Top Biz News

China Netcom posts sluggish result

By Zhang Jin and Jonathan Yeung (China Daily)
Updated: 2006-08-24 08:52

Slow progress in rural markets and the declining popularity of fixed-line telephones increasingly squeezed China Netcom Group Corp (Hong Kong) Ltd in the first half of the year.

And the delayed issue of the mainland's first batch of third-generation (3G) licences, which China Netcom is confident it will secure, also dampened its outlook, analysts said.

The mainland's second-biggest fixed-line phone firm posted a 1.7 per cent fall in first-half earnings yesterday as more users switched to mobile phones.

China Netcom, the smallest of the mainland's big four telephone companies, said it earned 5.82 billion yuan (US$727.5 million) for the six months ended on June 30, versus 5.92 billion yuan (US$740 million) a year ago.

Slow uptake of new users was blamed for the sluggishness, said analysts.

The company saw its number of telephone users increase by 4.7 per cent to 119.4 million in the first half, reflecting a setback in its expansion into rural areas where it earlier had planned to generate the bulk of its revenue.

The mainland remains the world's largest telecom market, with 426.37 million mobile subscribers and 365.3 million fixed-line users at the end of June, official data shows.

China Netcom said it's still confident it will get a 3G licence, which could help a turnaround by diversifying into the lucrative mobile business.

Chief Executive Officer Zuo Xunsheng said Beijing has given the firm a clear message to develop into an "all-round" operator.

But some analysts said the first batch of 3G licences may not be released until early 2007, making the firm's outlook somewhat bleak.