CHINA Telecom Corp, the nation's biggest fixed-line telephone company, reported first-quarter profit growth stalled as customers migrated to mobile rivals offering reduced rates.

Net income rose to 6.25 billion yuan (US$893 million) from a restated 6.22 billion yuan a year earlier, the Beijing-based company said yesterday in a statement to the Hong Kong stock exchange. Sales rose 1.6 percent to 43.6 billion yuan.

China Telecom and China Netcom Group Corp have lost phone users for at least eight straight months as more people sign up for cheaper mobile services that allow them to send text messages and download from the Internet. Chairman Wang Xiaochu, who has applied for a license to start wireless operations, countered the loss in phones users by luring Internet customers, Bloomberg News said.

"Internet access, and valued-added and integrated information application services continued robust growth momentum," Wang said.

The company's phone users fell by 920,000 in March, taking the first-quarter loss to 3.2 million, the statement said. It had a total of 217.2 million fixed-line customers at the end of March.

China Telecom added 730,000 broadband subscribers last month, increasing the total to 37.7 million, it said. In the first quarter, the company gained 2.1 million high-speed Internet users.

Shares of China Telecom, which has 60 percent of the market, rose 1.2 percent in Hong Kong yesterday before the earnings announcement. The stock has lost 18 percent this year.

Smaller rival Netcom yesterday said first-quarter sales rose 0.9 percent to 20.2 billion yuan after adding more Internet users. The firm doesn't report quarterly profit.

China, the world's biggest mobile market by users, had 565.2 million cell phone subscribers at the end of February.