China Telecom Profits Up By 51.9 Percent
China Telecom's reported a profit rise of 51.9 percent,
boosted by revenue from recent acquisitions in China.
China Telecom derives most of its income from fixed-line
subscribers.
The operator got its revenue from an 80 billion yuan acquisition,
six-province acquisition made in the last two months of
the year. The company plans to issue 8.31 billion shares,
or about 11 percent of its issued capital, to fund the
acquisition of networks in 10 provinces from its state-owned
parent, China Telecommunications Corp. Zhou Deqiang, chairman
and chief executive of the company, claims that the newest
round of acquisitions would be earnings-accretive, despite
the issuing of new shares. This is because, he claims,
the new shares will be solely used for the new acquisitions.
The 10 networks to be acquired are in Hubei, Hunan, Hainan,
Guizhou, Yunnan, Shanxi, Gansu, Qinghai, Xinjiang and
Ningxia. The Tibetan network will continue to retained
by China Telecommunications Corp. After the sale, the
parent's stake will be diluted to 69.91 percent from the
current 77.78 percent, and the proceeds will go to the
state-owned National Social Security Fund.
China Telecom's subscriber base grew 22 percent to 118
million. Of this number, 49 million came from the newly
acquired six provinces in October. They contributed 34.7
billion yuan in revenue and 4.2 billion yuan in profit.
Internet revenue jumped 66 percent to 8.16 billion yuan,
accounting for 7.38 percent of revenue.
Earlier, China Telecom faced with falling growth in China
in the face of competition from mobile services, has proposed
expansion
overseas. With the recent domestic acquisitions, the
company has discussed these moves less.
China Telecom's main competitor is China
Netcom , which is planning a listing to raise US$1.5
- 3 billion in the middle of the year.
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