China Unicom Q1 profit tumbles 86%

Melissa Chua
27 Apr 2011


China Unicom said unaudited results show its Q1 net profit fell 86% from last year as subsidies on 3G handsets again weighed on earnings.


Net profit had fallen to 166 million yuan ($25 million) from 1.21 billion yuan a year earlier, despite a 21% revenue increase to 49.03 billion, as the carrier competed with rivals for 3G customers.


Subsidies on 3G handsets rose sharply in Q1 to 1.9 billion yuan, from 10 million yuan a year ago.


China’s second largest carrier and the sole provider of Apple’s iPhone said results had also been affected by depreciation and other operating expenditure.


Depreciation and amortization had risen to 14.06 billion yuan from 13.17 billion yuan a year earlier, while operating expenses rose to 30.65 billion yuan from 22.29 billion yuan.


ARPU grew to 45.5 yuan from 41.5 yuan last year, but ARPU for 3G users had fallen to 117.2 yuan from 139 yuan.


China Unicom is expected to start offering iPhones without a contract soon. The firm had last month said higher 3G subsidies had been tied to higher iPhone sales in Q4 2010.


The firm added 1.86 billion 3G users in March, up from 1.21 million in February. China Unicom ended the quarter with the country’s second-highest number of 3G users at 18.54 million, according to the Wall Street Journal . China Mobile had 26.99 million while China Telecom had 14.76 million end February.


China Unicom’s net profit plunged 59.7% last year due mainly to 3G handset subsidies as well.


Melissa Chua

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