China Unicom

Unicom's 74 pc profit jump beats estimates

After strong first quarter, mainland's No2 mobile firm focuses on licence for FDD-LTE standard, with Beijing's nod expected this year

PUBLISHED : Friday, 18 April, 2014, 1:17am
UPDATED : Friday, 18 April, 2014, 1:17am

China Unicom (Hong Kong) reported a 74 per cent year-on-year increase in net profit for the first quarter as it beat analysts' estimates due to the rapid growth of its mobile business.

The mainland's second-biggest wireless network operator said net profit for the first quarter was 3.3 billion yuan (HK$4.1 billion), while the average estimate of analysts polled was 3.1 billion yuan. The profit growth was the fastest since the third quarter of 2010, Thomson Reuters data shows.

The company said it expected Beijing to launch the long-awaited licence for operating on the FDD-LTE standard this year.

"We've been actively in touch with the related department," president Lu Yimin said. "Though there is no clear-time schedule, we believe we will be able to get the licence this year."

Lu had earlier said that general technical direction for Unicom would be based on the FDD network. The company, along with the other two mainland telecommunications giants, has a licence to operate only on TD-LTE, a standard developed by Beijing. FDD is a more widely adopted 4G standard internationally.

Unicom's had 289.7 million mobile subscribers by the end of the first quarter, with a net addition of four million users in March alone. It launched high-speed fourth generation network services on March 18, but said it had no data yet on 4G sales. "The market reaction is warm," said Lu.

Revenue rose 8.3 per cent year on year to 76.5 billion yuan, of which service revenue increased 11.8 per cent to 63.8 billion yuan. The company said that amid keen market competition, selling expenses increased 21.4 per cent in the first quarter, against the same period a year earlier.

China Unicom shares ended 0.4 per cent higher at HK$10.48, against a 0.3 per cent rise in the Hang Seng Index yesterday.

ZTE, which supplies telecommunications operators with mobile phones and networks, saw net profit triple for the first quarter to 622.2 million yuan, from the year-earlier quarter. Quarterly operating revenue rose by a modest 5.5 per cent from a year earlier to 19 billion yuan.

ZTE, the world's fifth-largest telecommunications equipment supplier, has set a target of shipping about 60 million smartphones this year, compared with 40 million smartphones last year.

The Shenzhen-based company is expected to benefit from the mainland's 4G services, which were launched first by China Mobile at the end of last year.

"In China, the roll-out of 4G networks and infrastructure has ushered in a new wave of investment," the company said.

ZTE's shares rose 1.6 per cent to close at HK$16.18 yesterday.