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iPhone boost helps China Telecom profits beat estimates

Steve Sande, @stevensande
March 20, 2013
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It's a pattern that has been repeated over and over; a wireless carrier adds the iPhone to its mix of products and profitability improves. The latest beneficiary of this little bit of Apple magic is China Telecom, which began selling subsidized iPhones last year. The company reported that net income for the quarter fell 17 percent to 2.36 billion yuan (or about US$380 million) from the previous year, but that figure exceeded the 2.04 billion yuan analysts were predicting.

The iPhone helped China Telecom by boosting sales of wireless data dramatically. The company noted that mobile data traffic on its network essentially tripled last year after adding the iPhone to its stable.

China Telecom is the third-largest wireless carrier in the country with 160.6 million users, trailing far behind first-ranked China Mobile with 710.3 million customers and China Unicom at 239.3 million customers. The company was formerly a landline-only telecom operator, entering the wireless business in 2008 through the purchase of one of China Unicom's mobile divisions.

Things aren't all rosy for China Telecom, though. The carrier has reported three consecutive declines in quarterly profit, and the company recently finished the purchase of a 3G network that it will now need to upgrade. As a result of those upgrades, the company expects its capital spending to rise 40 percent in 2013.

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