China Telecom has reported an 8% decline in net income to CNY12.67 billion ($1.85 billion) for the first half of 2008, on revenue up 1% to CNY90.43 billion ($13.2 billion). It attributed the decline to price cuts offered by wireless carriers to customers.

Operating income during the period fell 9% to CNY18.75 billion ($2.73 billion), EBITDA fell 2% to CNY44.26 billion ($6.46 billion), and free cash flow grew 11% to CNY21.67 billion ($3.16 billion).

The company said wireline voice service revenue fell 12% to CNY50.51 billion ($7.37 billion), while internet and data services revenue grew 27% to CNY24.53 billion ($3.58 billion). Value-added and integrated information application services revenue grew 32% to CNY11.98 billion ($1.75 billion), and broadband access revenue grew 31% to CNY19.28 billion ($2.81 billion). "Best Tone" and ICT services revenue grew 57% and 102%, respectively.

The number of broadband subscribers increased by 4.3 million to 39.95 million, while the total number of access lines fell 2% to 215 million.

During the half, the company agreed to acquire the CDMA mobile-phone operations of China Unicom, and plans other acquisitions this year as it enters the mobile-phone market in line with a government ruling to revamp the domestic telecoms industry.

Wang Xiaochu, chairman and chief executive at China Telecom, said: "By way of the ongoing CDMA business acquisition, the company will quickly enter the mobile communications market and attain enormous development potential. The company aims to effectively converge mobile elements with integrated information services and implement differentiation development strategy with a focus on mid- to high-end urban customers."

Looking ahead, the company expects its wireline subscriber market share to continue to decline. It also said its mobile services operation will require significant investment at the initial stage.

source:CBR