Sunday, 24 September 2017

China Telecom posts profit growth on 4G adds

By Mary Lennighan, Total Telecom
Wednesday 23 August 17

Chinese operator outpacing China Mobile in 4G net adds, but will not make dividend payout.

China Telecom reported strong growth in net profit in the first half of 2017, aided by the addition of more than 30 million 4G customers. The Chinese operator's bottom line came in at 12.54 billion yuan (€1.6 billion) for the six months to the end of June, up by 7.4% on the same period a year earlier, while EBITDA grew by 3.7% to CNY52…

China Telecom reported strong growth in net profit in the first half of 2017, aided by the addition of more than 30 million 4G customers.

The Chinese operator's bottom line came in at 12.54 billion yuan (€1.6 billion) for the six months to the end of June, up by 7.4% on the same period a year earlier, while EBITDA grew by 3.7% to CNY52.41 billion.

Growth in mobile service revenues drove the company's top line.

Overall operating revenues reached CNY184.12 billion (€23.4 billion), up by 4.1%, including CNY165.85 billion in service revenues, an increase of 6.8% on 1H 2016; within the latter, mobile service revenues grew by 12.2% to CNY75.74 billion.

"[The] revenue structure of the company was continuously optimised," China Telecom said, in its results announcement.

"The mobile handset Internet access revenue, being the top revenue growth driver of the company, increased by 35% over the same period last year. Total revenues from the ecosphere of Smart Family, new ICT applications, Internet of Things (IoT) and Internet Finance increased by 23% over the same period last year," it said. "New revenue growth engines are being rapidly shaped and formed."

Customers are still flocking to China Telecom's 4G service.

The telco ended the first half of the year with a mobile customer base of 229.85 million, including 152.02 million 4G users. 4G net additions for the period reached 30.15 million, compared with 31.77 million in the second half of 2016 and 31.64 million a year ago.

And it continued its 4G momentum beyond the end of the reporting period, adding 5.03 million new 4G customers in July to take its total to 157.05 million.

Relative to the size of its overall customer base, China Telecom is adding 4G customers more quickly than larger rival China Mobile, which recorded 58.62 million net adds in 1H and 12.32 million in July.

Unlike China Mobile, China Telecom has chosen not to mark a successful first half with a dividend payout.

"Taking into consideration the company's profitability, cash flow level and the capital requirements for future development, the board of directors has decided not to pay an interim dividend this year in order to maintain adequate funding flexibility," China Telecom said.

"The board of directors will proactively consider the expectation of shareholders' return and evaluate the final dividend proposal when reviewing the full year results and will propose to the shareholders' general meeting accordingly," it added.

By contrast, China Mobile expressed its "heartfelt gratitude" to shareholders with a special dividend of HK$3.20 (€0.35) per share on top of an interim payout of HK$1.62.

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