China Telecom FY15 profit grows 13.4%
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China Telecom has reported a sharp increase in its net profit for 2015 thanks to one-off gains from the sale of telecom towers and related assets last year.
Profit surged 13.4% year-on-year to 20.05 billion yuan ($3.07 billion) on the back of a one-time gain of 3.94 billion yuan from the transfer of towers and other infrastructure to China Tower, the JV formed by the three telcos last year.
Revenues rose 2.1% to 331.20 billion yuan, while EBITDA fell 0.8% to 94.11 billion yuan, impacted by a number of regulatory changes and higher costs.
In its 2015 annual results, China Telecom said revenue growth was mainly driven by its mobile businesses, with revenue rising 3.5% to 124.50 billion yuan. Fixed service revenue increased 1% to 168.76 billion yuan.
China Telecom finished the year with 58.46 million 4G customers, or more than a quarter of its total mobile subscriber base of nearly 200 million customers. The operator’s 4G ARPU stood at 78 yuan, against the 58.46 yuan of blended ARPU.
The operator added more than 51 million 4G customers last year after it received government approval to provide a nationwide 4G service in February.
Mobile data traffic doubled last year, with 4G contributing 51%. Monthly average data traffic per 4G user increased by 25% year-on-year to 751 MB. By January-February this year, 4G customers averaged 850 MB per month.
By comparison, biggest rival China Mobile had 312 million TD-LTE customers, while China Unicom, the country’s second largest mobile carrier, had 44 million 4G customers.
“In its 2015 annual results, China Telecom said revenue growth was mainly driven by its mobile businesses, with revenue rising 3.5% to 124.50 billion yuan.”
China Mobile last week reported a 0.6% dip in its full-year net profit for 2015, while Unicom posted its first decline in net profit since 2010 for last year.
Looking ahead, China Telecom said “2016 is a crucial year for the Company in building up a more favorable market position for the future,” adding that the company will strengthen the core competence in network and operation and grasp the opportunities from the scale-up and value enhancement of its 4G and fiber broadband businesses.
China Telecom president and COO Yang Jie said China Telecom aims to add 60 million 4G subscribers this year. The operator plans to add 290,000 more 4G base stations by the year-end, bringing the total to around 800,000, as it expands coverage in towns and rural areas.
China Telecom also plans to deploy 4G+ in all cities, start testing 800-MHz band spectrum and prepare for the launch of VoLTE in 2017.
The company expects capex to fall to around 97 billion this year from 109 billion in 2015, with nearly half of spending going towards 4G.
In addition, the operator will expand its FTTH network by another 50 million homes passed, to a total 270 million.
China Telecom saw a strong growth in its FTTH business last year, with net additions of 28.38 million customers for a total 70.99 million of wireline broadband subscribers.
Questions & Answers
Q.What was the main reason for China Telecom's significant profit growth in 2015?
What was the main reason for China Telecom's significant profit growth in 2015?
The sharp increase in net profit was primarily due to one-off gains. These gains came from the sale of telecom towers and related assets to China Tower, the joint venture formed by the three telecommunication companies last year.
Q.Despite the profit growth, did China Telecom experience any financial declines in 2015?
Despite the profit growth, did China Telecom experience any financial declines in 2015?
Yes, while net profit grew, EBITDA fell by 0.8% to 94.11 billion yuan. This decline was attributed to a number of regulatory changes and higher operating costs experienced throughout the year.
Q.How do China Telecom's 4G customer numbers compare to its main rivals at the end of 2015?
How do China Telecom's 4G customer numbers compare to its main rivals at the end of 2015?
China Telecom had 58.46 million 4G customers. Its biggest rival, China Mobile, had a significantly larger base with 312 million TD-LTE customers, while China Unicom had 44 million 4G customers.
Q.What are China Telecom's key strategic goals for 2016 regarding its 4G network?
What are China Telecom's key strategic goals for 2016 regarding its 4G network?
For 2016, China Telecom aims to add 60 million 4G subscribers and plans to deploy 290,000 more 4G base stations. This expansion will bring the total to around 800,000, improving coverage in towns and rural areas.
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