China Unicom (Hong Kong), the country's second-largest wireless network operator, warned of 'substantially different' interim earnings this year due to escalating costs and higher 3G handset subsidies.
Based on the sharp fall in profit for the quarter to March it reported yesterday, Unicom would appear hard-pressed to meet last year's first-half net profit of 2.53 billion yuan (HK$3.02 billion).
The Beijing-based company, which is Apple's exclusive mainland carrier-partner for the iPhone, said its first-quarter net profit declined 86 per cent to 166 million yuan from 1.21 billion yuan a year ago.
That decrease was attributed to higher costs and other expenditures, which were up 25.3 per cent year on year to 48.79 billion yuan.
It included 1.9 billion yuan in 3G handset subsidies, 6.79 billion yuan for sales and marketing, 14.06 billion yuan in depreciation and 6.84 billion yuan in network, operation and support expenses.
Unicom's shrunken net profit was lower than the average forecast of 750 million yuan from analysts polled by Reuters and the 1.13 billion yuan median from Bloomberg estimates.
First-quarter revenue increased 21 per cent to 49.03 billion yuan from 40.52 billion yuan the previous year.