China Telecom Corp. added 3.6 million new subscribers in the three months ended September, driven largely by growth in its "Little Smart" service, taking its number of fixed-line customers to 65.8 million, the company said.

At the end of the first half of 2003, the company, the listed unit of China's largest fixed-line operator, reported 62.2 million customers.

Of its fixed-line subscribers, 7.7 million were users of its Xiaolingtong, or Little Smart, service at end-September, up from 5.4 million by end of June, China Telecom said in information posted on its Web site Thursday.

Little Smart is a limited-range wireless local access device that has become a cheap alternative to mobile phones in China. It is regarded as a threat to business growth for the country's two mobile giants - China Mobile (Hong Kong) Ltd. and China Unicom Ltd.

However, analysts said they are also worried that China Telecom's user growth might not translate into an equal rise in call volume as Chinese people increasingly use mobile phones instead of fixed lines.

Little Smart is a "burgeoning, powerful revenue growth contributor," China Telecom said in the Web site material, but noted there is also "more significant mobile substitution"

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