(Yicai Global) March 14 -- China Unicom's profit increased more than five times last year, topping analyst forecasts, thanks to higher service revenues amid mixed-ownership reform at the state mobile carrier. Its Hong Kong-listed shares gained.
Net profit was CNY10.2 billion (USD1.52 billion) in the year ended December, the company said in an earnings report released yesterday. The market expectation was for CNY8.5 billion, according to data from Refinitiv. Revenue rose 5.8 percent to CNY291 billion, beating an average analyst forecast for CNY287 billion.
Chief Executive Wang Xiaochu attributed the strong earnings performance of China United Network Communications Group, as the company is known officially, to its mixed-ownership reform. Mixed-ownership reform refers to a government policy to give private companies stakes in state-owned enterprises in a bid to boost their competitiveness. China Unicom has been the policy's poster child since 35 percent of it was sold to 14 investors in August 2017.
Service revenues were CNY264 billion last year, up 6 percent, of which CNY165 billion came from mobile services.
Shares of China Unicom Hong Kong [HKG:0762] jumped 3.3 percent today to close at HKD9.95 (USD1.27) each.
5G and Capex Outlays
The company expects to invest CNY6 billion to CNY8 billion in fifth-generation mobile networks this year and is applying for a 5G license.
"5G has just started. This year is the first year and technical trials and commercial use exploration are necessary," Wang said, adding that the firm will decide whether to invest more next year based on 2019's tests.
Pre-tax profit reached CNY13 billion, while capital expenditures were controlled at CNY45 billion and its asset-liability ratio dropped to 42 percent from 47 percent a year earlier.
The firm enrolled 31 million new active mobile users last year, up 52 percent from the year before, bringing the total to 320 million. The net increase in the number 4G users was 45 million, so their ranks hit 220 million, and their market share increased 1.3 percent over the same period last year. 4G users were 70 percent of active mobile users, up over 8 percent.
China Unicom is conducting 5G tests at 100 base stations in 17 cities nationwide to prepare for the new technology, the firm noted, giving full play to its advantages in the 3.5 gigahertz industry chain and keeping a close eye on the 5G license issuance and speeding up reforms of its supporting resources.
China Unicom expects CNY58 billion in capital expenditure this year, of which CNY6 billion to CNY8 billion will go to the 5G network.
Editor: Ben Armour