China Telecom has reported a 10% year-on-year surge in its net profits, which touched US$2.64 billion (RMB 16.2 billion) in the quarter ending September 2014.
The improved profits are on account of higher subscribers for the company’s fixed-line broadband and 3G-4G services. Recently, there has been a double-digit dip in handset subsidies, which has led to cost savings for the company. Aside from that, the Chinese government, in 2013, revised interconnection fees, which has proven favorable to the company’s cost saving efforts.
According to the financial statements of the company, its operating revenues saw a spike of 2.2%, YoY, nearing US$39.8 billion (RMB 244 billion). This happened because of higher revenues from the 3G service domain. Fixed broadband services continued to grow, contributing substantially to the improved profits of China Telecom. According to the carrier, it added well over 16 million new subscribers to its 3G subscriber base. At the end of September 2014, the company boasted a total 3G user base of 113 million.
However, the number of subscriber additions fell short of expectations. The company’s sales of mobile terminals slid by nearly 17% YoY, dropping to US$3.8 billion (RMB 23.3 billion).
At the same time, the company reported an increase in costs – especially under network operations maintenance projects. The total costs surged by 24.4% as compared to the same time last year. The company has been spending aggressively on improving the quality of its networks. The company reported that amortization and depreciation came down by nearly 5% as the company successfully sealed the acquisition of CDMA assets from its parent company.