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Telecom: China Netcom H1 net profit falls 5.2%

(Agencies)
Updated: 2008-08-25 17:08

China Netcom Group Corp (Hong Kong), one of the country's two main fixed-line phone operators, said its first-half net profit fell 5.2 percent to 6.38 billion yuan ($931.47 million) from 6.73 billion a year earlier as mobile phone services continued to eat away at its fixed-line business.

It said the trend toward substitution of mobile services for fixed-line services accelerated and has spread to long-distance voice business.

But China Netcom said the revenue generated from "innovative" businesses made up for most of the decline in the fixed-line sector.

Revenue in the first half was relatively steady at 41.13 billion yuan, against the year-earlier 41.54 billion.

Excluding upfront connection fees of 505 million yuan, revenue and net profit amounted to 40.62 billion yuan and 5.88 billion respectively.

China Netcom said the revenue from innovative businesses rose 26.2 percent to 16.48 billion yuan, accounting for 40.6 percent of total revenue.

It said growth was mainly the result of rapid expansion of broadband services, where revenue surged 38.8 percent to 8.86 billion yuan and average revenue per user (ARPU) was 68.5 yuan.

Broadband subscribers increased by 3.587 million from the end of 2007 to 23.36 million at end-June.

China Netcom said its share of the broadband market in its service areas was 90.4 percent, up 1.5 percentage points year on year.

As a result of continuous mobile substitution, local usage fee revenue dropped 12 percent to 9.07 billion yuan from 10.28 billion.

Chairman Zuo Xunsheng said the company will increase investment in its innovative businesses, including broadband, in the second half.

He said the company's imminent merger with wireless services provider China Unicom will support and strengthen execution of these strategies.