China Unicom has warned it expects to report a steep 85% year-on-year slump in profit for the first quarter to 380 million yuan ($74.2 million) due to increased expenses.
In a market update, the operator said earnings were impacted by an expected 16% growth in selling and marketing expenses, as well as a 37% increase in network operation and support expenses associated with the new China Tower joint venture.
The addition of a tower usage fee, higher energy charges and property rentals were among the factors that contributed to the higher opex.
But China Unicom noted that its expected performance for the quarter was a major improvement on the 4.55 billion yuan loss the company recorded in Q4.
The operator also expects to report both sequential and year-on-year growth in service revenue to 60.8 billion yuan. Mobile net additions were around 6.61 million, and mobile service revenue is estimated to have grown 9% quarter-on-quarter but declined 1% year-on-year to 36.2 billion yuan.
“Going forward, the group will deepen implementation of 'Focus Strategies', innovation and cooperation development to drive gradual turnaround with full strength,” the market update concludes.