BEIJING, China

CHINA Telecom Ltd yesterday said that first-half profit rose eight per cent as its mobile phone business grew despite strong competition.

Profit for the six months ending June 30 was 9.8 billion yuan (US$1.5 billion), or 0.12 yuan (1.8 US cents) a share, the Beijing-based carrier said. Revenue rose 11.5 per cent to 120.2 billion yuan (US$18.8 billion).

Mobile phone revenue rose 28 per cent to 18 billion yuan (US$2.8 billion) despite competition from rivals China Mobile Ltd and China Unicom Ltd while revenue for traditional fixed-line services declined.

China Telecom was long the country’s dominant phone carrier but fell behind China Mobile as customer demand shifted to wireless services. That prompted Beijing to restructure the industry into three groups in 2008, each with mobile and fixed-line assets, to revive competition and speed industry development.

The three rivals have focused on mobile phones and non-traditional services such as wireless Internet access to drive revenue growth as demand for traditional fixed-line services declines.

China Telecom said its number of mobile subscribers rose 19.7 per cent over a year earlier to 108 million. The number of third-generation subscribers rose 75.3 per cent to 21.5 million.

The company expects “valuable opportunities” from 3G service, chairman and CEO Wang Xiaochu said in a statement. But he acknowledged that “intensified competition” was creating “new challenges”.

Revenue from fixed-line voice services fell 19.6 per cent from the same period of 2010 and accounted for just 22 per cent of total revenue.