News
Chinese telco reports 6.3% rise in H1 net profit; 4G subscriber base reaches 90 million.
China Telecom reported what analysts described as a fairly unsurprising set of results for the first half of 2016, but provided some welcome updates on its spectrum re-farming timeline and capex plans.
According to a research note from Jefferies, “China Telecom gave clearer responses than peers” on these important issues, and led the analyst company to predict “solid net adds through 2H to support share price appreciation”.
The China-based telco said it would start re-farming 800 MHz spectrum for 4G services in rural areas from the second half of this year, and in urban areas from 2017. It noted that 800 MHz spectrum is more efficient than the 1.8 GHz band and said it aims to enhance user experience and coverage through re-farming.
China Telecom added that re-farming would lead to capex and opex reductions, commenting that high-frequency bands are 2-3x costlier than low frequency bands. The company also said it is working with suppliers to produce the right handsets to support the 800 MHz band. It further noted that it would start the deployment of voice-over-LTE (VoLTE) services in the second half of 2016, with commercial trials scheduled for 2017.
In the first half of the year, China Telecom said net income increased to 11.7 billion yuan ($1.8 billion), which was up from 11 billion yuan a year ago and above the 11.3 billion yuan median estimate in a Bloomberg News survey. Operating revenue rose 7.2% to 176.8 billion yuan, while EBITDA fell 0.4% to 50.6 billion yuan.
The telco added almost 32 million 4G subscribers in the first half, taking its total 4G subscriber base to just over 90 million. The total mobile customer base reached just over 206 million users. Wireline broadband subscribers increased by 4.94 million to 118 million million, of which 88.34 million were fibre-to-the-home (FTTH) subscribers.
