China Unicom has announced it expects to report a 68.9% increase in profit for the first six months of the year, partly as a result of improved cost efficiencies.
The company estimates it earned a profit of 2.4 billion yuan ($359.9 million) for the six month period, despite a 1.5% decrease in overall revenue to 138.2 billion.
Service revenue is expected to be up 3.2% year-on-year to 124.1 billion yuan, with mobile service revenue up 5.2% year on year.
But due to intense competition in the fixed broadband market, China Unicom expects flat fixed line service revenue of 46.6 billion yuan. Combined with a decline in revenue from sales of telecoms products, total revenue is expected to have declined.
But sales and marketing expenses, handset subsidies and other expenses were both lower year-on-year, leading to a projected 5.5% increase in ebitda to 43.6 billion yuan, representing around 35.1% of service revenue.
Looking ahead to the second half of the year, Unicom cautioned that the mandated abolition of domestic long distance and roaming fees on September 1 and cyclical increases in competition will place increasing pressure on the company’s financial performance.
Unicom will meanwhile act as the test subject for China’s planned mixed ownership model pilot program for the nation’s state-owned operators, bringing in private investors.