China Telecom to buy parent’s wireless network

China Telecom is to buy the CDMA network it currently leases from parent company China Telecommunications. With fourth quarter profits up 42 per cent on the back of a tripling of smartphone users, China’s biggest fixed-line carrier is looking to build on that growth by reducing its 3G costs. Last year, the cost of leasing the CDMA network rose by 59 per cent – more than the depreciation of assets and other related costs – to CNY13.3bn ($2bn).

Announcing the telco’s annual results yesterday, chairman Wang Xiachou reported a significant increase in the number of 3G users  -up to 12.3 million from 4.1 million the previous year. This, he said, had been driven by increasing the number of handsets on offer to users as well as promotional call rates. Profits excluding gains from connection fees increased to CNY2.67bn ($408m) in the last quarter of 2010, up from CNY1.88bn  a year earlier. This was somewhat behind the growth levels predicted by analysts and was attributed to the decline of the company’s fixed-line business as well as increased competition in the mobile space.

China Telecom sits in third place in the Chinese market, behind leader China Mobile and China Unicom. It entered the market in 2008, following a government-led shake-up of the country’s mobile industry which saw China Telecom acquiring one of China Unicom’s two mobile divisions.

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