Telecom recovering, but profit rate down
5/6/2003 15:00
China's telecom industry showed signs of recovery in the first quarter,
but the profit rate declined, according to an analysis on Eastday.com today of
the country's 24 publicly traded telecom companies.
In the first three
months, the average core business revenues of the companies jumped 56 percent
with profits up 27 percent.
Despite the jump, the analysis pointed out
that the profit rate is shrinking, particularly in the telecom equipment
sector.
Excluding the four mobile phone manufacturers--which are the main
profit generators in the sector--the remaining 20 telecom equipment suppliers
reported an average profit of minus 350,000 yuan (-US$42,322), a plunge from
5.76 million yuan in the same period a year ago. Core business revenues posted a
rise of 14 percent, however.
Seven of the 24 firms, or nearly 30 percent,
reported losses.
Data from the Ministry of Information Industry echoed
this analysis, indicating that the total profit of China's telecom equipment
sector plunged 38 percent year-on-year to 2 billion yuan from January to
March.
During the period, fixed asset investment in the sector nationwide
jumped 11.5 percent to 22 billion yuan and sales revenue soared 21 percent to 60
billion yuan.
Analysts blamed the fierce competition in the telecom
market for the declining profit rate. They said many companies are rushing to
slash prices to reduce their stockpile and seize more market share, while their
operational costs remain high and market growth is slowing.
For example,
handset maker Ningbo Bird Co Ltd, the top phone seller among the four listed
phone companies in the first quarter, sold 3.5 million phones during the period,
but reported a profit rate of 1.56 percent.
In comparison, Amoisonic
Electronics Co Ltd, the top profit maker among the four, sold 1.2 million phones
but made a profit of 183 million yuan, with the per-share-earning standing at
0.51 yuan. Unlike Bird, which uses a low-end strategy, Amoisonic taps the
high-end market.
Among telecom equipment manufactures, ZTE Corp leads the
20 companies with a 37-percent jump in core business revenue and 29-percent
growth in net profit.
Jane Chen / Shanghai Daily news
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