China Telecom reports big lift from iPhone sales
updated 03:15 pm EDT, Wed March 20, 2013
New subscribers, average user revenue both up
China's third-largest cellular carrier, China Telecom, reported higher-than-expected fourth-quarter profits on the strength of attracting new subscribers and a lift gained from iPhone sales, which increased average revenue per customer due to better sales of wireless voice and data. Though net income was down from the same quarter a year ago, it beat analyst's estimates, and the company added some eight million users in the last quarter -- boosting its total base to 160.6 million subscribers.
China Telecom, though much smaller than its rivals, remains the country's largest "landline" home telephone provider, and is one of two major carriers selling the iPhone -- the other being China Unicom, which will report results on Thursday. China Telecom originally become a wireless provider by purchasing one of Unicom's two mobile divisions in 2008. China Unicom has around 240 million subscribers, while China Mobile -- which has yet to conclude an agreement with Apple to sell the iPhone -- boasts more than 710 million customers.
China Telecom's sales rose 17 percent to 73.1 billion yuan ($11.76 billion) in the fourth quarter, with average revenue per user increasing to $8.67 -- higher than expected for both mobile voice and data. The company also beat analyst estimates on net income of $380 million, though the figure was down from a year ago. China Telecom has had larger expenses over the past year due to the increased handset subsidies of the iPhone as well as the expense of completing its 3G network, and will continue to see selling expenses increase over the coming year due to upgrades to that network.
Overall, the company reported a tripling in mobile data traffic volume over the course of 2012, and reiterated that the iPhone would boost long-term growth despite high subsidies and promotion costs in the short term. The stock rose slightly on the financial results, but has seen a nine percent decline over the course of the year. China Mobile, the largest cellular provider, also beat analyst's estimates with a net income of $5.8 billion, up six percent year-over-year.
