China Telecom on Wednesday reported that revenue and net profit remained flat in 2014, while EBITDA declined slightly, its numbers hit by new tax regulations and limited progress in 4G.
The Chinese operator posted revenue of 324.4 billion yuan (€49.8 billion) last year, up by 0.9% on 2013, although within that service revenues grew by 3.1% to CNY287.4 billion and mobile service revenues increased by 5.7% to CNY120.3 billion.
Full-year EBITDA slid by 1.8% to CNY94.9 billion, and net profit grew by 0.8% to CNY17.7 billion.
The firm’s figures were affected by the implementation of value-added tax (VAT) on telecoms service in mid-year. China’s telcos are now subject to VAT of 11% on basic telecom services and 6% on value-added services, instead of the 3% business tax they previously paid.
"The pilot programme of VAT reform commenced in the telecommunications industry in June 2014," China Telecom said in a statement.
"Although it has an adverse impact on the company in the short term, the company expects that it will be beneficial for its sustainable development in the long term," it said.
It also admitted that the "geographical limitations on the trial of it s 4G hybrid network" held back its growth on the mobile side. However, it conducted trials in 56 cities and was recently granted an FDD LTE licence, enabling it to launch full 4G services.
The lack of a full 4G offer caused significant mobile subscriber losses at China Telecom in the first half of last year. However, it clawed those back in the second half and ended 2014 with around 400,000 more customers than it had had at end-2013.
By the end of February this year, according to new operational statistics also published on Wednesday, China Telecom had a customer base of 187.57 million, having added almost 2 million connections in the first two months of the year.
"The company will seize the crucial opportunities from the issuance of [the] 4G licence and the sharing of tower resources," China Telecom said, referring to the joint venture it formed alongside China Mobile and China Unicom.
"The company will increase its investment and promote the rapid development of its mobile services in full strengths, especially the profitable scale development of its 4G services," it said.
