China Telecom rings changes

China Daily, March 31, 2011

China Telecommunications Corporation (China Telecom) said on Wednesday that its mobile subscriber numbers have reached 100 million, making the company the world's biggest carrier of a CDMA (code division multiple access) network.

Sun Kangmin, vice-president of China Telecom, said at a news conference in Beijing that the number of subscribers using the company's mobile services has increased to more than 100 million from 27 million in October 2008, with 3G (third-generation) user numbers reaching 15 million.

The US telecom operator Verizon Wireless had been the world's biggest CDMA network carrier with 94.1 million customers at the end of 2010, according to the company's report.

China Telecom is the country's biggest fixed-line operator by subscribers. In October, the company purchased China Unicom's CDMA mobile business as part of its restructuring in the country's telecom sector.

Its late entry into the mobile business saw China Telecom lag behind its rivals such as China United Network Communications Group Co Ltd, which had 170 million users at the end of January and China Mobile Communications Corporation, with 589 million.

Since the beginning of last year, China Telecom has invested heavily in the construction of the 3G network and has helped device manufacturers to launch a number of low-price smartphones.

According to the company, sales of CDMA-enabled handsets totaled 45 million by the end of last year, an increase of 50 percent over 2009. The average selling price of 3G CDMA handsets also fell by 54 percent during the course of 2010, paving the way for the rapid growth of China's CDMA market.

Wang Yuquan, a senior consultant with the research firm Frost & Sullivan, said the biggest obstacle China Telecom must tackle in developing its mobile business is the lack of handsets that support CDMA technology, which was mainly developed by the US chipmaker Qualcomm Inc.

However, the company may benefit from its huge fixed-line user base, he added.

China Telecom said that fourth-quarter net profit rose to 2.67 billion yuan ($407 million) from 1.88 billion yuan a year earlier, representing a growth rate of 42 percent. Revenue rose 5.1 percent to 56.21 billion yuan in the period.

Sun claimed on Wednesday that China Telecom already has the country's biggest 3G user base, when calculated using the company's own accounting method for 3G users.

China Telecom estimates that domestic sales of CDMA handsets will total 60 million this year, with 3G handsets accounting for more than 50 percent of that figure.

Wang Xiaochu, China Telecom's chairman, said on March 22 that the company plans to purchase a CDMA network valued at about 90 billion yuan from its State-owned parent company by the end of next year

The move will close to boost its debt-to-equity ratio 45 percent.