Internet links lift China Telecom

China Telecom is tipped to get a third-generation mobile licence

China's largest fixed line phone operator has reported forecast-beating full year profits after almost doubling its broadband subscriber numbers.

China Telecom posted 2004 net profits of 28.02bn yuan ($3.39bn;£1.80bn), compared with a restated 13.88bn yuan in the previous year.

Revenues were 161.21bn yuan, up from 151.55bn yuan in 2003.

Internet services contributed 14.11bn yuan to revenues, and the firm expects broadband to add to profits in 2005.

Mobile licence plans

Analysts had forecast China Telecom's net profits would be between 24bn yuan and 26 yuan, according to the Reuters and Bloomberg news agencies.

China Telecom is hoping top-end products like broadband and third-generation (3G) mobile phones will help offset slowing growth in its fixed telecoms business.

A decline in fixed line income during the second half of 2004 "does not look good", Francis Cheung, an analyst with the CLSA brokerage in Hong Kong told Reuters.

The authorities are expected to grant the first wave of 3G licences this year, and China Telecom is seen as a favourite to get one.

China Telecom said its broadband subscriber numbers have risen to 13.8 million.

In all, it managed to add 25.66 million new customers across its various services, taking its total to 187 million.

It has reigned back spending on its personal handyphone system, a low-cost mobile service, while it waits to see if it wins a 3G licence.

In the past few years, the company has partly grown by acquiring state-owned regional telecoms networks.

Analysts say that now the stock of these has largely run out, so some more radical restructuring may be required.

Shares in China Telecom, which has a market value of about $27.5bn, closed up 2.83% on Thursday.