Telecom Equipment News
- Unicom earnings dive on one-time loss
Date: 27-Aug-2007 Sources: (Shenzhen Daily)
CHINA Unicom Ltd., the smaller of the country's two mobile operators, saw quarterly earnings dive after swallowing a one-time loss amid fierce competition from rival China Mobile in the country's rural areas.
The company, which with China Mobile is scrambling to jumpstart growth in the world's largest mobile arena, is going after lower-paying rural customers, a move analysts warn may chip away at margins.
Both hope also that the advent of high-speed third generation wireless services will prop up their bottom line, though its timing remains uncertain.
Unicom posted a profit of 170 million yuan (US$22.4 million) for the three months ended June, compared with 1.41 billion yuan a year earlier.
However, if an unrealized loss of 1.64 billion yuan on the derivative component of a swathe of convertible bonds were to be excluded, Unicom would have made a net profit of 3.77 billion yuan, slightly outstripping expectations.
Seven analysts had predicted a second-quarter net profit of 1.68 billion yuan and a first-half net profit of 3.64 billion.
Unicom is looking ahead to a long-awaited restructuring of China's telecom sector. One scenario put forward by market watchers would be for Unicom to split in half and hive off its CDMA and GSM networks to other operators.
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