China Telecom Corp, the country's biggest fixed-line telephone operator, said yesterday

(China Telecom Executive Director Wu Andi (left), Chairman and CEO Wang Xiaochu (center) and President Leng Rongquan before a news conference announcing the company's 2006 results in Hong Kong on March 26. Photo: China Daily) Photo Gallery>>>

that its profit for 2006 fell 2.7 percent, plagued by slow growth in its core fixed-line business. But total revenue rose on strong demand for Internet connections and other services.

The Beijing-based carrier said its net earning was 27.1 billion yuan and revenue from Internet connections rose 32 percent whereas local phone revenue dropped 3.5 percent. Total revenue jumped 3.4 percent to 175 billion yuan.

China Telecom added nearly 13 million connections last year as its total fixed-line subscribers reached 223 million, while broadband customers increased by 7.3 million to 28.32 million. Non-voice services increased to 29 percent of the total revenue, up 5 percentage points from 2005.

The company's earnings before interest, taxes, depreciation and amortization (EBITDA) improved 3.8 percent to 84.91 billion yuan.

"The informatization process has continued to accelerate in China with rapidly growing demand for information infrastructure, information technology and applications services by the government, enterprises and households. This brings tremendous business development opportunities for us," Wang Xiaochu, chairman and CEO of China Telecom said in a statement.

"However, the company also well realizes the irreversible trend of mobile substitution and increasingly intensified competition in the telecommunications industry. The company will continue to progress its strategic transformation and further innovate to improve its systems and mechanisms," Wang said.

Lower connection fee hurt results. The company stopped charging for line installation in 2001 but has been booking deferred income, with the amount falling each year.

Excluding connection fees, net profit rose 4.9 percent to 22.2 billion yuan.

To make up for the slow growth, as mobile phones tend to be the preferred option, China Telecom is expanding broadband, Internet-based TV and other new services.

"Aiming at the diverse needs of customers, we provided innovated products and services, including improved high-speed Internet experience, feeding information to customers for their needs in daily life or business opportunities," the company said.

In comparison, China Mobile Corp, the country's top mobile carrier, announced last week that its 2006 profit rose 23 percent, benefiting from increasing subscribers.

China has the world's biggest telecom market, with 461 million mobile and 368 million fixed-line phones as of January. The number of mobile phones is expected to grow by 60 million this year, while fixed-line phones will rise by 10 million.

There were more than 437 million mobile phone users on the mainland, or 327 mobile phones per 1,000 people, by the end of August 2006, according to the Ministry of Information Industry statistics. And, mobile phone users on the mainland sent 273.67 million text messages from January to August in 2006.

On an average, China's mobile subscribers increased by 4.78 million each month.

China imported its first mobile phone telecommunication facilities in 1987 and it took a decade for the number of subscribers to reach 10 million. Four years later, the country had the largest number of cellphone subscribers in the world.