China Telecom 2008 profit drops 96%

China Telecom said its 2008 net profit fell 96% year-on-year to US$129.4 million due to losses associated with the discontinuation of its low-cost wireless services, the Wall Street Journal reported. Full-year revenues rose by 3.3% to US$27.3 billion, but the company booked losses of US$3.5 billion for retiring its “personal handyphone” or “xiaolingtong” assets – a limited wireless service based on fixed-line technology. The government last month ordered China Telecom to cancel the service to avoid frequency interference with third-generation wireless services. The company will cut its capital spending by 19% to US$5.7 billion this year and issue up to US$13.1 billion in debt to fund its expansion into the mobile business. It aims to add 30 million mobile subscribers this year – up from 30.63 million at the end of February – and pass 100 million by 2011.