Tags:broadband | China Mobile | 3G

China Netcom Group Corp. (Hong Kong) Ltd., the smaller of the country''s two fixed-line telephone companies, said first-quarter sales rose 0.9 percent on an increase in high-speed Internet subscribers.

Revenue climbed to 20.2 billion yuan ($2.9 billion) from 20.02 billion yuan, the Beijing-based company said in a statement to the Hong Kong exchange today. China Netcom doesn''t report quarterly profit.

China Netcom attracted more customers to its broadband services to offset a loss in phone users after mobile companies cut rates. The carrier lost 1.7 million fixed-line subscribers in the first three months. Netcom and bigger rival China Telecom Corp. may be granted wireless assets as part of a government industry revamp to improve competition in the industry.

In the second quarter, the company will ``seek to achieve high growth of broadband services,'''' Chairman Zhang Chunjiang said in the statement.

Hong Kong-listed Netcom gained 1.9 million high-speed Internet users in the first quarter for a total of 21.7 million, it said in the statement. Netcom lost fixed-line phone users, including customers for the cordless city-wide Little Smart service, bringing its total to 109.1 million at the end of March, from 114.7 million a year earlier.

The nation''s mobile duopoly, China Mobile Ltd. and China Unicom Ltd. added record subscribers in January and February after they cut rates and offered cheaper packages.

Shares Fell

China gained 17.9 million mobile-phone users in the first two months of the year for a total of 565.2 million, while fixed-line customers declined to 362.2 million as the carriers lost 3.3 million subscribers, according to official data.

Netcom shares fell 1.5 percent to HK$22.50 in Hong Kong on Friday. The stock has lost 4.1 percent this year, compared with a 13 percent decline in the benchmark Hang Seng Index.

As part of an industry overhaul, the government may order China Unicom, the nation''s second-largest mobile operator, to sell its bigger phone network to Netcom, analysts at UBS AG, Morgan Stanley and Goldman Sachs Group Inc. said last month.

Unicom may sell its smaller network to China Telecom, while the parent of China Mobile may acquire fixed-line operator China Tietong Telecommunications Corp., according to the analysts.

China, the world''s largest mobile market by users, hasn''t said when it will grant third-generation wireless services or disclosed how many it will issue. The 3G services allow faster downloads of music and video on to handsets.


Source:Bloomberg