China Unicom promises deeper reforms after sharp fall in profits

China Unicom, the country’s second-largest wireless network operator, plans to deepen reforms in its operations after reporting a widely anticipated sharp profit decline for the nine months to September 30.

In a filing with the Hong Kong stock exchange on Friday, Unicom said its total net profit in the past three quarters fell 80.6 per cent to 1.59 billion yuan (HK$1.83 billion), down from 8.18 billion yuan in the same period last year – confirming its profit warning on Tuesday.

The company mainly attributed the sharp drop to a 14 per cent year-on-year increase in selling and marketing costs, as well as a 32 per cent jump in network, operation and support expenses caused by the addition of a tower usage fee and higher energy charges and property rentals.

Unicom added, however, that the decline in profit was a “significant improvement” from the 3.36 billion yuan net loss recorded in the second half of last year.

Earnings before interest, taxes, depreciation and amortisation (ebitda) – a measure of a firm’s operating profitability – decreased 16.8 per cent year on year to 61.75 billion yuan.

Total service revenue advanced just 1.7 per cent to 182.75 billion yuan from 179.75 billion yuan a year ago.