China Unicom Says 2010 Profit Down On 3G Costs

One of China’s three state-owned enterprises offering phone carrier services, China Unicom, announced that its profits fell 60% in 2010 because it spent heavily to popularize its new 3G service. From MSNBC:

Profit was 3.8 billion yuan ($579 million) or 0.16 yuan (2 U.S. cents) per share for the 12 months ending Dec. 31, the Beijing-based company said. That was down from 9.6 billion yuan or 0.40 yuan in 2009.

Unicom said it invested 70 billion yuan ($10.7 billion) last year as it built up a third-generation network and subsidized handset sales.

Despite a fall in profits from 2010, however, Unicom did say announce that higher than expected subsidies allowed them to boost fourth-quarter profits. From Bloomberg News:

China Unicom (Hong Kong) Ltd., the nation’s second-largest mobile phone company, posted fourth- quarter profit that more than doubled as the company changed the way it accounts for handset subsidies.

Net income rose to 583 million yuan ($89 million), from 218 million yuan a year earlier, according to figures derived from 12-month earnings the Beijing-based company reported today. Profit exceeded the 339 million yuan median of four analysts’ estimates in a Bloomberg News survey.

Unicom, the only carrier in China now offering Apple Inc. (AAPL)’s iPhone with a contract for 3G high-speed network service, saw subsidies rise in the fourth quarter after the introduction of the iPhone 4, Chief Financial Officer Tong Jilu said at a briefing today. Total handset subsidies were 6.9 billion yuan last year, he said. That exceeded the 5 billion yuan the company had forecast in May.


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