China Telecom net income soars on iPhone adoption

China Telecom has reported a sharp rise in earnings and revenues for the first six months of the year thanks to soaring demand for the iPhone and mobile data services.

The operator – China’s third-biggest behind China Mobile (Beijing, China) and China Unicom (Beijing, China) – saw net income increase by 15.9% for the first half, to RMB10.2 billion ($1.67 billion), compared with the same period last year, while revenues grew by 14.1%, to RMB138 billion, over the same period.

China Telecom has reported a sharp rise in earnings and revenues for the first six months of the year thanks to soaring demand for the iPhone and mobile data services.

The operator – China’s third-biggest behind China Mobile (Beijing, China) and China Unicom (Beijing, China) – saw net income increase by 15.9% for the first half, to RMB10.2 billion ($1.67 billion), compared with the same period last year, while revenues grew by 14.1%, to RMB138 billion, over the same period.

China Telecom (Beijing, China) has benefited from a deal with Apple (Cupertino, CA, USA) last year that allowed it to start offering the iPhone to its subscribers.

Previously, China Unicom had been the country’s only iPhone service provider, while China Mobile still lacks an iPhone offer because its network technology is incompatible with the device.

Although iPhone subsidies initially weighed on China Telecom’s profits, rising usage of iPhone services appears finally to be translating into earnings growth for the company.

China Telecom reported a net addition of 18.28 million 3G customers in the first half of the year and some 50% of its 175 million mobile customers now use 3G services, putting it ahead of China Mobile and China Unicom on this measure.

The company’s average revenue per user was also 3.6% higher than in the first six months of 2012.

Whether the operator can maintain its advantage, however, is doubtful, with operators now preparing to launch 4G networks in China.

Analysts believe the next iteration of the iPhone will function on the TD-LTE variant of 4G technology in which China Mobile is investing, allowing the operator to overcome its biggest disadvantage against its competitors.

“There are still uncertainties in domestic regulatory policies while the accelerated evolution of new technologies is driving up industry competition,” noted China Telecom in its earnings statement.

In the meantime, China Telecom says it will seize the current “golden window of opportunity and focus on accelerating the scale expansion of the strategic 3G services”.