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China Telecom Loses 1.48Million Customers as China Mobile Flourishes

Date: 1/23/2008 11:38:52 AM

China’s stateowned telephone operator, China Telecom, lost a record 1.48 million landline telephone customers last month and posted its first ever fullyear drop in users, due to the rapidly increasing popularity of mobile phone services.

The country’s leading wireless carrier, China Mobile, which is also statecontrolled, separately reported gains of 6.6 million customers in the same 31day period.

December was the fifth month in a row of subscriber losses for China Telecom, bringing its total customer base to 220.3 million, the Beijingbased company said in an online statement. Shares in China Telecom have surged 41% in the past six months, however, on speculation that it may gain a wireless license of its own as part of an anticipated reorganization of phone companies in China, designed to spur competition.

“The loss of subscribers will lead to shrinking revenue for the fixedline operators and may lead to them lobbying the government to restructure the industry sooner,” predicted Francis Cheung, an analyst with CLSA Ltd. “The urgency of this scenario may give the government an added push to do so.”

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