17 Mar 2004
Continuing Efforts to Create Shareholders' Value through Organic and External Growth
China Telecom Corporation Limited (the "Group") (HKSE: 728; NYSE: CHA) performed with vitality in 2003. The Group has increased its overall strength significantly through its continuing efforts in innovation, solid execution, reforms and management improvement. Setting its goal to become "a world-class telecommunications operator" and its corporate objective to "maximise shareholders' value", the Group seized opportunities to accelerate growth. Further developing the Group's business model of "market-oriented", "customer-centered" and "return-driven", it has significantly increased and enhanced its profitability and investment value.
China Telecom successfully acquired the telecommunications businesses in Anhui Province, Fujian Province, Jiangxi Province, Guangxi Zhuang Autonomous Region, Chongqing Municipality and Sichuan Province in 2003. The acquisition resulted in an increase of 49.15 million local telephone subscribers, an increase of RMB37.07 billion in operating revenue and an increase of RMB6.53 billion in net profit. The acquisition realised strong external growth for the Group and further consolidated its market leader position.
The Group's core business sustained strong growth throughout the year. The Group's wireline telephone subscriber base reached 118 million, an increase of 22%. Of this increase in the Group's subscriber base, the number of its wireless local subscribers reached 18.35 million, an increase of 153%. The number of the Group's broadband Internet subscribers reached 5.63 million, an increase of 200%. The steady growth in the Group's local telephone subscriber base has strengthened its leading market position, while the Group's continuously expanding broadband Internet subscriber base made room for further business growth.
The Group achieved excellent financial performance, with significant growth in profitability. In 2003, the Group's revenue increased by 8.1% to reach RMB118.5 billion. Effective cost control led to a total EBITDA of RMB65.4 billion and an EBITDA margin of 55.2%. Net profit reached RMB24.7 billion and basic earnings per share was RMB0.33. Based on these operating results, the Board of Directors proposes to declare a dividend of HK$0.065 per share for 2003.
During the year, the Group further enhanced its operations and management. In 2003, the Group has generally completed the structure of a multi-level and seamless distribution channel that provides integrated services with full coverage.
This distribution system effectively drove the Group's revenue growth Comprehensive and centralised financial management and network resources management improved resource utilisation and reduced risk. Business process re-engineering initiatives were implemented to significantly improve the Group's market responsiveness and the quality of its customer service. This also resulted in strengthened corporate competitiveness. Meanwhile,progress in the implementation of the Group's corporate IT strategy improved operating efficiency, lowered management cost and enhanced customer satisfaction.
Mr. Zhou Deqiang, Chairman and Chief Executive Officer, pointed out that in 2004, the continuously strong growth in China's economy has created further growth potential in the Chinese telecommunications industry. The Chinese government's goal of further improving its residents' living standards and its strategy for developing information technology have provided robust driving forces for the development of the telecommunications industry in China. In 2004, the government's grand plans for developing China into a strong telecommunications nation will bring invaluable opportunities for the growth of the Group. China Telecom will seize all opportunities to accelerate growth and will strive to do its utmost to build the Group into a large corporation that is highly competitive worldwide.
For more details, please visit China Telecom's website at http://www.chinatelecom-h.com.
Forward Looking Statements
Certain statements contained in this document are "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements are, by their nature, subject to known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of China Telecom Corporation Limited (the "Company") to be materially different from any future performance, financial condition or results of operations set forth in such forward-looking statements.
Further information regarding these risks, uncertainties and other factors is included in the Company's most recent Annual Report on Form 20-F and the Registration Statement on Form F-3 filed with the U.S. Securities and Exchange Commission ("SEC") and in the Company's other filings with the SEC.
Mr. Zhao Xu
Office of Board of Directors
China Telecom Corporation Limited