China Unicom (Hong Kong) reported a 88.6 per cent increase in net profit for the first quarter to 1.9 billion yuan (HK$2.37 billion) from the same period last year, on the back of increased mobile data services spending by its subscribers. China's second-largest mobile-phone company reported revenue of 70.6 billion yuan for the January-March period, up 15.4 per cent year on year. Unicom was the first operator on the mainland to offer iPhones to subscribers. That helped the company attract high-end users who prefer to use the faster, third-generation (3G) networks for data-heavy activities such as downloading video content and playing online games. But while data sales boosted revenue, subsidies on smartphones have also been a drag on the company's bottom line. A Macquarie analyst had forecast its first-quarter net profit would reach 2.8 billion yuan, much higher than the amount Unicom finally posted. A Unicom spokesman said it was not reasonable to divide the full-year results into four and measure it with each quarter because business can be seasonal. The company said sales expenses increased by 22.8 per cent in the first quarter to 10 billion yuan to "respond to the keen market competition". The firm's 3G subsidy costs amounted to 2.23 billion yuan for the three months as Unicom tried to "accelerate the development of 3G contract subscribers", it said in a statement to the Hong Kong stock exchange after the end of trading hours yesterday. Unicom added 11.4 million new 3G users in the quarter, with total 3G subscribers standing at 87.8 million at the end of March. Its total mobile subscribers reached 250.7 million. Average revenue per user per month (ARPU) for the company in the first quarter was 48 yuan. ARPU for the more rewarding 3G business was 78.2 yuan. Unicom reported a 68 per cent surge in net profit last year. It has announced capital expenditure this year of about 80 billion yuan, compared with 99.8 billion yuan 2012. It said it "further expanded network coverage and improved network quality" in the first quarter. Shares in Unicom dropped 0.2 per cent yesterday to close at HK$10.8, while the Hang Seng Index rose 1 per cent. The stock has lost 13 per cent so far this year. The Hang Seng Index has shed 1.1 per cent over the same period.