UPDATE 2-China Unicom Q2 net slips as handset subsidies rise
(Adds ARPU, subsidy spending figures)
By Lee Chyen Yee and Alison Leung
HONG KONG Aug 23 (Reuters) - China Unicom (Hong Kong) Ltd , the country's second-biggest mobile phone operator, posted a 2 percent fall in quarterly net profit, reflecting earnings pressure across the sector as firms ramp up subsidy spending on handsets.
April-June net profit slipped to 2.42 billion yuan, slightly above expectations for 2.3 billion yuan among six analysts surveyed by Reuters as the company reported a below forecast depreciation and amortisation for the first half year.
"The bottom line was a little bit better than expected and looks like that has been driven by lower depreciation," Lisa Soh, an analyst at Macquarie Capital Securities, said.
China Unicom's results rounded off filings by China's three mobile carriers to the Hong Kong stock exchange on their results for the first half of 2012. Quarterly figures were calculated from the company data.
China Mobile, the biggest mobile carrier and the only one that doesn't offer iPhones, reported flat second-quarter profits last week, while third-placed China Telecom reported a 10 percent fall in profits on Wednesday, its biggest decline in two years.
They all ramped up spending to attract higher-end 3G users who typically use smartphones to download games and files, aiming to boost data usage that is more lucrative than voice services.
The mobile market is already made up by one billion customers but only 17 percent are 3G subscribers.
China Unicom, with 27 percent of mobile customers on 3G, boosted spending on handsets by 15 percent to 3.515 billion yuan in the first half of 2012 from a year earlier.
China Mobile, with 10 percent of 3G subscribers, increased spending on handset subsidies by 41 percent to 12 billion yuan, while China Telecom, with 37 percent of customers on 3G, ramped it up by 50 percent.
The competition was reflected in the firm's average revenue per user (ARPU), a closely watched industry barometer.
For the first half, China Mobile reported an ARPU of 67 yuan, down about 6 percent from 71 yuan for all of 2011.
China Telecom's mobile ARPU was roughly flat at 52.4 yuan and China Unicom's ARPU increased to 48.1 yuan in the first half from 47.3 yuan previously announced for 2011.
China Unicom released its results after the close of Hong Kong stock market trading. Its shares rose 4 percent on the day.
Some analysts say that Chinese carriers have effectively embarked on a price war to attract more 3G users. They are also feeling pressure on lower-end services from budget calling schemes. Free mobile messaging, such as Tencent's Weixin, is also starting to weigh on bottomlines.
China Unicom and China Telecom's additions of 3G users rose more than 5 percent in July from a month earlier, faster than China Mobile's near 3 percent, data from the carriers showed.
Out of the three operators, China Telecom, has the highest percentage of 3G users, though its profitability was affected by higher handset subsidies given out after it signed with Apple Inc in March to carry iPhones. (Reporting by Lee Chyen Yee and Alison Leung; Editing by Neil Fullick)
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