Unicom blames seasonal factors for weak earnings in quarter
China Unicom, a mainland mobile-telephone operator, yesterday said seasonal factors had weakened its first-quarter earnings performance, sparking concern analysts will cut the company's full-year profit forecast.
Earnings climbed 1.6 per cent to 2.02 billion yuan (HK$2.26 billion) from the same period last year. Excluding one-off unrealised gains from changes in the fair value of convertible bonds in the first quarter of last year, net profit rose 9.7 per cent.
Revenue increased 5.7 per cent to 25.49 billion yuan. Basic earnings per share were 14.8 fen, down from 15.7 fen per share a year earlier on an increase in the amount of company shares during the year.
The earnings matched market expectations for a profit of between 1.8 billion and 2.3 billion yuan. However, analysts may revise down their full-year forecasts due to a weaker than expected operating performance by its mobile business.
Revenue from Unicom's GSM business rose 6.6 per cent to 16.26 billion yuan in the first three months of the year. Average revenue per user per month was 44.30 yuan, down from 46 yuan last year. Minutes of usage per subscriber per month totalled 242.2 minutes, down from 250.1 minutes last year.
Revenue from its smaller CDMA operations, which are expected to be sold to China Telecom Corp as part of industry restructuring, rose 1.9 per cent to 6.78 billion yuan. Average revenue per user per month was 53.30 yuan, down from 58.10 yuan last year, while minutes of usage per user reached 238.4 minutes, down from 263 minutes last year.
'China Unicom seems to be slowing down the development of its CDMA business,' said Daiwa Institute of Research analyst Marvin Lo.
Mr Lo said Unicom executives had indicated that CDMA's sluggish performance was mainly due to contract subscribers spending less when they renewed contracts, and more users leaving the network for other service providers.
'With weak first-quarter operating performance, analysts could revise down their full-year average net profit target of 8.8 billion yuan,' Mr Lo said, adding that his own full-year forecast was 7.9 billion yuan.
Unicom shares climbed 2.87 per cent to HK$17.18 yesterday.