updated 11:37 am EDT, Wed August 22, 2012
Profits seeing 'short-term pressure' because of high iPhone subsidies
China Telecom added 8.35 million subscribers during its second quarter, something attributed to launching the iPhone 4S in March, Bloomberg reports. Net income dropped 10 percent year-over-year from 5.05 billion yuan to 4.55 billion yuan, or $716 million. The figure did however exceed a 4.4 billion yuan median between seven analysts; Telecom says the iPhone should improve long-term growth while putting "short-term pressure" on profit margins, since it is paying high subsidies for each iPhone upfront instead of over the course of a contract.
Telecom is just the second official iPhone carrier in mainland China, competing against China Unicom. Still missing from the picture is China Mobile, the world's largest cellphone carrier with over 650 million subscribers. While a number of hacked iPhones are on Mobile, a proprietary 3G network has prevented official sales. That could change sometime after the launch of the next-generation iPhone, which may support the LTE network Mobile is in the process of building.