China Telecom eyes revenue growth amid further tariff cuts
Mainland’s third-largest mobile network operator reports a 10pc decline in 2016 net profit
China Telecom, the world’s eighth largest mobile network operator by subscribers, is looking to maintain revenue growth this year despite implementing further tariff reduction measures directed by Beijing.
“Raising [internet] speed costs money, while cutting prices hurts our revenue,” China Telecom chairman and chief executive Yang Jie said on Tuesday. “We will try to minimise the impact [of these actions] by increasing [network] usage and demand.”
The fees affected by Premier Li Keqiang’s recent call for the telecommunications sector to “raise speed, drop prices” account for nearly 10 per cent of China Telecom’s 309.6 billion yuan in service revenues for 2016, according to the company.
China Telecom, China Unicom and China Mobile had all pledged to substantially reduce internet private line access charges for small and medium-sized enterprises, cut international call tariffs, and from October 1, cease to charge domestic long-distance and roaming fees on their mobile subscribers.
Last week, Unicom estimated the cancellation of domestic roaming fees alone would cost it about 1.6 billion yuan (US$232 million) in lost revenue each quarter.
Raising [internet] speed costs money, while cutting prices hurts our revenue
“China Telecom has indicated that 60 per cent of its subscribers are already on plans that do not have domestic roaming charges,” Jefferies equity analyst Edison Lee said.
