China Unicom, the second largest operator in the mainland, showed some continued signs of improvement in 2016, but the end of domestic roaming charges is expected to reduce its quarterly revenue by about CNY1.6 billion ($232 million) and slow its recovery through 2017.
The country’s three mobile operators said in early March they will end domestic consumer roaming fees by October, which is part of a push by the government to cut consumer costs. All three issued statements saying the cut will have “a certain impact” on their operating revenue and net profit.
Unicom chairman and CEO Wang Xiaochu said at a press conference the roaming cut would have a major impact on its revenue each quarter.
While the operator’s profit fell sharply in 2016, service revenue increased as did mobile turnover and its subscriber base.
Net profit for 2016 dropped 94 per cent to CNY625 million ($90.6 million), and EBITDA fell 9.1 per cent to CNY79.5 billion. The company said it will not pay a dividend for the year and will “strive to enhance its profits while paving the way for paying a dividend for 2017”.
Unicom, with 20 per cent market share, issued three profit warnings last year, with the last coming in late October.
It forecast a profit of CNY460 million in Q1, which is about 50 per cent higher than the same period of 2016.
Total revenue last year was down 1 per cent to CNY274 billion, while service revenue rose 2.4 per cent to CNY241 billion. Mobile service revenue returned to growth, rising 1.7 per cent from the previous year to CNY145.02 billion. Voice revenue dropped 15 per cent to CNY49.1 billion and data revenue increased 20 per cent to CNY73.4 billion.
Its 4G user base more than doubled to 104.6 million after adding 60.4 million 4G subscribers in 2016. The operator’s 4G subscribers accounted for 40 per cent of total mobile connections. After losing mobile subscribers in 2015, it added 11.5 million subs last year, bringing its total to 264 million.
ARPU increased slightly to CNY46.40, while 4G ARPU was steady at CNY76.40.
The operator said despite a 46 per cent reduction in capex to CHY72 billion, it “attained substantial improvement in network capability”. It added 337,000 4G base stations to take its total of 736,000.
In addition, 70,000 4G base stations and about 16,000km of fibre cable were co-built and co-shared. Through a network sharing partnership with China Telecom, China Unicom said it saved about CNY3.3 billion in capex and CNY35 million in operating expenses. The two companies plan to continue to open existing base station resources and strengthen sharing, while enhancing cooperation in operational maintenance.