China Telecom to push into rural areas

China Telecom, the country’s biggest fixed-line operator, said on Wednesday it would focus on broadband and make a big push into rural areas to boost growth as it awaits the launch of 3G mobile services.

China Telecom is widely expected to build a 3G network based on China’s homegrown TD-SCDMA technology after Beijing said earlier this year this system would become the country’s first national 3G standard.

But analysts have said this could be a burden on the company as TD-SCDMA is commercially unproven.

Without commenting directly on whether China Telecom preferred a TD-SCDMA network or the more popular global WCDMA standard, Wang Xiaochu, chairman and chief executive, said: “we would be keen to ask the government to let the consumer choose”.

Analysts said the comments indicated China Telecom might not want a licence based on TD-SCDMA.

Mr Wang said before China Telecom could rely on 3G to expand its business, it would need to boost its broadband services.

Beijing has said it wanted 3G services to be in place for the 2008 Olympics, but has not indicated when it would issue the licences.

China Telecom’s broadband revenue grew 32.6 per cent to Rmb17.03m last year after it signed up 51.9 per cent more subscribers to 21.02m.

The company also said it would develop more rural markets to spur new demand for its core fixed-line business, whose sales grew only 1.7 per cent to Rmb123.2m.

According to China Telecom, fixed-line penetration in rural areas was 16.7 per cent in 2005, compared with 36.2 per cent in urban areas. The company added 6m users from the poorer regions last year, higher than 5.7m in the more developed provinces.

China Telecom on Wednesday reported a 6.4 per cent increase in 2005 sales to Rmb162.5bn while net profit rose 8.0 per cent to Rmb21.1bn.