We are keeping our fair value estimate after reviewing China Telecom's CHA 2009 full-year results, which are consistent with our expectations. Total revenue for 2009 was CNY 209 billion, up by 12% from 2008, thanks to robust growth in the mobile and Internet access businesses. The carrier has made strides in building itself into a full-service provider, with traditional fixed-line voice service now accounting for only 37% of total revenue, down from 52% in 2008. In particular, through heavy spending on marketing and partnerships with channels such as electronics, appliance, and handset specialty stores, China Telecom more than doubled its mobile subscriber base in the past year and grew its mobile voice sales fivefold to CNY 20 billion, compared with only CNY 4 billion in 2008 when the CDMA network was still under its previous owner China Unicom CHU.
Overall, the company managed to hold 2009 operating expenses roughly flat from 2008, but the firm did raise sales and marketing spending by 47% to strengthen its brand in the promising 3G and mobile Internet services and to acquire new subscribers. We think this is money well spent, as a larger scale will give China Telecom more operational efficiency and more clout when negotiating with business partners such as handset makers, application developers, and channels about rolling out new products and services. Excluding amortized up-front connection fees and CDMA network capacity lease fee, China Telecom's earnings before interests, taxes, depreciation and amortization was 82 billion in 2009, or 39% of sales.
Given China Telecom's dominance in broadband Internet in the prosperous southern provinces, the carrier should continue to benefit from China's economic rebound and rising penetration of the Internet. The mobile market is another growth area where we believe China Telecom will continue to expand aggressively. As of December 2009, China Telecom only had a paltry 7.7% share of China's mobile subscriber base of 726 million.
