China Unicom Hong Kong Limited
), China's second largest mobile operator, announced the results
for full-year 2013 with adjusted net income of RMB 10.4 billion
($1.68 billion) that surged 46.7% year over year on strong
revenue growth and higher adoption of 3G plan.
Revenue & Subscriber
Total revenue (excluding deferred fixed-line upfront
connection fee) climbed 18.5% year over year to RMB 295.0 billion
($47.65 billion) in 2013. Telecommunication service revenues,
comprising roughly 81% of the total revenue, were RMB 238.56
billion ($38.52 billion), up 13.5% year over year.
Healthy revenue growth was attributable to rapid growth of 3G
and fixed-line broadband businesses. However, China Unicom has
lost its exclusive right to distribute iPhones to
China Telecom Corporation Limited
Total revenue from the mobile business increased 25.9% year
over year to RMB 207.52 billion ($33.51 billion). A large
contributor to growth was the telecommunication service with
revenues of RMB 151.13 billion ($24.41 billion), up 19.9 % year
over year. China Unicom added 41,671 million new subscribers to
reach 280.983 million at the end of 2013.
China Unicom's 3G business is growing at a fast pace since its
introduction in Oct 2009 and has become the major driver of
revenue growth. 3G business telecommunication service revenues
were RMB 89.80 billion ($14.50 billion) in 2013, up 50.2% year
over year and accounted for 59.4% of telecommunication service
revenues. The company's total 3G subscriber base reached 122.600
million, with 46.144 million new customers added in 2013.
Telecommunication service revenues from the GSM business
decreased 7.4% year over year to RMB 61.34 billion ($9.90
billion) due to growing data substitution and stiff competition.
Subscribers at the end of 2013 were 162.856 million, showing a
4.47 million year-over-year decline.
Revenues from the fixed-line business increased 3.9% year over
year to RMB 86.56 billion ($13.98 billion) due to company's
effort to upgrade its broadband speed, improve service quality
and accelerate the development of high speed bundled service.
Telecommunications services revenues from the fixed-line
business also rose 3.9% year over year to RMB 86.48 billion
($13.18 billion) backed by consistent growth in fixed-line
Telecommunications service revenues from the broadband
business were RMB 45.99 billion ($7.42 billion), up 10.6% from
the prior year. China Unicom added 6.107 million customers during
the reported year, bringing the total number to 64.647
The local telephone business recorded service revenues of RMB
26.28 billion ($4.2 billion), down 10.4% from the prior year. The
company's total fixed line broadband band subscriber base reached
87.643 million, with a loss of 4.314 million customers.
Total expenses crept up 17.6% year over year to RMB 279.27
billion ($45.10 billion) due to higher selling expenses, subsidy,
interconnection charges and depreciation charges. Selling and
marketing expenses increased 22.7% year over year to RMB 42.99
billion ($6.9 billion) in 2013, mostly due to higher promotional
spending on handsets and applications.
China Unicom exited 2013 with cash and cash equivalents of RMB
21.51 billion ($3.47 billion) compared with RMB 18.25 billion
($2.89 billion) at the end of 2012.
Operating cash flow grew 11.1% year over year to RMB 78.482
billion ($12.67 billion) in the reported year.
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 further wants to enhance data volume growth and
improve customer service to achieve a higher profit margin.
China Unicom currently carries a Zacks Rank #1 (Strong Buy).
Other stocks worth considering within this sector are
SK Telecom Limited
Level 3 Communications Inc.
). SKM carries the same rank as CHU, while LVLT holds a Zacks
Rank #2 (Buy).
CHINA TELCM-ADR (CHA): Free Stock Analysis
CHINA UNICOM (CHU): Free Stock Analysis
LEVEL 3 COMM (LVLT): Free Stock Analysis
SK TELECOM CO (SKM): Free Stock Analysis
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