CHINA Unicom Ltd, the smaller of the nation's two mobile-phone companies, reported first-quarter profit rose 1.5 percent, missing analyst estimates, after China Mobile Ltd increased users at a faster pace.
Net income climbed to 2.02 billion yuan (US$288.84 million), or 0.15 yuan a share, from a restated 1.99 billion yuan, or 0.13 yuan, a year earlier, the company said in a statement to the Hong Kong stock exchange. Unicom was expected to post profit of 2.2 billion yuan, according to the median of four analysts' estimates compiled by Bloomberg News.
China Mobile, the world's biggest phone company by users, added customers at five times the rate of Unicom in the first quarter as the telcos cut charges. Unicom shares have risen more than 43 percent in the past year on speculation its assets may be broken up and sold to the fixed-line carriers in a government revamp to improve competition.
"While Unicom is adding more users, it's still far behind China Mobile in terms of users and scale," Chen Haofei, an analyst at China International Capital Corp, said before earnings were announced. "The industry restructuring may help Unicom as it will be able to focus on one network."
Sales rise
Unicom's sales climbed 5.8 percent to 25.5 billion yuan. The company's shares rose 2.9 percent to HK$17.18 (US$2.20) yesterday, before the earnings were announced, compared with 1.6 percent gain in the benchmark Hang Seng Index.
The mobile carrier, which controls about 33 percent of the nation's wireless-phone market, added 4.5 million users in the first quarter for a total of 167 million. China Mobile increased subscribers 22.8 million in March to 392.1 million.
Fixed-line carriers China Telecom Corp and China Netcom Group Corp (Hong Kong) Ltd have lost phone users for at least eight straight months and have relied on Internet subscribers to bolster earnings.
Unicom's increase in users has not been matched by a gain in customer spending as the company focused on signing up subscribers in smaller towns and villages. Rural residents' average annual disposable income in the first quarter was 1,494 yuan, a third of the amount for urban dwellers, according to government data.
China Unicom offers services on the global system for mobile communications, or GSM, and code division multiple access, or CDMA, standards. About 74 percent of its 167 million subscribers use the larger GSM network.
Unicom's monthly average revenue per user on its smaller service fell to 53.3 yuan in the first quarter, from 58.6 yuan a year earlier, it said.