China Unicom's 2016 profit falls 94.1%

20 Mar 2017

China Unicom has reported a 94.1% slump in net profit for 2016, as a result of intense competition as well as heavy spending on marketing and 4G expansion.

The operator reported a net profit for the year of 625 million yuan ($90.5 million), despite a 2.4% increase in service revenue to 240.98 billion yuan.

But the operator's profit for the year was an improvement on the 3.36 billion yuan loss, excluding the gain from the disposal of its tower assets to China Tower, recorded in the second half of 2015.

Overall operating revenue declined 1% to 274.19 billion yuan.

Mobile service revenue grew 1.7% year-on-year to 145.02 billion yuan and net additions reaching 11.51 million to a total of 263.82 million.

During the year, the company expedited 4G network construction - increasing its total 4G base stations by 337,000 to 736,000 - and spent heavily on marketing its 4G services. As a result, total 4G subscribers grew by 60.4 million to 104.5 million, or 39.6% of the total mobile subscriber base.

In line with the government's efforts to ensure China's big three state-owned operators share infrastructure, Unicom said that during 2016 a total of 70,000 4G base stations and around 16,000km of fiber were co-built and shared. This resulted in savings of around 3.3 billion yaun in capex and 35 million yuan in opex.

Fixed line revenue meanwhile grew 3.7% to 94.66 billion, with internet data center and cloud revenue up 33.7% year-on-year to 9.45 billion yuan and ICT revenue up 37% year-on-year to 5.94 billion yuan.

Fixed broadband revenue was stable at 43.87 billion yuan, with total subscribers up 4% to 75.24 million. Of these, 71.2% were FTTH subscribers.

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