China Unicom (Hong Kong) Ltd.’s net profit in the January-September period rose 30% thanks to strong revenue growth as it increased the number of subscribers to its third-generation mobile services.
The result was slightly below analysts’ expectations. But China Unicom, the country’s second-largest mobile operator by subscribers, nonetheless outshone larger rival China Mobile Ltd., which earlier this week said its net profit for the same period rose only 1.4%.
China Unicom is racing with China Mobile and China Telecom Corp. to increase revenue per user by increasing the number of customers for their third-generation mobile services, which offer faster data speeds at a higher price than second-generation services.
Net profit for the nine months ended Sept. 30 was 5.45 billion yuan ($865.08 million), up from a restated 4.21 billion yuan a year earlier, China Unicom said Thursday.
The company didn’t provide a third-quarter net profit figure, but based on its first-half net profit of 3.43 billion yuan, China Unicom’s third-quarter net profit was 2.02 billion yuan. The company was expected to report a third-quarter net profit of 2.094 billion yuan, according to the average forecast in a Thomson Reuters and Dow Jones Newswires poll of four analysts.
Revenue for the nine-month period rose 19% to 185.19 billion yuan from a restated 155.96 billion yuan in the same period a year earlier.
Like its rivals, China Unicom has been investing heavily in 3G network services and it is finally seeing rewards as growing revenue from the more valuable services has lifted profits. But at the same time, costs have risen as the company seeks to compete with rivals to attract users to the costlier 3G services.
Selling and marketing costs rose 23% to 25.38 billion yuan. The cost of telecom products sold rose 48% to 33.78 billion yuan and subsidies for 3G handsets were 4.78 billion yuan in the three quarters. Expenses grew 18% to 177.93 billion yuan because of an expansion of network coverage and marketing costs, Unicom said.
China Unicom’s monthly average revenue per user for mobile services–a key barometer of long-term growth for telecom companies–rose to 48.3 yuan in the January-September period from 47.4 yuan a year earlier. ARPU for 3G users fell to 89.1 yuan from 115.0 yuan.
China Unicom had the second-largest number of 3G subscribers in China at the end of September, with 66.9 million. China Mobile led with 75.6 million 3G users. China Telecom, which has yet to issue figures for September, had about 56.4 million 3G users, according to government data.