Unicom seeks to raise 3G user base
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China Unicom aims to sharply boost its 3G subscriber base, a major source of future growth, this year as it posted disappointing results dragged down by a slow uptake for its new wireless telecoms network.
China's No. 2 mobile carrier yesterday said it aims to have 10 million subscribers for its 3G mobile service paying 100 yuan (US$14.65) or more per month by the end of this year, up sharply from the total of 2.74 million 3G users at the end of last year following the network's 2009 launch.
The relatively slow start for 3G, combined with a decline of about 10 percent for its substantial fixed-line service, were both factors behind the downside earnings surprise in its fourth-quarter results, said Daiwa Securities analyst Marvin Lo.
"This looks like slow growth for the 3G business," Lo said. "At the same time the fixed-line operation declined faster than expected."
Unicom raised depreciation and amortization charges related to its new 3G network by 650 million yuan in the fourth quarter, helping drag results lower, it said in a statement to the Hong Kong stock exchange.
"Our results were below expectations largely because of the start-up costs associated with setting up the 3G network," Unicom's Chief Financial Officer Tong Jilu said at a media briefing. "The pressure we're facing as a result of 3G development costs is real, but as revenue grows, things will improve."
Unicom posted a net profit of 222 million yuan in the October-December quarter, according to Reuters calculations using full-year company figures released yesterday through the Hong Kong exchange.
That was lower than the 2.72 billion yuan it recorded in the third quarter of 2009 and well below market expectations for a 1.2 billion yuan net profit, according to a survey of 23 analysts polled by Thomson Reuters.
Comparisons with the previous year are difficult as Unicom is a vastly different company after an industry-wide revamp in early 2009 that saw the company sell some parts of its business and combine with a smaller rival.
Monthly average revenue per user, a key performance indicator in the telecoms sector, fell to 41.20 yuan for the full year for its core GSM service, down 2.4 percent from 2008.
Rivals China Mobile, the world's biggest mobile carrier, and China Telecom, the country's largest fixed-line operator, both said earlier this month that they were banking on their 3G mobile services to fuel further growth.
Unicom's results came after China Telecom and China Mobile posted strong quarterly numbers.
Unicom, the only operator authorized to sell Apple's iPhone on the Chinese mainland, operates a 3G network that runs on the world's most mature standard, WCDMA.
China is the world's largest mobile market, with about 726 million subscribers at the end of last year.
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