Chinese full service provider China Unicom has booked annual declines in revenue and profit of 2.8% and 4.2% respectively for the first three months of 2015, as the operator reported its first decline in mobile subscriptions. Turnover for the period was down to CNY74.30 billion (USD12.14 billion) from CNY76.47 billion in Q1 2014, whilst net profit slumped from CNY3.30 billion to CNY3.16 billion. A 7.9% increase in operating expenses to CNY9.70 billion, along with growing depreciation and amortisation (CNY19.36 billion, +6.3% y-o-y) and staffing costs (CNY8.83 billion, +6.8% y-o-y) were offset by a reduction in other expenses of 24.0%, from CNY16.96 billion to CNY12.89 billion.
Unicom registered the first contraction in its mobile subscriber base in Q1 2015, with net losses of 4.35 million subscribers. Whilst the provider has been steadily shedding 2G subscribers since Q2 2013, Q1 2015 represented the first period in which 3G and 4G growth failed to compensate for the GSM disconnections, with 2.26 million net new 3G/4G users in the three-month period compared to a fall of 6.61 million 2G subscriptions. The prolonged delay in licensing Frequency Division Duplex Long Term Evolution (LTE) technology, Unicom’s preferred platform for 4G, has caused the provider to fall even further behind market leader China Mobile. The larger cellco fully embraced the home-grown rival 4G system, Time Division (TD)-LTE – permissions for which were issued in December 2013, more than a year ahead of the FDD concessions, which were allocated in March 2015 – rolling out more than 720,000 4G-enabled base stations by 31 December 2014 and accruing more than 140 million 4G subscribers as at end-March 2015.
On a more positive note, China Unicom recorded strong growth in the fixed broadband segment, adding 809,000 new users to bring its total subscriber base to 69.60 million, up from the 308,000 added in Q4 2014, although down from the 1.8 million additions in Q1 2014. Meanwhile, Unicom’s fixed line telephony user base continued its decline, sliding to 80.31 million from 82.06 million three months earlier.