China Telecom Posts $833.5 Million Net, Sees No Need to Enlist Foreign Partner
April 29, 1999
By DAISY S.Y. WONG
Dow Jones Newswires
HONG KONG -- China Telecom (Hong Kong) Ltd. said 1998 net profit
totaled 6.9 billion yuan ($833.5 million).
The red-chip company, based in Hong Kong but with significant business
interests in China, didn't provide a year-earlier figure, as the company was
only listed in October 1997. It said it recorded a net profit of 1.51 billion
yuan in the period from Sept. 3, 1997, to Dec. 31, 1997. China Telecom,
a constituent stock of the blue-chip Hang Seng Index, was incorporated in
Hong Kong on Sept. 3, 1997.
Revenue totaled 26.35 billion yuan ($3.18 billion) for calendar 1998,
compared with 4.70 billion yuan from Sept. 3, 1997, to Dec. 31, 1997.
Earnings per share in 1998 totaled 59 fen, up from 17 fen for the Sept. 3
to Dec. 31 period a year earlier.
The company won't pay a final dividend and didn't pay an interim dividend.
Earnings were boosted by a 1.61-billion-yuan exceptional profit, most of
which came from interest income on its initial placement offers in 1997.
China Telecom's October 1997 listing in Hong Kong raised about HK$32
billion (US$4.13 billion), a record at the time for IPOs in Asia, excluding
Japan.
In Hong Kong trading Wednesday, China Telecom slipped 1.2% to
HK$17 after rising to a high of HK$17.70 in the morning session.
At a press conference, China Telecom's vice chairman said the mainland
mobile-network provider has no plans to link up with a foreign partner to
develop value-added services, such as Internet services, in China.
"We don't need foreign partners. We can provide the services ourselves,"
said Li Ping, the company's vice chairman and chief operating officer.
Mr. Li said China Telecom plans to focus more on its existing
mobile-network operations but eventually hopes to expand into a broader
media business.
The comments come amid a frenzy of buying of Hong Kong-listed telecom
companies with any links to the Internet. The run on high-tech and telecom
stocks has been fueled in part by rumors of deals with big foreign players,
which have, in some cases, been realized.
Hong Kong Telecommunications Ltd. announced in March a tie-up with
Microsoft Corp. to develop Internet services in Hong Kong, which sent its
stock soaring.
China Telecom said a sharp increase in its subscriber base underpinned the
company's earnings growth in 1998. Its total subscriber base grew 52%
from a year ago to 6.53 million at the end of 1998.
The company said it has a 94.5% average market share in Guangdong,
Zhejiang and Jiangsu provinces. Its Guangdong network, which started
operating about five years earlier than the other two networks, contributed
about 58% of China Telecom's operating revenue, Mr. Li said. Total
usage among subscribers in 1998 jumped 42% to 25 billion minutes, while
their churn rate was at a low of 1.75%.
With stronger recurrent income, the mobile-network provider's available
cash rose to 18.79 billion yuan at the end of last year. Total debts stood at
6.33 billion yuan.
Market concerns have emerged in recent months about whether China
Telecom can hold onto its huge share of the mainland market, once the
country opens its market to gain access to the World Trade Organization
this year.
"If China joins the WTO in the second half [of this year], we think it's
beneficial to China's telecom network and it's beneficial to our company,"
said Wang Xiaochu, the company's chairman.
"It will offer both challenges and opportunities" for China Telecom and the
company will continue to adopt changes in its future development, said the
chairman, though he declined to offer specifics on its strategy.
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