China Unicom, the country’s second largest mobile operator, returned to profit in Q1 as it accelerated the migration of 2G and 3G subscribers to 4G plans and focused on reducing marketing expenses.

The operator’s net profit for the quarter jumped 79 per cent year-on-year to CNY862 million ($125 million) – in Q4 it posted a loss of CNY963 million. Its net profit for 2016 dropped 94 per cent to CNY625 million, while total revenue was down 1 per cent to CNY274 billion.

Service revenue in Q1 2017 rose 2.4 per cent year-on-year to CNY61.4 billion, while mobile service revenue increased 2.8 per cent from Q1 2016 to CNY37.2 billion. Fixed-line service revenue rose 2.5 per cent to CNY23.8 billion.

China Unicom, with a 20 per cent market share, signed up 18.2 million 4G users during the quarter to take its LTE user base to 122.7 million, or 46 per cent of total mobile subscribers. It added 2.44 million new mobile customers, giving it a total of 266.3 million.

4G ARPU edged up to CNY73.90, while overall mobile ARPU was steady at CNY46.70.

The operator said it is transforming its marketing model to improve profitability, with selling and marketing expenses declining 4.2 per cent year-on-year to CNY8.3 billion during the quarter. While tower related expenses increased 17.6 per cent to CNY5.64 billion, which the operator said was due to its network’s larger scale, its overall network, operation and support expenses fell 0.4 per cent CNY13.99 billion.

Rival China Mobile reported its net profit for Q1 increased 3.7 per cent to CNY24.8 billion, with revenue also growing 3.7 per cent to CNY184 billion.

China Telecom reports its Q1 results on 27 April.