China Telecom said Wednesday its net profit dropped 9.5 percent for 2012, compared to a year earlier, due to intensifying market competition and increasing costs.
China's largest fixed-line operator by subscribers said in a filing to the Hong Kong stock exchange that it saw a profit of 14.93 billion yuan ($2.38 billion) for the year ending December 31, 2012, from 16.50 billion in 2011.
The company's revenue went up 15.5 percent reaching 283.07 billion yuan in 2012, from 245.07 billion in a year earlier, but total operating expenses also went up 18.5 percent to 261.89 billion yuan for last year.
The rise in expenses was due to increased marketing initiatives during the group's launch of Apple's iPhone to expand its high-end subscriber market.
"We accurately captured the development pattern of the mobile Internet and developed sustainable competitive advantages," the company said in the filing, adding that it saw an addition of 32.76 million 3G subscribers.
But the company still lags behind China Mobile and China Unicom, which offer faster data speeds and are attracting more 3G users, Dow Jones Newswires reported.
"The intensifying market competition... and rapid development of new technology offer us not only development opportunities but also new challenges," it said.
China Mobile, the world's biggest mobile operator by subscribers, last Thursday said its 2012 net profit slowed to 2.7 percent, blaming intensified competition.