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Profit focus on China Telecom
HONG KONG, China (CNN) -- Investors in the telecommunications sector will focus on full-year results from China Telecom later this week after rival China Mobile (Hong Kong) said Tuesday its first-quarter profit rose 9.7 percent. Analysts expect a 2002 profit of about $2 billion on revenue of $9 billion for China Telecom when it reports on Thursday. China Mobile, China's biggest provider of mobile phone services, posted a profit of 8.98 billion yuan ($1.08 billion) for the three months to March 31, on revenue of 37.65 billion yuan ($4.5 billion). Earlier this month, China Unicom, the No. 2 mobile operator, said its 2002 net profit was $552 million on revenue of $4.9 billion. Once the sole provider of fixed lines in China, China Telecom now competes with China Mobile and China Unicom in broadband and wireless services. These are expected to be the growth areas for the company when it unveils its 2002 results on Thursday. Over the past year China Telecom has been preparing to roll out a limited-mobility wireless phone service called Xiaolingtong or Little Smart, which is substantially cheaper than standard mobile phone service. So far, it has an estimated 3 million subscribers. China Telecom is expected to launch Little Smart in the southern city of Guangzhou on May 17. Reports from Beijing say that another fixed line operator, China Netcom, will launch a similar service in Beijing on the same day. But the fixed line operators have a long way to go to catch the mobile incumbents. According to Xinhua news agency, China Mobile and China Unicom increased subscribers by 2.6 percent in March over February to a combined total of 222 million. China Mobile said on Tuesday it has 123.8 million users. China Unicom is aiming to add 21.5 million mobile users this year, split 11.4 million for its CDMA service and 10.1 million for its GSM network. China Telecom is expected to buy five or six provincial networks from its parent company by the end of 2003. "Those are the key issues," ING Barings analyst Leon Chik told Reuters news agency. "Xiaolingtong is always the key, as well as broadband and new acquisitions." Thursday's results are expected to be in line with forecasts China Telecom made before its initial public offering in November. That share sale raised $1.43 billion, or less than half what China Telecom had originally hoped for. The stock is trading Tuesday at HK$1.41, below its IPO price of HK$1.47. In Shanghai Tuesday, Chinese telecoms gear maker Eastern Communications Co Ltd (Eastcom) said it posted a loss of about $25 million for 2002. Eastcom, based in Hangzhou, makes handsets and network equipment in partnership with U.S. giant Motorola Corp. The pair are major suppliers to China Unicom's CDMA network.
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