Internet drives growth at China Telecom

China Telecom, the country?s largest fixed-line operator, posted a first-half net profit of Rmb11.29bn ($1.39bn), an 8 per cent increase from a year ago.

Company executives said revenue growth this year had in large part been driven by strong demand for broadband internet and value-added services, reflecting a gradual diversification of its business.

China Telecom said operating revenue in the first six months, excluding upfront connection fees, rose 6 per cent from a year ago to Rmb80.62bn.

The company has in recent years been seeking revenue generators other than its core fixed-line business.

Compared with a year ago, revenue from internet access rose 29 per cent to Rmb8.54bn while the total number of broadband subscribers surged nearly 60 per cent. Revenue from value-added services soared 56 per cent to Rmb4.6bn.

Wang Xiaochu, chairman and chief executive, said in a media briefing that this trend was likely to continue through the year and represented the operator?s shift to a greater reliance on its ?non-voice revenues?.

He said the company aimed to transform into a ?modern integrated information services provider?.

?We are fully confident of our future prospects,? he said.

China Telecom?s core voice business, which includes local and long distance services, accounts for about 76 per cent of total revenues, down from nearly 80 per cent just a year ago.

As of the end of June, the company?s total telephone subscriber base reached 202m, up 8 per cent from the end of 2004.

China Telecom, and its main rival China Netcom, have been looking ahead to the government?s allocation of third-generation mobile phone licences.

When the licences are handed out, Mr Wang said his company was likely to focus on providing 3G services in more developed eastern and southern Chinese cities in the initial stages.

China Telecom?s board decided not to pay an interim dividend. It also expects to add independent directors so that they will account for a third of board members.yesterday before the first half figures were made public.

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