The statement Wednesday is an indication that China Telecom will run a network based on a different standard than its massive rival China Mobile Ltd.,0941.HK +1.37% and that China will build networks that use both major fourth-generation standards.

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Speaking at an earnings conference, the company's Chief Executive Wang Xiaochusaid that it would be cheaper to build a network using the FDD-LTE standard, which would also allow it to quickly offer a variety of the most popular handsets already built for it. Last week China Mobile said it would spend $7 billion on a 4G network based on the somewhat less common TD-LTE standard.

Analysts have worried that China Telecom will have difficulty competing with China Mobile once licenses for 4G networks are given out, in part because it won't be able to match China Mobile's investment. Last year Mr. Wang brushed aside concerns, arguing that the conversion to 4G will first focus in urban areas and can be done quickly.

Also Wednesday, China Telecom announced its net profit in 2012 was down 9.5% from a year earlier. China's largest fixed-line operator by subscribers, China Telecom has been spending heavily on its mobile-services business, bought in 2008 from China Unicom (Hong Kong) Ltd. 0762.HK +0.96% as part of a government-mandated restructuring of the telecommunications sector.

China Telecom began offering Apple Inc.'s AAPL -0.71% iPhone earlier this year to attract more high-value users, but analysts say spending on subsidies and marketing is hurting its bottom line. China Telecom said it made an "appropriate increase" in iPhone marketing, which it expects will "significantly enhance the long-term sustainable growth and value creation despite the short term pressure on profitability."

Analysts expect China Telecom's net profit growth to recover in 2013, due to its emphasis on attracting more valuable users. The company said average revenue per user, a key metric for carriers, was 53.9 yuan in 2012, up from 52.4 yuan in 2011.

Net profit for the 12 months ended Dec. 31 was 14.93 billion yuan ($2.38 billion), down from 16.50 billion yuan a year earlier and nearly matching the average 14.92 billion yuan forecast of 28 analysts polled by Thomson Reuters. Revenue was up 16%, to 283.07 billion yuan from a restated 245.07 billion yuan in 2011.

The company flagged challenges such as increasing competition, an uncertain regulatory environment and the rapid development of new technology. It also said that it had budgeted US$12 in capital expenditures for 2013. In comparison, China Mobile will spend about $30 billion.

Write to Paul Mozur at paul.mozur@dowjones.com and Juro Osawa atjuro.osawa@dowjones.com