China Unicom Doubles First Half Profits

China Unicom has reported a doubling of its first half profits as the company nears the completion of its merger with landline operator, China Netcom. The company said that earnings for the six months through June 30 were RMB4.42 billion ($642 million), up from the RMB2.2 billion in the same period last year, and beating the average forecast of RMB4.18 billion from seven analysts polled by Dow Jones Newswires. Revenues rose by 4% to RMB35.1 billion ($5.1 billion).

China Unicom said it added 7 million subscribers to its GSM service in the first half to raise the total to 127.6 million. The company is in the process of selling its CDMA business to China Telecom as part of the government mandated restructuring.

As a result of the proposed disposal of the CDMA business, the Company has classified this business as discontinued operations. Profit for the period for the discontinued operations for the period was RMB0.65 billion. The company ended the period with 43.17 million CDMA subscribers.

While the Company continued to increase the penetration rate and diversity of revenue from its mature businesses such as SMS and "Cool Ringtone" service, it also focused on the promotion of its GPRS business, achieving a penetration rate of 17.3%. In the first half of this year, revenue derived from GSM mobile value-added service increased by 21.6% over the same period of last year, and represented 24.1% of service revenue from GSM mobile business.

Under the proposed merger of wireless carrier China Unicom and fixed-line operator China Netcom unveiled in late June, each existing China Netcom share will be swapped for 1.508 new China Unicom shares, while each existing China Netcom American Depositary Share will be swapped for 3.016 new China Unicom ADSs.

Looking forward, Mr. Chang Xiaobing, Chairman and CEO of China Unicom said, "In the second half of this year, the Company will increase investments in its GSM network and enhance its overall network coverage and communication quality. The Company will focus on further developing its mobile business, in particular the GPRS value-added services, to boost overall revenue. The Company will continue to execute its strategic restructuring, and ensure a smooth transition and transfer of its CDMA business. The Company also plans to complete the proposed merger with China Netcom smoothly and proactively integrate its existing resources, enhance operational efficiency and service capabilities, in order to achieve synergies."

Posted to the site on 25th August 2008