China Unicom, the second largest operator in the mainland, issued its third profit warning of 2016, stating a substantial increase in network, operation and support expenses led to a sharp drop in profit for the first nine months of the year.
The company, which releases results tomorrow, expects its net profit for the first three quarters to fall 80.6 per cent year-on-year to CNY1.59 billion ($292 million). It attributed the decline to substantially higher selling and marketing expenses, the addition of tower usage fees as well as higher energy charges and property rentals.
The struggling operator said in a statement that in the first nine months of the year the group “strived to mitigate its underlying shortcomings, with positive business momentum emerging. Our mobile business has achieved initial success in overcoming operational challenges”.
The operator noted, however, that the loss was a “significant improvement” from the CNY3.36 billion net loss recorded in the second half of last year.
On the positive side, it added nearly 45 million 4G subscribers this year to take its total to 89 million and give it a 4G penetration of 34 per cent. More than half of China Mobile’s users are on 4G plans and 49 per cent of China Telecom’s subscribers are 4G. China Unicom added six million 4G subs in September after averaging 4.8 million a month for the first eight months of the year.
In August China Unicom filed a profit warning with The Stock Exchange of Hong Kong and the US Securities and Exchange Commission, stating it expects its first half net profit to decline by about 80 per cent compared with the same period last year.