Chinese state-owned telecommunications network operator China Telecom Corp Ltd on Tuesday reported net profit that fell 10.2 percent last year due to a higher base of comparison, and said subscribers to its 4G mobile network doubled.
Profit fell to 18 billion yuan ($2.61 billion), in line with the 18.1 billion yuan average of 21 analyst estimates from Thomson Reuters SmartEstimate. It grew 11.7 percent when excluding a one-off gain in 2015 from disposing of tower assets.
Operating revenue rose 6.4 percent to 352.3 billion yuan.
China Telecom is among China's state-owned telcos bracing for revenue pressure after Chinese Premier Li Keqiang called on them to "raise speed, drop prices" by evening out local and long-distance domestic call charges and removing domestic roaming charges.
Jefferies analyst Edison Lee said China Telecom will suffer more from the reform than bigger rival China Mobile Ltd
due to its narrower net margins. Lee lowered his 2017 earnings-per-share forecast for China Telecom by 16.8 percent as a result of Li's call.
Chairman and Chief Executive Yang Jie, speaking at an earnings press conference, said China Telecom had earmarked 89 billion yuan ($12.90 billion) for capital spending this year, down 8 percent from 2016 which itself was 11.3 percent down on 2015.
Spending next year would be "significantly lower," he added.
China Telecom, which derives almost half of its revenue from its mobile business, said it doubled the number of users of its fourth-generation (4G) mobile network last year to 122 million, making up a 16 percent market share.
The telco, China's second-largest by market value, also declared a dividend of HK$0.105 per share, up from HK$0.095 a year earlier.
"Year 2017 is a crucial year for the company to implement the strategy of comprehensive transformation and upgrades as well as the construction of comprehensive competitive advantages," Yang said in a statement to the stock exchange.
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