China Unicom sets 69pc profit growth target through 2020 on back of tie-ups with internet firms
The state-owned telecoms company’s chairman says it will enhance cooperation with internet giants and step up investments in future growth engines
China Unicom has set an annual pre-tax profit growth target of 68.7 per cent through 2020, as the state-owned telecoms firm benefits from a transformation of its business model and partnership with internet giants Alibaba Group Holding and Tencent Holdings, its chairman said on Thursday.
The forecast came after China Unicom reported its 2017 net profit increased 192 per cent year on year to 1.82 billion yuan (US$288 million).
China Unicom raised US$11.7 billion from a dozen private investors last August, including Baidu, JD.com and China Life Insurance. It was among the first batch of state-owned enterprises to undergo “mixed-ownership” restructuring, an initiative by Beijing to rejuvenate state-owned enterprises with private capital.
Following the restructuring, China Unicom has also enhanced cooperation with these strategic investors in online retailing services, cloud computing, online video products, big data, internet of things and telecommunication services.
“We will collaborate further with internet companies in the future and step up investment in future growth engines,” said Wang Xiaochu, chairman and chief executive of China Unicom, at a press conference in Hong Kong.
Wang said he was confident of the new board after the restructuring, which has added Baidu’s chief executive Robin Li Yanhong and Alibaba, Tencent and JD executives, adding that the board will have more control over the company’s operations.
The company posted a 2.59 billion yuan pre-tax profit in 2017, up threefold from the previous year.
China Unicom also plans to conduct 5G commercial trials in 12 Chinese cities this year, with the roll-out of the next generation mobile broadband services possible in 2019 “at the soonest”, Wang said.
The telecom group will spend 50 billion yuan in capital expenditure this year, with 37 per cent dedicated to mobile business, 20 per cent to fixed-line broadband service and the rest on IT facilities.
In 2017, mobile service revenue grew 7.9 per cent year on year to 56.44 billion yuan. But fixed-line service revenue decreased 0.9 per cent to 90.87 billion yuan.
Key initiatives for 2018 also include enhancing network coverage in northern and select southern regions in China, driving sales via internet channels and offering home network services.
China Unicom also announced financial results for the first nine months of this year, with net profit up 287 per cent to 1.76 billion yuan from the same period last year.