China Netcom Group Corp posted a better-than-expected full-year profit in 2007 as rising broadband Internet subscriptions offset the decline in the fixed-line phone business, the Hong Kong-listed firm said on Tuesday.

The country's second-largest fixed-line phone company attributed the profit growth to surging demand for broadband and multimedia services ahead of the Beijing Olympic Games in August.

Net profit rose to 10.58 billion yuan (US$1.49 billion) in 2007 from 10.55 billion yuan in the previous year. The average of 24 analysts' estimates compiled by Bloomberg News was 9.87 billion yuan.

China Netcom's revenue hit 82.49 billion yuan last year, a rise of 0.9 percent from a year ago.

"In 2007, the substitution of fixed-line voice services by mobile voice services accelerated," Zuo Xunsheng, Netcom's chief executive, said in a statement.

China Netcom's gains from broadband Internet sales offset declining revenue from phone calls as mobile operators lured phone users by cutting rates.

"The increasing use of the Internet by all sectors of society is accelerating. Access to the Internet is increasingly regarded not as a luxury but a necessity," Zuo said.

Internet sales rose 40 percent to 13.8 billion yuan and the company's broadband customers grew 31 percent to 19.8 million subscribers last year.

China Netcom, which operates fixed-line phone networks in northern regions including Beijing, invested 10 billion yuan on broadband network upgrade in 2007, which allowed it provide more rich data services like IPTV (Internet Protocal TV), Zuo said previously.

China's fixed-line subscriptions last year fell for the first time, dropping by 2.3 million while number of mobile-phone subscribers jumped 86.2 million in 2007.