China Telecom (NYSE:CHA), the smallest of the three Chinese wireless carriers, is expected to publish its Q4 and FY 2018 results in the coming weeks. We expect the company’s earnings to trend higher on account of its soaring wireless user base, which should bolster service revenues, and also due to lower equipment related costs. Below, we take a look at some of the key trends we will be watching when the company publishes its results.
Our interactive dashboard on What’s driving China Telecom’s Valuation details our forecasts and expectations for the carrier. In addition, here is more Trefis data for Telecommunications companies and Consumer Staples companies.
Improved Coverage And Marketing Drive Subscriber Growth, Service Revenue
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The carrier added a solid 53 million subscribers over the last year, marking an increase from the 35 million net adds it posted a year earlier, outpacing its larger rivals China Mobile and China Unicom. The strong net adds are being driven primarily by improved coverage and network performance. For instance, the company had about 1.2 million 4G base stations as of mid-2018, up from just over 1 million base stations in 2017, with its network covering 98% of the population. The company has also been addressing market demands such as larger sized data packs, which are popular with Chinese users.
China Telecom’s Wireless ARPU Could Remain Under Pressure
Although the company’s 4G mix grew to about 80% as of December, up from about 73% over the last year, with data consumption per user also soaring, ARPU is likely to remain under pressure on account of lower data tariffs and the government’s move to stop roaming and long-distance charges. During the first half of 2018, overall mobile ARPU declined by about 7.7% year-over-year to RMB 52.4.
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