(Adds details, quotes)
By Lee Chyen Yee and Alison Leung
HONG KONG Aug 23 China Unicom (Hong Kong) Ltd
, the country's second-biggest mobile phone
operator, posted a 2 percent fall in quarterly net profit,
largely in line with market forecasts, as handset subsidies
weigh on its bottomline.
China Unicom's first-half net profit totalled 3.43 billion
yuan ($540 million), up from a revised 2.62 billion yuan a year
earlier and compared with a consensus forecast of 3.3 billion
yuan by six analysts surveyed by Reuters.
That meant that China Unicom made a net profit of 2.42
billion yuan in the April-June quarter, down from 2.47 billion
in the year-earlier period and compared with a forecast of 2.3
billion yuan. Reuters calculated the quarterly profit from the
Lisa Soh, an analyst at Macquarie Capital Securities, said
of the first-half figures: "The bottom line was a little bit
better than expected and looks like that has been driven by
lower depreciation because the EBITDA level is in line with
China Unicom released the results after the close of Hong
Kong stock market trading. Its shares rose 4 percent on the day.
China Unicom produced first-half earnings before interest,
tax and depreciation and amortisation of just over 36 billion
China Unicom's results come days after its rivals China
Mobile and China Telecom announced first-half earnings.
China Mobile posted flat second-quarter net profit
of 34.4 billion yuan, while China Telecom's net profit
fell 10 percent, its biggest decline in two years due to higher
handset subsidies after bringing in iPhones.
China has over a billion mobile phone users, though less
than a fifth are 3G users, which the companies court for higher
revenues stream. Most subscribers use 2G to make calls and send
Chinese carriers have embarked on a price war in terms of
offering generous subsidies for handsets to attract more 3G
users and offering 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, the smallest, has
the highest percentage of 3G users, though its profitability was
affected by higher handset subsidies given out after it signed a
contract earlier this year with Apple Inc to carry
All three carriers have been trying to attract higher end 3G
users who typically use smartphones to download games and files,
which will help boost data usage, which is more lucrative that
(Reporting by Lee Chyen Yee and Alison Leung; Editing by Neil