China Netcom, the country's second largest fixed-line operator, saw its net profit fall 5.4 percent in the first half of 2007 under continued pressure from mobile communication operators, the company said in a statement.

The Hong Kong- and New York-listed company reported a net profit of 6.7 billion yuan (US$881.6 million) in the first six months of 2007, down from 7.1 billion yuan (US$934.2 million) for the same period in 2006.

The company registered 40.7 billion yuan (US$5.4 billion) in revenue in the six-month period, representing a slim 0.43 percent increase on last year's same period.

Chairman Zhang Chunjiang said the slow revenue growth of fixed-line operators was a result of increasing mobile substitution.

Although the fixed-line subscribers went up by 1.1 million from the end of last year to 115 million at the end of June, revenue generated from fixed-line telecommunication services continued to decline in the first half.

The company has been active in exploring the mobile services market to cope with the situation. Its interim report showed its broadband subscribers grew by 32 percent year-on-year to more than 17 million in the first half.

Zhang was optimistic about the company's performance, saying the company "achieved remarkable results in its transformation towards a broadband communications and multimedia services provider".

The company's revenue from broadband and Internet-related services rose 33.8 percent to 6.6 billion yuan (US$868.4 million), with its average revenue per user of broadband services at 67.4 yuan (US$8.9), up 3.4 percent from the same period last year.

The country's dominant mobile communication operator - China Mobile said earlier its first-half profit rose 25.7 percent to 37.9 billion yuan (US$4.99 billion).