China Unicom Hong Kong Limited
), China's second largest mobile operator, announced results for
first-quarter 2014 with adjusted net income of RMB 3.302 billion
($539.5 million) that surged 73.8% year over year on strong
revenue growth and higher adoption of the 3G plan. Earnings per
share soared 75% year over year to RMB 0.14 (2 cents).
Revenue & Subscriber
Total revenue (excluding deferred fixed-line upfront
connection fee) climbed 8.3% year over year to RMB 76.5 billion
($12.5 billion) in the first quarter. Telecommunication service
revenues, comprising roughly 81% of total revenue, were RMB 63.80
billion ($10.4 billion), up 11.8% year over year.
Healthy revenue growth was attributable to rapid growth of the
3G and fixed-line broadband businesses. However, China Unicom no
longer has the exclusive right to distribute
) iPhones to
China Telecom Corporation Limited
In spite of that, total revenue from the mobile business
increased 15.4% year over year to RMB 40.68 billion ($6.7
Revenues from the fixed-line business increased 5.8% year over
year to RMB 22.92 billion ($3.7 billion) given the company's
effort to upgrade its broadband speed, improve service quality
and accelerate the development of high speed bundled service.
Telecommunications service revenues from the broadband
business were RMB 12.44 billion ($2 billion), up 11.0% from the
prior-year quarter. China Unicom added 1.794 million customers
during the reported quarter, bringing the total number of
broadband users to 66.441 million.
Total expenses crept up 5.9% year over year to RMB 72.08
billion ($11.8 billion) due to higher selling expenses, subsidy,
interconnection charges and depreciation charges. Selling and
marketing expenses increased 21.4% year over year to RMB 12.15
billion ($2 billion) in the first quarter due to higher
promotional spending on handsets and applications.
China Unicom exited the first quarter with cash and cash
equivalents of RMB 22.463 billion ($3.7billion) compared with RMB
21.51 billion ($3.47 billion) at the end of 2013. Operating cash
flow was RMB 18.202 billion ($3 billion) compared with RMB 16.836
billion ($2.7 billion) in the first quarter of 2013.
China Unicom will continue to benefit from the ongoing
development strategy aimed at enhancing growth and profitability.
The company expects to generate higher revenues by accelerating
large-scale developments of 3G and fixed-line broadband services.
The company also wants to enhance data volume growth and improve
customer service to achieve a higher profit margin.
China Unicom, which competes with
China Mobile Limited
), currently carries a Zacks Rank #5 (Strong Sell).
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