UPDATE: China Telecom 2011 Net Profit Grew 7.5%, Sees Higher Revenue Per User This Year

China Telecom Corp.'s (CHA) 2011 net profit grew 7.5% from a year earlier, outpacing bigger rival China Mobile Ltd.'s (CHL) 5.2% growth, and the company forecast higher average revenue per user this year as the March launch of the new iPhone 4S from Apple Inc. will help add subscribers and revenue.

China Telecom still lags China Unicom Ltd. and China Mobile Ltd. in mobile users, but it has kept pace with its larger rivals in the race to attract users of third-generation mobile services, which offer faster data speeds and more revenue per user than the more common second-generation technology. China Telecom has been trying to fuel growth in its mobile services business since it bought it from rival China Unicom (Hong Kong) Ltd. in 2008 as part of a government-mandated restructuring of the country's telecom sector.

China Telecom was the only operator of the three major telecom firms to see third-generation subscriber growth accelerate in February. The company added 2.45 million subscribers for its 3G mobile services in the month, up from about 2.41 million in January. That left the company with 41.2 million 3G subscribers, less than China Unicom's 45.9 million or China Mobile's 56.6 million.

Though the company warned about intensifying competition, China Telecom said it expected the 3G market to continue to grow "explosively" in 2012. It also said broadband service remains in a period of high growth.

China Telecom, China's largest fixed-line operator by subscribers, said its net profit for the 12 months ended Dec. 31 rose to CNY16.50 billion (US$2.61 billion) from CNY15.35 billion a year earlier, while revenue rose 12% to CNY245.04 billion from CNY219.86 billion.

The results came in below the average CNY17.69 billion net profit forecast of 27 analysts polled by Thomson Reuters as expenses to promote mobile services grew.

Selling, general and administrative expenses in 2011 grew 16% to CNY48.74 billion from 2010, while other operating expenses rose 51% to CNY28.87 billion.

China Telecom also said that it expects to add more than 35 million mobile users in 2012 and expects the Chinese government to issue speedier fourth-generation wireless licenses in 2014. It also said it expects to spend CNY54 billion on capital expenditures this year, up from CNY49.6 billion in 2011.

-By Paul Mozur, Dow Jones Newswires; 886 2 2502 2557; [e-mail]