3G continues to fuel growth for Unicom

28 Feb 2014

China Unicom, the nation’s second largest player in both the wireless and broadband markets in terms of subscribers, has registered operating revenues of CNY295.04 billion (USD48.14 billion) for the full year ended 31 December 2013, representing an 18.5% increase year-on-year. Growth was strong across the board for the telco, with mobile and fixed line service revenues increasing by 19.9% and 3.9% to CNY151.13 billion and CNY86.49 billion respectively. Operating costs and expenses also expanded by 17.5%, however, with marketing costs and 3G handset subsidies registering the largest increases – the former rising 22.7% to CNY41.99 billion and the latter jumping by 27.8% to CNY7.80 billion – although the telco was able to reduce its financing costs to CNY2.94 billion, a fall of 14.1% y-o-y. Similarly, CAPEX was reduced by 26.4% to CNY73.46 billion, representing 30.8% of service revenues, compared to 47.5% in 2012. Meanwhile, Unicom registered EBITDA of CNY83.96 billion (+15.6% y-o-y) with an EBITDA margin of 35.2%, whilst net profits surged to CNY10.41 billion from CNY7.10 billion a year earlier.

The telco’s network expansion drive continued despite the cut in investment, and Unicom increased the number of 3G base stations in its network by 23.0% to 407,000, all of which were HSPA+ enabled, with those in multi-carrier sectors boosted to dual carrier (DC)-HSPA+. In the fixed line space, Unicom expanded its broadband networks, increasing the number of access ports by 11.8% to 119.07 million, of which 71% were either fibre-to-the-home (FTTH) or fibre-to-the-building (FTTB).

The 3G market has been Unicom’s greatest driver of growth and the cellco reported substantial subscriber expansion as well as increases in average usage. 2013 saw 3G overtake 2G in terms of service revenues, increasing by 50.2% to CNY89.80 billion (59.4% of mobile service revenues) whilst turnover from 2G services dipped by 7.4% to CNY61.34 billion. 3G subscriptions grew by 60.4% y-o-y to 122.6 million, increasing the penetration of 3G users in Unicom’s customer base to 43.6% from 31.9% a year earlier. Intensifying competition saw average ARPU for 3G subscribers drop to CNY75.1 in 2013 from CNY86.1 in 2012, although the greater proportion of 3G customers in Unicom’s user base led to a slight increase in overall mobile ARPU to CNY48.2 from CNY47.9. Price erosion also led to a greater level of data usage per customer, with the average 3G customer using 185.6MB of data per month, compared to 147.8MB in 2012.

China, China Unicom,

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