The Profits Of The Three Major Telecom Operators Have declined For Three Years

Recently, the SASAC issued the report. The net profit of China Telecom, China Mobile and China Unicom the three central communications companies in the last year is 103.16 billion yuan, a decrease of 13.2% over the previous year. The profit has declined for three consecutive years.

Compared to the earnings of the three major carriers announced in the August of this year, the situation is clearly better than the previous years. But the experts of the industry believe that the huge investment in fiber-optic broadband, the continuously decreasing telecom charges, the high end subsidies are the reasons that the three central operators will not make money. There are many variables whether they can make profit.

As opposed to the constantly rising CPI index, telecommunications charges are declining at an annual average rate of 10%. This is the inevitable trend. However, the consumers’ voice that the telecommunications charges are too high is still heard. Especially in the 3G era, the operator is caught in contradictions.

On the one hand, they want to stimulate users to use the new business to increase traffic revenue. On the other hand, the high charges of Internet access are difficult to allow consumers to readily use 3G. At present, the main problem of the communication tariff is the unreasonable structure. It is also a higher challenge to the profitability of the operators. At the same time, the fierce competition in the market directly raised the marketing costs of the three operators. The marketing budgets are usually used up in advance.

“Maybe in the end, the profit margins of the three operators will drop to around 8% to 10%. The profit margins will be flat with the Western operators.” The analyst said. In 2008, 2009 and 2010, the profits of the communications companies have been falling for three consecutive years and the decline rate is increasing.

Will it rebound in 2011? From the earnings of the three operators in the first half, the prospects look good. But there are still variables, iPhone4s is that variable. In the second half of this year, 3G is likely to enter the earnings period, which is absolute good news for operators that have invested in hundreds of billions on 3G.

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