China Unicom sees profit surge

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China Unicom (Hong Kong), the nation's second-largest telecom operator, saw net profits surge 89 percent to 1.9 billion yuan ($307.7 million) in the first quarter, thanks to the company's burgeoning third-generation, or 3G, network business.

In a filing to the Hong Kong Stock Exchange on Thursday, China Unicom said revenues rose 15 percent to 70.6 billion yuan in the three months.

The performance means Unicom has managed to narrow the profit gap between it and major domestic rival China Mobile.

The latter this week posted its weakest profit growth in three quarters as higher costs eroded gains from an increase in its 3G service users.

China Mobile's net profit edged up just 0.3 percent to 27.9 billion yuan in the first quarter.

Analysts attributed China Unicom's rapid growth to its rising 3G service business.

The company has relied on an improved smartphone portfolio and attractive service plans to draw subscribers to its 3G network.

China Unicom became the first Chinese telecom carrier to introduce Apple Inc's iPhone series on contract three years ago, and has now greatly expanded its smartphone offerings.

Its smartphone prices start at around 1,000 yuan, and it offers various options, up to high-end flagship handsets such as Samsung Electronics' Galaxy S4.

"We have seen accelerated 3G business growth from the beginning of this year," said Zhou Youmeng, China Unicom's marketing general manager.

Zhou said that in the first quarter, China Unicom added 11.4 million 3G subscribers, pushing the total number to 87.8 million.

However, the figure still lags the 114.4 million enjoyed by market leader China Mobile.

Zhou said she expected to sell 144 million smartphones on China Unicom's 3G network this year, an annual rise of 35 percent from 107 million in 2017.

Some market analysts have expressed concern over China Unicom's competitiveness over the next one to two years, as China Mobile continues to promote the launch of a 4G network in the country.

China Mobile fell behind its rival in the 3G market, largely due to an inferior 3G telecommunication standard it had adopted.

China Mobile has gained less industry support than China Unicom, as the latter enjoys a more mature 3G technology.

"I don't think China Unicom has much to worry about. The company still holds certain advantages in the 4G era," said Chen Peng, a telecom analyst at China Merchants Securities. "China Unicom is likely to upgrade its 3G network download speed to 42 Mbps next year.

"If the carrier deploys the 4G network, it is going to choose FDD LTE technology," Chen said, pointing out that FDD LTE already enjoys greater popularity overseas, and is better developed than the homegrown TD-LTE technology.

Questions:

1. How was China Unicom’s performance in the first quarter?

2. What contributed to its success?

3. How did rival China Mobile do?

Answers:

1. It saw net profits surge 89 percent to 1.9 billion yuan.

2. The company's burgeoning third-generation, or 3G, network business.

3. It posted its weakest profit growth in three quarters, edging up just 0.3 percent to 27.9 billion yuan in the first quarter.

About the broadcaster:

Nelly Min is an editor at China Daily with more than 10 years of experience as a newspaper editor and photographer. She has worked at major newspapers in the U.S., including the Los Angeles Times and the Detroit Free Press. She is also fluent in Korean.