China Unicom, the second-largest mobile operator in the country, recorded double-digit profit gains in the first six months of 2019, but consolidated revenue dipped on the back of a significant drop in mobile service turnover.

Wang Xiaochu, chairman and CEO, said in a statement that while the Chinese telecoms industry reported annual revenue declines in the face of challenges in developing mobile services, the company “persisted in driving differentiated operations with a focus on increasing the effort in internet-oriented transformation on products, channels and marketing, striving to avoid simple price competition, with the aim to attaining high-quality sustainable growth”.

The operator said it plans to launch commercial 5G service in key cities in September, depending on the supply of handsets. It installed 17,000 5G base stations in 40 cities during the period.

Wang said as China officially enters the 5G era, “the issuance of 5G licences will empower high-quality development of the country’s real economy and bring about new opportunities for the innovative development of the communication industry”.

Net profit grew 16.3 per cent year-on-year to CNY6.88 billion ($980 million), with overall revenue declining 2.8 per cent to CNY144.9 billion.

Mobile service revenue was again impacted by a government speed upgrade and tariff reduction policy, falling 6.6 per cent to CNY78.7 billion, with data sales decreasing 4.7 per cent to CNY51.3 billon and voice revenue falling 16.9 per cent to CNY15.4 billion.

Equipment sales dropped 18.3 per cent to CNY12 billion.

The key bright spots were an 8.2 per cent increase in fixed-line service revenue to CNY53.1 billion and a 43 per cent jump in its industry internet business to CNY16.7 billion.

The operator added 9.32 million new mobile subscribers since end-June 2018 to close the half with 324 million subs. Its 4G sub base rose 8.6 per cent year-on-year to 239 million, giving it a 73.8 per cent LTE penetration.

Average monthly data usage per user increased to 10.3GB from 7GB at the end of H1 2018. ARPU decreased 19 per cent to CNY45.90.

H1 capex reached CNY22 billion, with 58 per cent allocated to mobile networks. The 2019 budget is set at CNY58 billion.

To improve coverage in rural areas, the operator said it increased the number of 4G base stations by 180,000 to 1.35 million. In addition, it ended June with 200,000 NB-IoT base stations.