UPDATE 1-China Unicom profit down on competition, beats view

* Q2 net profit 1.4 bln yuan vs forecast 1.3 bln yuan

* H1 EBITDA margin 36.8 pct from 38.8 pct in Q1

* H1 ARPU down to 42.9 yuan per month from 41.5 yuan in Q1 (Adds details, quotes)

HONG KONG, Aug 26 (Reuters) - China Unicom (0762.HK), the country's No. 2 mobile operator, reported a 54 percent fall in second-quarter profit on Thursday, but the figure beat expectations, as increasing 3G use helped to partly offset the effects of intensifying competition.

The company made a net profit of 1.4 billion yuan ($205 million) in the April-June quarter, worse than the 3.05 billion yuan recorded a year ago, but beat expectations for a 1.3 billion yuan net profit.

The company, considered the least aggressive promoter of its mobile services among China's three major carriers, called 2010 a "critical year" for it to enhance its market position and make changes in its operational model.

"For the mobile business, the company will accelerate the construction of the 3G premium network, continue to improve the GSM network, and ensure a continued improvement in network capacity and network quality," it said in a statement.

"The company will also further optimise the 3G business marketing strategy, enrich the offerings of 3G intelligent terminals, motivate sales channels, and promote the continuous rapid development of the 3G business."

Unicom's market-beating results come after rivals China Mobile (0941.HK) and China Telecom (0728.HK) reported second-quarter earnings that beat expectations, helped by a growing number of 3G users.

Average revenue per user (ARPU) at Unicom, the only mobile carrier to sell Apple's (AAPL.O) iPhone in China, clocked in at 42.9 yuan per month in the first half of the year, up from 41.5 yuan in the first quarter.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) margin, a key indicator of profitability, fell 2 percentage points to 36.8 percent from 38.8 percent in the first quarter.

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For the three carriers' latest mobile numbers, click:

r.reuters.com/kub36n

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Unicom's 3G user base grew to 8.5 million subscribers at the end of July, more than doubling from the 3.6 million at the start of this year.

Like its peers in more developed economies, China Unicom has been seeing revenue from its core fixed-line voice operations slip as more users migrate to mobile. The company has been trying to push data services over its 3G and fixed-line networks to make up for the fall.

China is the world's biggest mobile market with almost 800 million users. However, cut-throat competition among its three major carriers has seen profit growth stall as they chase less lucrative subscribers in smaller cities to keep their user base growing.

Shares of China Unicom are up 1.2 percent so far this year, better than the benchmark Hang Seng Index's .HSI 5.8 percent decline but lagging gains by China Mobile and China Telecom. (Reporting by Kelvin Soh; Editing by Jacqueline Wong)