China's largest fixed-line phone operator, China Telecom Corp Ltd, Wednesday posted a better-than-expected 2003 net profit of 24.69 billion yuan (US$2.98 billion), up 153 percent from the previous year, benefiting from its solid growth in wireless and broadband businesses.

Turnover for 2003 edged up to 118.5 billion yuan (US$14.2 billion), representing a growth of 8.1 percent from the previous year, and the company declared a dividend of 0.0689 yuan per share.

"The low-end wireless service known as Xiaolingtong or personal access system (PAS) and broadband services are the most effective driving forces for the growth," said Zhang Bing, an analyst with CITIC Securities.

According to a statement from China Telecom Corp Ltd, its fixed-line subscribers grew 22 percent to 118 million.

It has 18.35 million subscribers for its Xiaolingtong service so far while its broadband subscribers reached 5.63 million, registering a 200 percent growth compared to the previous year.

"The two main revenue generators will continue to play a significant part in sustaining its growth this year," Zhang said.

He says the company's broadband subscribers are likely to increase by at least 50 percent this year.

Zhang pointed out that the fixed-line plus Xiaolingtong wireless service will be a very competitive way to fight for a position amongst the country's two mobile giants - China Mobile and China Unicom.

As a matter of fact, both China Telecom and its rival, China Netcom, have spent billions of dollars over the last two years to roll out their PAS and broadband networks.

Board Chairman and Chief Executive Officer Zhou Deqiang said the country's sustained domestic economic development has helped carve out huge market potential for growth.

China Telecom Corp Ltd also said yesterday it plans to issue shares worth roughly HK$23.7 billion (US$3 billion) to fund the planned acquisition of 10 provincial phone networks from its state-owned parent company.

The company said that of the 8.317 billion shares it hopes to issue, about 9 percent are owned by its parent firm, which would effectively lower the government's stake in the company.

The company also said it will seek approval from shareholders to issue new stock, allowing it to issue the new shares at any time before November 2.

Late last year, China Telecom acquired six provincial networks from its parent company for 46 billion yuan (US$5.56 billion), bringing its number of city and provincial networks to 10. The company eventually plans to buy another 11 networks still owned by its parent company.

The purchase may include its parent company's fixed-line network, data and Internet business.

In a statement last month, China Telecom Corp Ltd said discussions on acquiring remaining provincial networks were preliminary and neither the price nor financing of any purchase had been agreed on.

(China Daily March 18, 2004)