China Unicom

Unicom steps up 3G expansion after first-half profit jump

Wireless operator will expand its network across the mainland as more smartphone subscribers look for broadband on the go

PUBLISHED : Friday, 24 August, 2012, 12:00am
UPDATED : Friday, 24 August, 2012, 2:47am

China Unicom, which posted strong first-half gains yesterday, will accelerate expansion of its 3G network across the mainland to meet rising mobile broadband use by new smartphone subscribers.

"Our 3G business will [increasingly] account for a larger share of total revenue," chairman and chief executive Chang Xiaobing said.

Chang described greater network coverage as vital for Unicom to log 3G growth that had "both quality and quantity", which meant catering to high-end subscribers in the major cities and the vast number of low-end users in the rural areas.

Unicom's total wireless and fixed-line capital expenditure this year is set at 100 billion yuan (HK$122.42 billion), but the company spent only 38.9 billion yuan in the first half.

First-half net profit for Unicom, the country's second-largest wireless network operator, rose 31.9 per cent to 3.43 billion yuan, up from 2.60 billion yuan a year earlier, behind a solid gain in 3G mobile and fixed-line broadband sales and subscribers. In the first six months of the year, the company added 17.51 million 3G subscribers for a total 3G user base of 57.53 million, which pushed its total mobile subscriber base to 219.25 million. Last month, its total 2G and 3G subscribers reached 222.66 million.

Unicom's earnings before interest, tax, depreciation and amortisation - a measure of a company's operating profitability - grew 12.5 per cent to 36.04 billion yuan from 32.03 billion yuan the previous year.

"We have a healthy growth momentum," Unicom president Lu Yimin said, adding that the company still led the mainland telecommunications services industry in revenue growth.

First-half revenue climbed 20 per cent to 121.69 billion yuan from 101.40 billion yuan a year ago. Revenue from 3G services doubled to 29.90 billion yuan from 13.18 billion yuan.

Lu said efforts to boost 3G adoption among subscribers included providing competitive, market-specific tariff plans for low-end users and widening the range of smartphones on offer.

He said Unicom, which is the first mainland carrier-partner for Apple's iPhone, would continue to promote aggressively domestic-brand smartphones priced from about 1,000 yuan to 2,000 yuan. But chief financial officer Li Fushen said the wide availability and great demand for cheaper smartphones allowed Unicom to lower its first-half 3G handset subsidy to 13.1 per cent from 23.2 per cent a year earlier.

Lisa Soh, an analyst at Macquarie Capital Securities, said: "The guidance that sales and marketing expense will be lower as a percentage of revenue than in 2011 is a positive for Unicom."