China Unicom is a state-owned telecom operator in China. China Unicom is ranked as the world’s third-biggest mobile provider.
Solid first-half earnings growth tipped for Unicom
Growth in 3G users to feed into higher earnings for mainland's No 2 mobile carrier, analysts say
China Unicom (Hong Kong), the mainland's second-largest wireless network operator, is expected to post solid first-half gains as the number of its 3G mobile subscribers continued to swell in the quarter to June.
The Beijing-based telecommunications services provider, which will report its interim financial results on Thursday, maintained rapid 3G subscriber growth in the second quarter, averaging 4.1 million new users a month. This is a step up from the monthly average of 3.8 million new users in the first quarter.
The carrier had a total of 262.169 million mobile subscribers at the end of June, of which 100.028 million are much-coveted 3G data users.
A research note released by Barclays last week said Unicom enticed more of its 2G users to switch to 3G by offering monthly data plans for as low as 10 yuan.
Barclays forecast a net profit of 2.7 billion yuan in the second quarter and 4.6 billion yuan for the first half of this year.
A year earlier, Unicom posted net profit of 2.4 billion yuan in the second quarter and 3.4 billion yuan in the first half.
The consensus estimate from a Bloomberg poll of analysts was first-half net profit of 4.9 billion yuan.
"While 3G subscriber growth for the second quarter has tracked well versus our expectations, 3G arpu [the monthly average revenue per user] levels will be a key factor to watch [in the interim financial results announcement]," the Barclays report said.
Second-quarter arpu is forecast to reach 75.3 yuan, lower than its 78 yuan arpu in the first quarter, a dilution caused by the introduction of low-cost monthly 3G data packages.
The limited downside to Unicom's earnings estimates was helped by the network operator's decision to cap its initial spending on high-speed 4G mobile infrastructure.
The low side of the company's initial 4G investment estimate is five billion yuan, while 10 billion yuan will be the cap.
Unicom had earlier earmarked about 80 billion yuan in total capital expenditure this year.
Ricky Lai, a research analyst at Guotai Junan International, last week said that he expected Unicom and China Telecom to start 4G infrastructure investments next year.