China Unicom optimistic despite H1 profit tumble - Mobile World Live

China Unicom optimistic despite H1 profit tumble

17 AUG 2016

China’s second largest mobile operator China Unicom claimed “a more solid foundation has been built for healthy development in the future with stronger growth momentum”, after a tough first half which saw profit plummet 80 per cent.

“Currently, the company is undergoing a new stage of transformation, and facing both opportunities and challenges. We are more than confident in our future development,” said Wang Xiaochu, chairman and CEO.

It said it has worked to “mitigate the underlying shortcomings” in areas such as network, terminals, channels, services, IT, systems and mechanisms. This includes focusing its mobile activities on 4G and key cities and driving availability of 4G handsets.

The company reported a net profit for the six months of CNY1.4 billion, down 79.6 per cent from CNY7 billion, on revenue of CNY140.3 billion, down 3.1 per cent.

It said service revenue (up 1.4 per cent to CNY121.9 billion) had “bottomed out”, with revenue from non-voice services accounting for 73.1 per cent of revenue, up 4.8 points year-on-year. Mobile service revenue of CNY73 billion was down 0.6 per cent, with shrinkage in voice revenue contrasting with growth in data.

Subscriber turnaround
It also said it had turned around a downward trend in subscribers, adding 8.39 million during the period to take its total to 260.7 million. It saw its 4G base grow, which was attributed to “improvement in 4G network quality, terminal market share and competitiveness”, to reach 72.42 million. This number still trails the country’s third largest operator, China Telecom.

Profitability was impacted by increased sales and marketing expenses, and the kick-in of tower usage fees, higher energy charges and property rentals lead to a significant increase in network, operation and support costs. This is in-line with earlier guidance provided by the company.

Unicom said it “pushed forward comprehensive and strategic cooperation with China Telecom”, which covers areas including mobile and fixed infrastructure sharing.

Last week market leader China Mobile – the world’s largest mobile operator – reported its first half profit increased 5.6 per cent to CNY60.6 billion ($9.1 billion), on revenue of CNY370.4 billion, up 7.1 per cent.

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