China Unicom identified its 3G business as “the largest driving force” in its revenue growth, stating that has improved its differentiation based on “handsets, channels and applications.”

In a statement, the company said that it had experienced a “rapid and substantial” increase in this business, noting that moving forward the penetration rate of 3G will further accelerate and the mobile Internet application market will “continue to prosper.”

As a whole, its mobile business ended the year with 199.7 million subscribers, an increase of 19.3 percent year-on-year. Its 3G subscriber base reached 40 million, representing 20 percent of its mobile customer tally.

For the year, the company reported a profit of CNY4.23 billion (US$671 million), up 14.2 percent compared with 2010, on revenue of CNY209.17 billion, up 22.1 percent.

The company missed an analyst forecast average compiled by Bloomberg, which was attributed to costs related to subscriber growth and network buildout.

Service revenue from its mobile business was CNY103.3 billion, up 25.3 percent.  Some 37.2 percent of mobile service revenue now comes from non-voice.

For its 3G unit, service revenue was CNY32.74 billion, up 182.3 percent year on year, and accounting for 31.7 percent of total mobile service sales – indicating that 3G subscribers are notably more lucrative than their 2G counterparts.

The company noted that it had “further utilised the leading advantages of WCDMA in the field of intelligent handsets,” offering a range of smartphones at all price levels – it trumpeted “the world’s first CNY1,000 smartphones.”

In terms of distribution, Unicom said it “continued to break through the scale of independent channels,” which accounted for 53 percent of its 3G sales for the year. It is also revamped a number of its own shops, “resulting in a significant increase in sales per store,” and promoted online retailing.

In terms of content and applications, it said that it “focused its efforts on key products such as music, reading and application stores and widely promoted experience and content delivery activities, resulting in increased usage by subscribers.”

The company said that its GSM business “remained generally stable,” as it “boldly explored the transformation of the GSM business marketing model in areas such as products and channels.”

While service revenue for this business was stable at CNY70.6 billion, it was noted that the voice business was on the decline “due to various factors such as the intense competition in the voice sector and the substitutive impact of mobile internet products.”

During the period, the company accelerated its 3G network build and continued to improve its GSM network, it said. Its total number of base stations increased by 19.9 percent to 614,000, with most additions coming from its 3G build. It completed an HSPA+ upgrade in 56 key cities.

In 2012, the company intends to increase its network investment in WCDMA, as well as ensuring the allocation of resources to growth sectors.

It said it intends to “basically eliminate 3G network blind and weak coverage spots in all cities and achieve full 3G coverage in villages and towns in the eastern and central regions and the western developed regions, as well as key scenic spots and transportation routes.”

Service revenue from its fixed line business was CNY81.6 billion, up 2.1 percent.