quarterly results compare to the 6.16 billion yuan a year earlier and the 3.44 billion yuan forecast from a poll of eight analysts. First-half revenue from fixed-line services fell 18.7 percent.

The company wants to have 100 million mobile users and 65 million broadband users by 2011. Media reports say it's struggling to sign up 3G customers. Share prices of all three companies lagged the 35.8 percent jump by Hong Kong's China enterprises index over the same period.

Reuters
 

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