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China Netcom posts sluggish result

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

And China Netcom now seems to be pinning high hopes on its IPTV service, which could probably become a big profit engine, as the mainland's IT companies and broadcasters are promoting the product to a young, Internet-loving generation.

Its broadband subscribers increased by 28.6 per cent from the previous year to 13.506 million. Revenue from broadband and other Internet-related services amounted to 5.34 billion yuan (US$667 million), an increase of 33.3 per cent.

By the end of June, the company saw its IPTV subscribers reach 85,800, up 48.1 per cent from the end of 2005.

Zuo also said yesterday the company's disposal of Asia Netcom, a Hong Kong-listed subsidiary, was completed on Tuesday.

China Netcom hoped to reap exceptional earnings from the US$168.84 million transaction between it and the consortium led by Ashmore Emerging Markets Liquid Investment and Spinnaker Global Opportunity fund.

"We expect to obtain additional earnings of more than 1 billion yuan (US$125 million) from the deal within the year," said China Netcom's Chief Financial Officer Li Fushen.

As for co-operation with Hong Kong's dominant phone company PCCW, in which China Netcom has a 20-per-cent stake, Zuo said it would team up with PCCW to develop a 3G and IPTV network in the future. He also vowed to strengthen the real estate business with PCCW.

PCCW Chairman Richard Li has sold his controlling stake to high-profile local banker Francis Leung in July, who vowed to strengthen ties with Netcom.