(Yicai Global) March 23 -- China United Network Communications's shares surged in Hong Kong today after one of China's three major telecoms operators posted double-digit profit gain for last year. Besides risks, the Covid-19 outbreak should spell out digitization demand for the firm this year.
Shares of the company [HKG:0762], commonly known as China Unicom, climbed 11.8 percent to HKD4.6 (US 59 cents) by the lunch break. Meanwhile, the Hong Kong market's main benchmark Hang Seng Index was 3.6 percent up. The Beijing-based firm's mainland stock price [SHA:600050] edged up 3.3 percent.
The operator boosted its net profit by 11 percent to CNY11.3 billion (USD1.6 billion) last year from 2018, it said in its earnings report published yesterday. Its service revenue climbed 0.3 percent to CNY264.4 billion (USD37.3 billion).
China Unicom is confident it will tackle the challenges posed by the Covid-19 epidemic amid intensifying competition, increased spend on fifth-generation wireless network construction, and risk of bad debts, it said. Still, the outbreak will also create new business opportunities by accelerating digital transformation, it added.
The number of China Unicom's mobile data subscribers increased by 3.4 million to 318 million. However, due to reduced fees, such revenues fell by 5 percent to CNY156.4 billion. Lowered prices showed elsewhere, too. Although 2.6 million more broadband internet clients were added, the firm's revenue from that business dropped by nearly 2 percent to CNY41.6 billion.
China Unicom has more than 60,000 5G base stations to support its services. The firm and its domestic ally, China Telecom, joined hands earlier to build 50,000 5G base stations, saving about CNY10 billion.
Editor: Emmi Laine