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China Unicom Q3 Earnings Deteriorate Y/Y, Revenues Up

China Unicom Hong Kong Ltd.CHU reported mixed financial results in the third quarter of 2015. Earnings per ADR (American Depository Receipt) fell a massive 68% year over year to 8 cents. Quarterly net income was approximately $190 million, down a whopping 69.3% year over year.

Revenues

Total revenue was up a marginal 0.1% year over year at $10,723 million in the third quarter of 2015. Total Service revenue came in at approximately $9,476 million (constituting 88.4% of the total revenue), down 0.6% year over year. For the first nine months of 2015, Mobile revenues were approximately $17,446 million, down 8% and Fixed-Line Revenues were $11,024 million, up 3.4% year over year. Other service revenues grossed $164 million, up 27.1% year over year. Revenues from Telecom Product Sales were about $5,124 million, up 12.8% from the year-ago quarter.

Expenses and Margins

In the first nine months of 2015, total operating expenses increased slightly by 0.04% to $32,076 million. Operating profit for the period was $1,682 million, down 24.9% year over year. Operating margin was 5% compared with 6.5% in the year-ago period. EBITDA in the reported period came in at around $11,828 million, up 3.1% year over year. EBITDA margin was 41.3% against 38.5% in the prior-year quarter.

Liquidity

During the first nine months of 2015, operating cash flow was approximately $10,358 million, up 0.3% year over year. Free cash flow, in the same period was about $788 million compared with $3,484 million in the year-ago period. China Unicom exited the first nine months of 2015 with cash and cash equivalents of $4,208 million compared with $3,514 million at the end of 2014. Total debt outstanding at the end of the reported period was $14,321 million against $14,945 million at the end of 2014.

Subscribers Statistics

As of Sep 30, 2015, China Unicom had 287.571 million (down 3.2% year over year) mobile subscribers, of which, 172.464 million (up 15.7% year over year) were 3G/4G users. The company added 14.676 million 3G/4G subscribers in the reported quarter but lost 1.736 million overall mobile customers. Overall Mobile average revenue per user (ARPU) was a little over $6.64, down 1.9% year over year.

Fixed-line broadband subscriber base was 71.692 million, up 4.2% year over year. The company added a net 1.102 million fixed-broadband subscribers in the reported quarter. Fixed-line access subscriber base was 76.522 million, down 8.8% year over year. The company also lost net 1.905 million fixed-access subscribers in the reported quarter.

Zacks Rank & Other Stocks to Consider

China Unicom currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the non-U.S. telecom industry include NTT DOCOMO Inc. DCM , China Mobile Ltd. CHL and SK Telecom Co. Ltd. SKM . While NTT DOCOMO sports a Zacks Rank #1 (Strong Buy), both China Mobile and SK Telecom carry a Zacks Rank #2 (Buy).

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CHINA UNICOM (CHU): Free Stock Analysis Report

SK TELECOM CO (SKM): Free Stock Analysis Report

CHINA MOBLE-ADR (CHL): Free Stock Analysis Report

NTT DOCOMO -ADR (DCM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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