China Telecom's HK-listed arm is set to buy back its network assets from its parent company, after reporting a 9.3% increase of profit for 2010.
China Telecom has yet to put a price tag on its planned 2012 network sale to its listed subsidiary, but chairman Wang Xiaozhu said the network was valued at 90 billion yuan ($13.74 billion).
The deal could mean savings for the company as it was revealed that the leasing fee outstrips the depreciation of assets and related acquisition fees.
The group earned a profit of 15.88 billion yuan last year, with revenue increasing 5 % to hit 219.86 billion yuan.
China’s smallest mobile operator, China Telecom had its 2010 financial performance boosted by its mobile business. Mobile services accounted for 24.6% of revenue, compared to 17.1% in 2009.
The CDMA operator saw service revenue from its mobile segment increase 59.1% to 47.72 billion yuan, as its mobile subscriber base grew 61.4% to 90.52 million.
China Telecom’s 3G subscriber base grew 202% to 12.29 million, or 14% of its total subscriber base.
The company operates China’s largest fixed line network, and its number of broadband subscribers rose 18.7% last year to 63.5 million. Revenue from this segment increased 15% to 54.13 billion yuan.
China Telecom, and the other Chinese mobile operators, have been pursuing an economic model involving listing parts of its business, but leaving the expensive network building costs to the non-listed parent until it is economical to buy back the network.