China Unicom First-Quarter Profit Trails Estimates on 3G - Bloomberg

China Unicom (Hong Kong) Ltd. (762), the nation’s second-largest mobile phone company, posted first- quarter profit that missed analysts’ estimates on weaker than expected subscriber additions to its high-speed service.

Net income rose to 1 billion yuan ($159 million), from a restated 145 million yuan a year earlier, the Beijing-based company said in a statement today. That compared with the 1.1 billion yuan median of six analysts’ estimates in a Bloomberg News survey.

China Unicom (728) Chairman Chang Xiaobing lost the advantage of being the only carrier in China to offer Apple Inc. (AAPL)’s iPhone with a service contract when China Telecom Corp. began sales of the device March 9. China Unicom added 8.84 million users to its third-generation network in the first quarter, which Macquarie Group Ltd. analyst Lisa Soh called “a weak number.”

“At this stage it is unclear whether this 3G net adds number was impacted by China Telecom’s iPhone launch,” Soh, a Hong Kong-based analyst who rates the shares underperform wrote in an April 19 note to clients. “Unicom will need to incur higher costs/lower average revenue per user to accelerate its 3G run rate throughout the remainder of the year.”

Revenue rose 25 percent to 61.2 billion yuan in the first quarter, from 49 billion yuan, beating the median estimate of 56.8 billion yuan in the Bloomberg News survey.

Unicom rose 0.2 percent to HK$13.02 at the close in Hong Kong trading before the announcement. The shares have declined 20 percent this year.

China Unicom’s 3G subscribers totaled 48.9 million at the end of March. The company lagged behind China Mobile Ltd. (941)’s 59.6 million 3G users, according to data the companies released this month. Unicom’s total mobile customer base of 209.5 million was less than half of China Mobile’s total of 667.2 million.

On April 20, China Mobile said first-quarter profit rose 3.5 percent, missing analyst estimates, as the world’s biggest carrier by subscribers increased spending to attract users. Net income climbed to 27.8 billion yuan, from 26.9 billion yuan a year earlier. The median of four estimates by analysts in a Bloomberg News survey was 28.2 billion yuan.

China Telecom, the country’s biggest fixed-line carrier and third-largest mobile phone company, will report earnings on April 27.

--Edmond Lococo. Editors: Garry Smith,

To contact Bloomberg News staff on this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net