BEIJING, Nov. 6, 2009 (Xinhua News Agency) -- China's top three telecom operators, China Mobile (0941.HK; CHL.NYSE), China Unicom (OOTC:CHUFF) (0762.HK; CHU.NYSE), and China Telecom (0728.HK; CHA.NYSE) announced their first three quarter business performances in succession.
The reports show that competition pattern has taking shape in the telecom market, and the effects of 3G business adjustments have emerged. Value of fixed-line and mobile voice services quickly dropped, while the growth of data service was unclear, and telecom operators' revenue growths will slow. However, the competitive impact will provide upward support for the market to develop.
-- Intense competition, weak profit growth
The following table shows key indicators of the three carriers' business performances in the third quarter of this year. Main indicators of China's three carriers' operating performances in Q3, 2009 China Mobile China Telecom China Unicom Operating revenue (bln yuan) 114.064 52.194 38.492 EBITDA (bln yuan) 57.824 20.217 14.53 EBITDA margin (%) 50.7 38.7 37.7 Net profit (bln yuan) 28.606 2.98 1.872 Net profit rate (%) 25.1 5.7 4.9 Mobile service subscribers (mln) 508.37 46.78 142.8 (Source: Quarterly report of the telecom operators)
China Telecom reported operating revenue of 154.75 billion yuan in the first three quarters, up 15.3 percent year on year. Its EBITDA and net profits were respectively 65.57 billion yuan and 11.39 billion yuan, down 3.9 percent and 33.9 percent from the same period last year.
According to BOCOM International Holdings (BOCOM International), China Telecom's significantly fallen net profit was induced by sharply increased costs for network operation support and sales management, a repeat from the first half.
The following Chart 1 shows key indicators of China Telecom's operating performance in the first three quarters.
China Unicom achieved operating revenue of 114.93 billion yuan from January to September, including 111.82 billion yuan from communications service, accounting for 74.1 percent of the total in 2008. The profit was 9.34 billion yuan, representing 1.19 times of 2008's total.
China Unicom and Spanish telecom operator Telefonica de Espana signed a share swap contract valuing one million US dollars on September 6. By the third quarter of this year, the recognized fair value of swap contract triggered by the growth of Telefonica's (NYSE:TEF) share price was 960 million dollars, which greatly contributed to the carrier's performance growth.
The following Chart 2 shows key indicators of China Unicom's operating performance in the first nine months.
Both China Telecom and China Unicom saw their net profits lower resulting from their scale construction of mobile networks this year. Besides, with the intensification of industrial competition, the telecom operators' sales and market promotion expenditures are continuing to increase.
Brokers held that with the continuous investment into 3G business and equipment depreciation, the carriers' profits will continue falling until 2010.
