China Unicom Q1
* Unaudited net profit of US$155.8 million, in the first quarter
* ARPU
-- 60.6 yuan ($7.32) a month for GSM service
-- 157.9 yuan ($19.07) for CDMA service (no prepay)
* Net adds
-- GSM service added 3.415 million for the first quarter
-- CDMA service added 1.78 million for the first quarter
* Total Subs
-- 64.91 million subscribers at the end of March
-- 63.12 million subscribers at the end of March
* EBITDA for the first quarter was 6.59 billion yuan
* EBITDA margin of 41.2 percent.
* Subsidies
- To help attract users to its nascent CDMA network last year, the company offered a number of handset subsidies, the costs of which were partly amortized in its first-quarter income statement, amounting to CNY1.53 billion. That pushed selling and marketing expenses for the quarter up to CNY3.21 billion.
- As a result, the CDMA division posted a pretax loss of CNY210 million for the first quarter. With handset subsidies trimmed since January, analysts expected losses to be trimmed gradually over the rest of the year.
(US$1=8.28 Yuan)
>> China Unicom Q1 Net 1.29 Bln Yuan
Hong Kong
April 30, 2003
Reuters
China Unicom Ltd 0762.HK said on Wednesday it generated an unaudited net profit of 1.29 billion yuan, or US$155.8 million, in the first quarter, as a key revenue measure missed expectations amid fierce competition.
The company, China's No. 2 mobile carrier, said in a statement total operating revenue was 15.98 billion yuan in the three months ended March 31.
No comparative figures were given.
Unicom shares closed at HK$4.25 on Tuesday, down nearly 28 percent in the past three months.
Unicom said that average revenue per user (ARPU), a widely watched industry barometer, came in at 60.6 yuan a month for its older GSM service, while that for CDMA users was 157.9 yuan.
The CDMA figure was below expectations, said DBS Vickers analyst Wallace Cheung.
"CDMA ARPU is falling much faster than expected," he said.
"For the first quarter we were looking at 175 yuan, and they had 158...Their profit was in line with my forecast but I think it's way below the (market) consensus."
Unicom said net additions of subscribers to its GSM service reached 3.415 million for the first quarter, while those to its CDMA cellular business reached 1.78 million.
Unicom this month said its subscriber base grew 2.84 percent in March, as growth for its year-old CDMA service picked up from the previous month. It had a total of 64.91 million subscribers at the end of March, against 63.12 million a month earlier.
Unicom said on Wednesday its EBITDA for the first quarter was 6.59 billion yuan, giving an EBITDA margin of 41.2 percent. (US$1=8.28 Yuan) <<
Dow Jones Business News
>> China Unicom 1Q Results Show Weak Wireless ARPU - Analysts
Loretta Ng
Edited by Debra Boyce
Hong Kong
Dow Jones Business News
April 30, 2003
China Unicom Ltd.'s revenue per user for its mobile phone services fell sharply in the first quarter from fourth-quarter estimates, amid reduced handset subsidies and intensifying competition, said analysts.
The Hong Kong-listed unit of China's second-largest mobile operator reported quarterly earnings for the first time Tuesday, and said net profit for the first three months was 1.29 billion yuan (US$1=CNY8.28). It didn't provide a comparative figure for the same period in 2002 but said the first-quarter net profit amounted to 25.8% of its bottom line in 2002.
Analysts said a sluggish performance by the company's long-distance call division and increasing competition, which helped to push down average revenue per user, both weighed on the company in the first quarter.
The company has businesses ranging from wireless services, based on both global system for mobile communications and CDMA technology, to data and Internet, long distance and paging operations.
To help attract users to its nascent CDMA network last year, the company offered a number of handset subsidies, the costs of which were partly amortized in its first-quarter income statement, amounting to CNY1.53 billion.
That pushed selling and marketing expenses for the quarter up to CNY3.21 billion.
As a result, the CDMA division posted a pretax loss of CNY210 million for the first quarter. With handset subsidies trimmed since January, analysts expected losses to be trimmed gradually over the rest of the year.
However, fewer handset subsidies weighed on revenue. The CDMA monthly ARPU for the first quarter was CNY157.9, compared with analyst estimates ranging from CNY175 to more than CNY190 for the fourth quarter.
For the GSM network, China Unicom's first-quarter ARPU was CNY60.6 - already below JP Morgan's forecast for 2003 as a whole.
Vulnerable To Threats From "Little Smart"
JP Morgan analyst Edison Lee said China Unicom's GSM has been "vulnerable to threats from Little Smart" - a cheap, limited-range wireless mobile-phone alternative operated by China Telecom Group and China Netcom Group.
Merrill Lynch analyst Agnes Ho said there could also be pressure on the company to cut its GSM network tariffs to protect its market share from increasing competition from China Mobile (Hong Kong) Ltd. (NYSE:CHL - News) .
Pretax profit generated by the long-distance business achieved just 18% of this division's full-year pretax profit in 2002, even though total minutes in the first quarter reached 31% of last year's total, said Merrill Lynch's Ho.
"This could imply some tariff pressure on the long-distance call business," she said.
Though the actual profit number came in below his estimate of CNY1.40 billion for the period, UBS Warburg (News - Websites) analyst Dylan Tinker said he is still upbeat about the company's full-year earnings.
"Higher network leasing expenses (due to a change in contract terms to six months from three) and a higher tax rate are major reasons" that net profit was lower than his forecast, Tinker said.
Monday, UBS Warburg revised up its 2003 earnings forecast for China Unicom by 8% ahead of the company's first-quarter earnings report. Tinker said he would stick with the new forecast for now.
However, JP Morgan, whose forecasts have been near the high end of the range, said it may have to revise down its 2003 earnings forecast for China Unicom in response to the first-quarter net profit. << |
