China Telecom returns to profit, warns of competitive threats

China Telecom (0728.HK, CHA.NYSE) returned to profit in the fourth quarter of 2009, with a net income of US$439.4 million, Reuters reported. The company filed a loss of US$2.4 billion a year earlier largely due to provisions for PHS, the low-end wireless service that is being phased out. China Telecom said that the development of newer networking-based applications including cloud computing is driving demand for high-speed data services, but warned that it was “facing serious challenges from intensifying competition in the telecommunications industry.” The company acquired a 2G CDMA network as part of the industry restructuring and has since introduced 3G services. Its mobile subscribers totaled more than 56 million in 2009, more than double a year earlier, giving the company a 7.7% market share. However, average revenue per user dropped to US$8.71, from US$9.29 in 2008, a reflection of the intense competition in the industry. China Telecom’s full-year profit for 2009 fell 34% to US$1.9 billion.