China Telecom Corp Ltd reported a lower-than-expected profit of 17.68 billion yuan ($2.83 billion) in 2014, roughly unchanged from a year earlier, as the smallest of the country's three carriers struggled with the effects of a new value-added tax (VAT) imposed this year. China had imposed a flat 3 percent business tax on carriers until a value-added tax, levied at between 6 percent and 11 percent for various services, was enforced from June 1.
Chairman Wang Xiaochu said in a statement on March 18 the carrier "rose to the challenge" of changing market conditions, including the VAT imposed in the middle of last year, by improving the sales of its expensive 3G and 4G services and delivering relatively stable results.
The company, which was granted a full licence to operate a nation-wide, high-speed 4G network this month, has set an ambitious target of acquiring 100 million 4G customers this year as it seeks to catch up with China Mobile in the high-speed mobile market.
Like China Mobile and China Unicom, Telecom is betting on increased mobile data use and the more expensive 3G and 4G services to offset shrinking call and text messaging revenues, which are hurting from the rise of Internet-based messaging apps.
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