China's telecoms giants tipped to report mostly downbeat 2016 results

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China’s major telecoms are expected to report weaker annual results for 2016 this week in spite of continuing growth in mobile subscribers. Photo: EPA

Published: 6:00am, 13 Mar 2017Updated: 1:29pm, 14 Mar 2017

Investors are likely to find a mixed bag of full-year earnings announcements from China’s telecommunications industry, as the three major network operators kick off their latest reporting season this week.

To further complicate matters, China Mobile, China Unicom and China Telecom will face questions from the market about the impact of further tariff reductions announced a week ago by Premier Li Keqiang at the National People’s Congress.

“While we forecast strong year-on-year recovery in revenue and Ebitda (earnings before interest, tax, depreciation and amortisation) across the sector, we feel risks are skewed to the downside,” Daiwa Capital Markets analyst Ramakrishna Maruvada said last week.

The difficult operating environment was underscored by Unicom’s profit warning in January and the weak third-quarter earnings posted in October by China Mobile, the world’s largest wireless network operator.

A group of attendants use a mobile phone to take a picture during the third plenary session of the National People's Congress outside the Great Hall of the People on March 12, 2017. Photo: AFP

Unicom will report on Wednesday its financial results for last year. In 2016, the company added 11.5 million new mobile subscribers, bringing its total subscriber base to 263.8 million as of December 31.

The operator has announced that its net profit last year will be down by about 94 per cent from 2015, attributing that decrease to rising network and marketing costs.