Unicom optimistic of turnaround after 79.6% drop in profit

18 Aug 2016

China Unicom, China’s second largest cellco by subscribers, has reported a 79.6% year-on-year drop in net profit, citing a significant increase in sales and marketing expenses as well as higher energy charges, property rentals and the introduction of tower usage fees, which totalled CNY7.70 billion (USD1.16 billion) in H1 2016. The operator booked operating revenue of CNY140.26 billion in the first six months of 2016 – a 3.1% drop compared to H1 2015 – whilst EBITDA dropped 18.2% y-o-y to CNY41.28 billion, with a margin of 33.9%. Net profit dropped to CNY1.43 billion from CNY6.99 billion in H1 2015.

The operator has set out plans to reverse its fortunes, focusing on its growing 4G user base. The cellco is looking to add more than 280,000 new 4G-enabled base stations to its network by the end of 2016 to provide contiguous coverage in cities and towns nationwide. Unicom also highlighted its costs-saving measures, noting that it hosted some 25 million MVNO subscribers on its wireless network and had inked a strategic cooperation with rival China Telecom to share around 60,000 4G base stations and 14,500km of transmission fibre cables.

Mobile service revenue dropped by 0.6% y-o-y to CNY73.04 billion, with an 18.5% increase in turnover from data traffic narrowly falling short of offsetting declines of 14.7% and 15.2% in the voice and value added services (VAS) segments, respectively. The fixed sector saw a similar shift, with turnover from voice services dropping by 11.9% with internet and data services revenue growing by 6.8% and bolstered by a 34.2% increase in ICT services.

China, China Telecom Corporation, China Unicom