China Telecom earnings beat analyst expectations

China Telecom (CHA.NYSE, 0728.HKG) released higher-than-expected earnings for the second quarter, due in part to the growth of its new iPhone user base, Bloomberg reported. The company’s net income fell 10% year-on-year to RMB4.55 billion (US$716 million), a smaller decline than many analysts were expecting. China Telecom started offering subsidized iPhones in March, a scheme that required sacrificing short-term profits for a bigger long-term consumer base. “It looks like the negative impact of iPhone subsidies was not as strong as people expected in the quarter, and average revenue per user was higher than we expected,” said Marvin Lo, an analyst with Mizuho Securities in Hong Kong. China Telecom Chairman Wang Xiaochu said on Wednesday that he expects the cost of iPhone subsidies in the second half of the year to be “more or less the same as the first half.”