(Adds analyst comment; competition for 4G mobile users;
By Sijia Jiang
HONG KONG Oct 18 China Unicom Hong Kong Ltd
said it expected to report on Friday an 80 percent
slide in its profit for the nine months through September, due
partly to higher selling and marketing expenses.
In a statement to the Hong Kong stock exchange on Tuesday,
China's second-largest telecom service provider forecast its
nine-month profit at 1.6 billion yuan ($240 million), down 80.6
percent from a year earlier.
First half profit had plunged 80 percent to a 16-year low
after racking up heavy expenses marketing its fourth-generation
China's top three telecom operators - China Mobile
, China Unicom and China Telecom - are
competing to capture Chinese users as they migrate to 4G from 2G
China Unicom, whose 4G subscribers accounted for 28 percent
of China's total by the end of June, is likely to continue to
face heavy marketing costs that will weigh on profits, analysts
"The company is still in the stage of trying to gain market
share. Its operating leverage is very high, profit margin very
low, so any increase in cost results in great fluctuation in
profit," said Nomura analyst Joel Ying.
"Competition among the service providers is only more fierce
in the second half now that China Unicom and China Telecom have
basically completed their 4G networks," he added.
China Unicom said it expects its number of 4G subscribers to
double to 88.9 million in the first three quarters of the year.
It announced earlier this month its state-owned parent
company could be chosen for China's first pilot for
mixed-ownership reform pending government approval, which could
introduce private shareholders and more management autonomy.
That also means a rumoured merger with China Telecom is
unlikely to happen after the two companies entered into a
strategic alliance on network sharing and new business
investment collaboration at the start of the year.
($1 = 6.6685 Chinese yuan)
(Reporting By Sijia Jiang and Anne Marie Roantree; Editing by