China Telecom Corp, Ltd., China's largest fixed line service provider, said Thursday that net profits fell 27.5 percent from a year earlier in the first half of this year on losses of fixed-line subscribers and increased costs on mobile services.

Net profits stood at 8.41 billion yuan (US$1.23 billion) in the first half, excluding gains from fees collected from installation of fixed lines. Earning per share was 0.1 yuan, the company said in its statement to the Hong Kong Stock Exchange.

Revenue rose 14.8 percent year on year to 102.55 billion yuan from January to June. The company said it didn't plan to pay an interim dividend, but would consider the matter at the end of the year.

The number of fixed telephone users decreased 4.3 percent from a year ago to 199 million in the first half. The revenue from fixed-line voice services fell 18.7 percent from a year earlier to 41.06 billion yuan.

The company added 4.78 million broadband users from the end of 2008 to 49.05 million by the end of June and mobile users increased by 11.37 million to 39.28 million.

China Telecom said it had expanded its third generation (3G) mobile network to cover 342 cities and more than 2,000 counties at the end of July.

The company said it would improve its services and launch new 3G products in the next half to satisfy customers' demands and to obtain a bigger market share.

Wang Liang, an analyst with Founder Securities, said the half-year result was in line with market expectations as the company increased spending on construction and marketing of the Code Division Multiple Access (CDMA) network in the first half.

The company began the mobile-phone service in October last year after acquiring China Unicom (Hong Kong)'s CDMA technology business to access the 3G market.

"The company should increase investment in the marketing of mobile-phone services, which will enhance sustained development and add value in the long run although it will mean short-term pressure on the company's profitability," China Telecom's statement said.

(Xinhua News Agency August 28, 2009)