China Netcom Earnings Leap as Costs Drop
HONG KONG -- China Netcom Group Corp. (Hong Kong) Ltd. continued a cost-cutting binge in the second half of last year, leading to a sharp jump in net income for 2005.
The cuts are part of a broad strategy to position the company for an expected restructuring of China's telecommunications sector -- in which China Netcom is the smallest of four state-controlled giants -- as the country advances its wireless system to new technology.
China Netcom said it earned 13.9 billion yuan, or about $1.7 billion, in 2005, a fivefold increase from the 2.7 billion yuan it earned in 2004, when it wrote down the value of some assets. Revenue was 87.2 billion yuan, up from 83.5 billion yuan in 2004. Operating expenses fell to 79.6% of revenue from 83.4%.
Though China Netcom continues to perform solidly, the future of the company, which chiefly operates landline services in China's northern provinces, is up in the air as the country prepares to upgrade its wireless networks. Government officials may pare the four companies to three -- with China Netcom perhaps the likeliest candidate to be subsumed by one of the others -- and give each the chance to build new wireless services.
Until that happens, China Netcom executives have been trying to offset slowing growth in landline subscriptions by cutting costs and trying to build up broadband Internet service. The company is even experimenting with Internet-delivered TV in some Chinese cities.
China Netcom Chairman Zhang Chunjiang also said the company is looking at options for "business cooperation" for its Asia Netcom subsidiary, which operates fiber networks in China and elsewhere, but he stopped short of saying a sale might be in the offing, as has been rumored.
The company, which has its primary stock listing in Hong Kong and American depositary receipts on the New York Stock Exchange, sharply raised its dividend to 46.6 Hong Kong cents for 2005, from 3.7 cents for 2004.
China Netcom got a boost from the addition in October of the phone business in four provinces from its parent, China Network Communications Group Corp. China Netcom, which uses Hong Kong accounting standards, chose a pooling-of-interests reporting method to account for the acquisition. It restated its 2004 results and calculated its 2005 figures as if the operations from the four provinces had been in its control from the start of 2004.
Those operations added 1.5 billion yuan to the listed company's bottom line for 2005, slightly exceeding the 1.4 billion yuan that executives forecast last September, a spokeswoman said. China Netcom will file annual results under U.S. generally accepted accounting principles to U.S. regulators in late May or early June.
Edward Tian, the company's chief executive officer and founder of its predecessor firm, didn't attend the firm's financial-results news conference in Hong Kong. Waving off speculation that Mr. Tian might leave the company, Mr. Zhang said Mr. Tian attended the company's board meeting in Hong Kong and was in another meeting at the time of the news conference.
Broadband services accounted for almost half the company's jump in revenue. Its long-distance revenue declined as new competitors, many offering voice-over-Internet service, moved into China.
China Netcom's landline subscriber base grew just 2.5% last year. Its market share in the provinces where it operates slipped to 92.3%, from 93.5% in 2004.
Subscribers to its short-range wireless service, known as personal handyphones, grew 24%, a slower rate than in 2004 and 2003.
中国网通纯利飙升
中国网通集团（香港）有限公司(China Netcom Group Corp. (Hong Kong) Ltd., 简称：中国网通)在去年下半年继续大幅削减成本，2005年的净利润因此迅速提升。
在中国推动无线网络新技术发展的情况下，削减成本是中国网通整体策略的一部分，目的就是应对中国电信业计划中的重新洗牌──中国网通是四家国有电信企业中规模最小的一个。
中国网通表示，2005年公司实现净利润人民币139亿元（合17亿美元），比2004年冲销部分资产后的27亿元增加了4倍。公司2005年收入872亿元，高于2004年的835亿元。经营费用占收入的比例从83.4%降至79.6%。
虽然中国网通的业绩依然稳健，但在中国准备升级无线网络的情况下，主要经营中国北方省份固话业务的中国网通却前途未卜。政府可能准备将这四家公司合并为三家，允许它们自己开展新的无限服务。中国网通最有可能被其他三家电信企业之一吞并。
但在这一天到来之前，中国网通的管理人士一直积极努力通过削减成本和提供宽带互联网服务来抵消固话业务的颓势。中国网通甚至在一些城市尝试提供网络电视，也就是通过互联网传输电视节目的服务。
中国网通主席张春江表示，公司正在为其亚洲网通(Asia Netcom)子公司寻找“商业合作”机会，该子公司在中国和其他地区从事光纤网络业务，不过他并未提到人们传言的出售一事。
中国网通在香港和纽约两地上市，公司2005年的股息大幅提高，从2004年每股0.037港元增加到0.466港元。
因去年10月收购母公司中国网络通信集团公司(China Network Communications Group Corp.)四省份的固话业务，中国网通的业绩有了进一步提高。使用香港会计标准的中国网通用权益集合法核算这笔收购。公司重新发布了2004年的财报并计算了2005年的数字，假设四省业务从2004年年初就已属于中国网通了。
一名公司发言人表示，四省业务为中国网通2005年的净利润贡献了15亿元，超出了管理人士去年9月预期的14亿元。中国网通将在今年5月底或6月初向美国监管机构提交按照美国公认会计准则编写的年报。
中国网通首席执行长田溯宁(Edward Tian)并未出席在香港举行的财报发布会。张春江否认了田溯宁即将辞职的传言，表示田溯宁参加了公司在香港举行的董事局会议，在发布会进行时正在参加其它会议而无法抽身。
公司收入增长的近一半来自宽带业务。其长途业务收入由于新的竞争者──许多公司都提供互联网语音传输服务──进入中国而下滑。
中国网通固话用户数量去年仅增长了2.5%。其业务省份的市场占有率从2004年的93.5%下滑到92.3%。
其无线市话用户，也就是应用PHS网的“小灵通”用户增长了24%，低于2003和2004年的增长水平。
