China Unicom says no operational overhaul yet
It is still too early for China Unicom to overhaul its operations in anticipation of a restructuring of the mainland telecommunications sector, chairman Chang Xiaobing said in Hong Kong yesterday.
The nation's smallest mobile operator is tipped to be one of the parties most affected by the restructuring. Rumours have indicated that Unicom's GSM mobile network could be merged with China Netcom Group Corp, while its smaller CDMA mobile business could be sold to China Telecom Corp.
'I don't have anything new on the restructuring to tell you,' Mr Chang said. 'It's too early to talk about our plans and our 3G mobile-phone strategy post-restructuring. I think China is ready for 3G services and I hope the government will issue a licence as soon as possible.'
Unicom president Shang Bing yesterday denied rumours that the company had stopped marketing activities for its CDMA business before a possible sale of assets to China Telecom.
'We haven't stopped our CDMA business,' Mr Shang said. 'We will develop CDMA as usual and aim to increase high-tier users this year.'
Unicom plans 30.95 billion yuan (HK$34.32 billion) in capital spending this year, up 20 per cent from 25.72 billion yuan last year. Of this, 73 per cent would be spent on expanding its GSM network, he said.
Net profit for the year to December reached 9.29 billion yuan, up from 3.8 billion yuan in 2006. Revenue increased 4.4 per cent to 99.54 billion yuan, up from 95.34 billion yuan a year earlier.
The surge in net profit was due to a government tax refund on reinvestment in a subsidiary of 2.78 billion yuan. Adjusted net profit, which excludes the impact per share of convertible bonds issued to SK Telecom and the tax refund, rose 14.4 per cent to 7.09 billion yuan. The market had expected Unicom's adjusted net profit to be between 7.16 billion yuan and 8 billion yuan.
'Initial guidance for this year appears weak,' said Macquarie Research analyst Tim Smart in a research note. 'The company may face pressure to keep the profit margin due to competitive pressure on the GSM business.'
Earnings per share were 71.3 fen, up from 30.2 fen in the previous year.
The company will pay a final dividend of 20 fen per share.
Unicom's debts fell 84.9 per cent to 3.86 billion yuan last year and the company generated free cash flow of 6.61 billion yuan.
Unicom shares fell 1.02 per cent to close at HK$17.54 yesterday.