China Telecom Q3 profit drops for third straight quarter

Summary:Country's smallest telco sees bottomline dragged down due to higher handset subsidies after it started selling Apple's iPhone, bucking trend of profit growth by its two rivals.

China Telecom, the smallest of the country's mobile operators, has posted its third consecutive quarter of profit decline.

According to a statement released Monday, the telco posted a 7 percent drop in its net profit to 3.8 billion yuan (US$603 million) for the three months ended September--in line with market forecasts, according to a Reuters poll of six analysts.

This compares with a 1 .3 percent increase by China Mobile and China Unicom's 27 percent gain in their net profit.

China Telecom, which started selling Apple iPhone earlier this year, saw increased spending due to handset subsidies as it tries to attract more data users.

In the statement, the company said it had made an "appropriate increase in marketing initiatives for the profitable scale development of its mobile services". This was expected to significantly enhance its long term sustainable growth and value creation despite the short term pressure on its profitability, it added.

Net profit for the first nine months fell eight percent to 12.56 billion yuan (US$1.99 billion) from a year-ago. This was on the back of revenue rose 15 percent to 209.98 billion yuan (US$33 billion).

In August, China telecom reported planned to buy 3G assets from its parent company in a 120 billion yuan deal (US$19 billion) to offset rising costs.

Topics: Tech Industry, China, iPhone, Networking, Telcos


Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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