China Unicom

Unicom prepares for 4G network build-out

PUBLISHED : Friday, 22 March, 2013, 12:00am
UPDATED : Friday, 22 March, 2013, 4:19am

China Unicom (Hong Kong), which reported a 68 per cent surge in net profit for last year, plans an initial investment of up to 10 billion yuan (HK$12.5 billion) to roll out its 4G network.

Chang Xiaobing, Unicom's chairman and chief executive, said yesterday the high-speed 4G licences on the mainland "will likely be issued in 2013", which is why the firm has been preparing for this network expansion.

Unicom, which operates the mainland's second-largest wireless network, expects to undertake lower capital expenditure this year of about 80 billion yuan, compared with 99.79 billion yuan last year, despite its preparations to build the 4G infrastructure.

The low side of the company's initial 4G investment estimate is 5 billion yuan, while 10 billion yuan will be the cap at the high end of projected spending.

Lisa Soh, an analyst at Macquarie Securities, said: "This reflects Unicom's strategy with 4G, which is to focus only on hot-spot and heavy-traffic areas rather than a wide-scale development like what China Mobile is doing."

That approach also means that Unicom, which was Apple's first mainland carrier-partner for the iPhone, "will be more reliant on its 3G network", Soh said.

China Mobile, the world's largest wireless network operator, said last week its capital expenditure would rise 49 per cent to 190.2 billion yuan this year from 127.4 billion yuan last year. Its trial 4G network programme will add more than 200,000 base stations this year, up from about 20,000 last year.

Advanced 4G networks have theoretical internet download speeds of up to 100 megabits per second. Unicom's 3G networks have been upgraded to run at 21Mbps.

Chang pointed out that rising demand for mobile data services and rate of internet penetration across the mainland "indicate that 3G and [fixed-line] broadband businesses are still at the stage of rapid growth".

Unicom had 331,000 total 3G base stations at the end of last year, a large percentage of which could be used to co-locate 4G equipment.

Unicom had "basically stopped" new investment in 2G network equipment, but support for subscribers would continue, Chang said.

Unicom had 239.3 million mobile subscribers at the end of December, 76.5 million of whom are 3G network users. Unicom reported yesterday a 68.5 per cent increase in net profit to 7.1 billion yuan last year from 4.21 billion yuan in 2011, as it added more subscribers who bought low-cost smartphones while cutting subsidies. Total revenue rose 19 per cent to 248.9 billion yuan.

With Unicom's revenue from 3G services up 82.6 per cent year on year to 59.8 billion yuan, company president Lu Yimin said the firm would start targeting more high-spending 3G subscribers this year.