China's top carrier posts 8% earnings dip

China Telecom's first-half earnings slipped 8% as revenues for fixed-line voice service shrank. The company warned it faces pressure on profits as Beijing carries out a planned restructuring of the telecoms industry, an Associated Press report said.

Net profit for the six months ending June 30 was 12.7 billion yuan (€1.27 billion, US$1.85 billion), down from 13.8 billion yuan (€1.3 billion, US$2 billion) in the year-earlier period, the report said.

China Telecom is the country's biggest fixed-line telephone provider and is expanding into the quickly growing mobile business under an industrywide restructuring plan announced by regulators in May, the Associated Press report also said.

That plan will create three carriers, China Telecom, China Mobile and China Netcom, each with fixed line and mobile services.

The report also quoted chairman and CEO Wang Xiaochu saying that

China Telecom's efforts to expand the market for fixed-line voice service suffered 'immense pressure' in the first half due to the falling price of mobile service.

The company should benefit in the long run but will face 'downward pressure on our profit' as it invests to get its mobile business up and running, Wang said.

Fixed-line carriers have responded to slack demand for voice service by promoting internet access, web-based cable television and other products.

China Telecom's first-half revenues for voice service fell 11.8% from the year-earlier period to 50.5 billion yuan (€5 billion, US$7.4 billion). Revenues for internet and data services rose 27.3% to 24.5 billion yuan (€2.4 billion, US$3.6 billion), while those for business services climbed 31.6% to 12 billion yuan (€1.1 billion, US$1.75 billion).

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