China Telecom Announces 2003 Interim Results

10 Sep 2003

China Telecom Corporation Limited (the "Company") (HKSE: 728; NYSE: CHA) announced its 2003 interim results today.

In the first half of 2003, though facing fierce competition, the Company positioned the accelerated expansion of businesses on the top of its agenda and consolidated the implementation of its strategies. As a result, the Company maintained healthy and stable growth in its core businesses.

The Company achieved promising financial performance in the first half of 2003. Revenue increased by 7.2% over the same period last year to a total of RMB39.5 billion. Operating expenses were RMB27.3 billion, a 5.3% increase over the same period last year. Thanks to the adoption of various management measures that led to improvement in resources utilization, operating expenses growth was kept at a slower pace than the revenue growth. EBITDA grew 10.2% to RMB23.1 billion with an EBITDA margin of 58.3%, and net income grew 9.2% to RMB9.3 billion with a net profit margin of 23.4%.

In the first six months of 2003, the Company's subscriber base for local telephone service sustained rapid expansion. As of June 30, 2003, the Company's local subscriber base expanded by 9.4% from year-end 2002 to 62.20 million, in which 5.37 million of the total local subscribers are wireless local access subscribers. Increasing local traffic ensures high quality development in local business. The Company will continue to stimulate local traffic and revenue growth through enhancement of distribution channels.

The Company is committed to uphold the fast growth of its broadband service by implementing aggressive marketing strategies. As of the end of June 2003, broadband subscribers reached 2.56 million, representing an increase of 85.8% from that of the end of 2002. Broadband service is increasingly being seen as a key engine for the Company's revenue growth. Furthermore, the Company made significant headway with the CHINAVNET platform, bringing a win-win value chain between the end users, content and application providers and China Telecom.

Facing an increasingly competitive long distance market, the Company adopted more flexible and effective marketing strategies in the first half of this year. Domestic long distance market share was maintained at 52.6%, which was close to the level as in the second half of 2002. Domestic long distance revenue as a share of total revenue decreased 1.7% to 17.7%. The risk associated with domestic long distance business was further moderated.

Wire-line value-added service achieved noticeable development in the period. The Company enhanced promotional activities for its caller ID display service, thus increasing its penetration rate by 5.2% during the first half of 2003. Meanwhile, the Company also made great efforts to boost other value-added services like call-up information and information telephone, and successfully introduced new services such as "Telephone QQ" and "Walk With Me".

Mr. Zhou Deqiang, Chairman and CEO, pointed out that, while still facing fierce competition, the Company will take full advantage of the opportunities presented by the strong demand in the domestic market. Adhering to its market-oriented, customer-centered and return-driven business model, the Company will maintain rapid revenue growth by outpacing expenses growth, further optimize cost and capital expenditure structures, and strive to improve return on investment. "Based on the strong performance in the first half of 2003", Chairman Zhou said.

"The Company will stick to its overriding principle of maximizing shareholder value and continue the development of its businesses, making every effort to operate in the best interest of the shareholders."

Press Enquires:

Mr. Zhao Xu
Office of Board of Directors
China Telecom Corporation Limited

Tel:   (8610) 66428166
Fax:   (8610) 66010728