China Unicom

China Unicom sticks with Apple, as it reports 25.8pc surge in net profit

Procurement list omission won't stop No 2 wireless operator from selling iPhones, as it reports 25.8pc surge in first half net profit

PUBLISHED : Friday, 08 August, 2014, 4:28am
UPDATED : Friday, 08 August, 2014, 8:25am

China Unicom said Apple's absence from a government procurement list would not affect its arrangement with the US firm to sell the iPhone.

"As an operator, we don't think we feel the pressure [to stop co-operation with Apple]," said chairman and chief executive Chang Xiaobing. "Every government has the right to choose the brands that best suit its need."

Beijing excluded Apple from the procurement list for governmental departments out of cyber security concerns, said a Bloomberg report this week, quoting unnamed sources.

But mainland magazine Caixin, also quoting unnamed sources, reported that Apple was not on the list because it had not handed in the required application material on time.

Whatever the reason, 10 Apple products, including the iPad and MacBook, were not on the list distributed last month. Other foreign brands, such as Dell and Hewlett-Packard, made it on the list.

"It does not mean that the mass consumer market will be affected," Chang said. "China Unicom will continue to offer best service to users for all kinds of smartphones, including iPhone."

The country's second-biggest wireless network operator said first-half net profit surged 25.8 per cent to 6.7 billion yuan (HK$8.4 billion) year on year in the first half, boosted by strong growth of 3G and 4G subscriptions.

The number of mobile broadband subscribers rose 40.8 per cent to 140.8 million, accounting for 47.7 per cent of its total mobile subscribers.

During the six months, the company added 14.02 million mobile subscribers, reaching 295 million in total.

Revenues rose 3.6 per cent to 149.6 billion yuan.

"Due to the replacement of business tax with value-added tax as well as the changes in market environment, our revenue growth slowed down," the company said.

The impact of value-added tax and intense market competition was also reflected in the monthly average revenue per user (arpu), which fell 11.5 per cent to 68.70 yuan.

President Lu Yimin said the company was confident of keeping the arpu at a stable level "when the impact of some governmental policies fade".

Last month, Beijing stipulated that China Mobile, Unicom and China Telecom cut marketing expenses as they spent too much on promoting high-end devices such as the iPhone.

Chang said changing the past practice could be "a good thing".

A research report by Credit Suisse said it expected mainland telecommunications companies to cut their handset subsidies by about 10 per cent, starting from last month.

"This is important since, just as rising subsidies have compressed sector profitability since 2008, a decline in subsidy levels will have an immediate positive impact," the report said. "This move is also contrary to the beliefs held by many investors that the 4G launch would lead to an aggressive upward spiral in marketing activities in general and subsidy costs in particular."


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