(Adds details throughout, adds analyst comment)
By Gerry Shih and Paul Carsten
BEIJING Aug 7 China Unicom, the
country's second-biggest wireless carrier, fell short of analyst
expectations when it reported its first-half net income as
China's new value-added tax scheme began to cut into earnings.
Net income for the six months ended June 30 rose 26 percent
to 6.7 billion yuan ($1.09 billion), the company said on
Thursday after the Hong Kong market close. That missed
projections of 7.35 billion yuan, estimates compiled and
calculated by Thomson Reuters show.
The new VAT, which replaced a flat business tax of roughly 3
percent, came into effect June 1. China Unicom did not disclose
its current effective tax rate - calculated by some analysts to
be as high as double-digits - saying only that "there will be
pressure on the company's revenue growth and profitability
First-half revenues gained 3.6 percent to 149.6 billion
yuan, China Unicom said. But average revenue per user for 3G and
4G subscribers, a key industry metric, fell to 68.7 yuan during
the period, down 11.5 percent from a year earlier.
"The VAT had a lot to do with the revenue side, which missed
both our estimates and consensus," said Jefferies analyst
Cynthia Meng, who also attributed the carrier's disappointing
earnings to interest payments on its recent debt obligations.
Still, the carrier has continued to ride a wave of
subscriber growth as more and more people in the world's most
populous country log onto the mobile Internet.
Mobile broadband revenue rose by a third, China Unicom said,
while the total number of subscribers increased to 295 million.
China Mobile and China Telecom recently
reported 791 million and 180.24 million subscribers,
China Unicom shares ended down 1.6 percent versus a 0.8
percent drop in the Hang Seng Index.
(1 US dollar = 6.1578 Chinese yuan)
(Editing by Ryan Woo)