Unicom net dives 62% on 3G cost

Fiona Chau
27 Aug 2010

China Unicom has blamed a 62% plunge in first-half earnings on handset subsidies and 3G costs.

The fixed and mobile operator reported net income of 2.53 billion yuan ($372m) down from 6.62 billion yuan a year earlier, on 7.6% higher sales of 82.11 billion yuan.

It was the weakest result of any of China’s three operators in this reporting season.

CEO Chang Xiaobing told a press briefing on Thursday that the 3G business was still in its early stages and it still “could not cover 3G network operation and maintenance, asset depreciation and marketing costs,”

Mobile revenue rose 17.7% to 41 billion yuan, of which 2.3 billion yuan was from 3G. Combined 2G and 3G ARPU rose 2.9% to 42.9 yuan,

But selling and marketing expenses rose 17% year-on-year to 11.34 billion yuan, while 3G handset subsidies totaled 1.17 billion yuan.

Executive director Lu Yimin said the company would spend between 3 billion-5 billion yuan on 3G handset subsidies this year.

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