Unicom warns to expect an 80% profit slump for H1
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China Unicom has warned it expects to report an 80% year-on-year slump in net profit for the first half of the year as a result of a surge in expenses.
In a stock exchange filing, the operator said that selling and marketing expenses grew significantly during the six month period.
New tower usage fees resulting in the outsourcing of tower assets to new joint venture China Tower, higher energy charges and property rentals also contributed to the growth of expenses.
China Unicom reported a profit for 1H15 of 6.99 billion yuan, so the company is estimating a profit fo the period of around 1.4 billion yuan.
The operator noted that this is nonetheless a significant improvement of the 3.36 billion loss – excluding the gain from the tower asset disposals – recorded during the second half of last year.
The filing also states that Unicom’s mobile business has “achieved initial success in overcoming operational challenges.”
As a result the company achieved a net addition of mobile subscribers of 8.39 million during the period. This compares favorably to the operator’s performance last year, when the company recorded net losses of customers for consecutive months.
Questions & Answers
Q.What is the primary reason for the expected 80% profit slump?
What is the primary reason for the expected 80% profit slump?
The company attributes the significant profit decline to a surge in expenses. Specifically, selling and marketing costs, new tower usage fees, higher energy charges, and property rentals all contributed to this increase.
Q.How much profit does China Unicom expect to report for the first half of the year?
How much profit does China Unicom expect to report for the first half of the year?
China Unicom expects to report a net profit of approximately 1.4 billion yuan for the first half of the year. This follows a profit of 6.99 billion yuan for the same period last year.
Q.Has China Unicom seen any positive developments in its mobile business?
Has China Unicom seen any positive developments in its mobile business?
Yes, the company's mobile business has overcome operational challenges and achieved initial success. This resulted in a net addition of 8.39 million mobile subscribers during the period, a significant improvement from last year's customer losses.
Q.Is the predicted profit still an improvement over recent performance?
Is the predicted profit still an improvement over recent performance?
Yes, despite the large slump, the estimated 1.4 billion yuan profit is considered a significant improvement. It compares favourably to the 3.36 billion yuan loss recorded in the second half of last year, excluding tower asset disposal gains.
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