China Unicom booked a double-digit drop in profit in the first quarter of 2020 as ARPU and subscriber numbers continued to fall year-on-year, with the operator looking to 5G to drive growth but still not revealing subscriber figures.
The operator’s net profit in the January to March period dropped 13.9 per cent year-on-year to CNY3.17 billion ($448 million), while service revenue increased 2.3 per cent to CNY68.3 billion and equipment sales fell 13 per cent to CNY5.52 billion.
In a statement, Wang Xiaochu, China Unicom chairman and CEO, claimed that while facing challenges such as market saturation and strong competition as well as the Covid-19 (coronavirus) outbreak, the company controlled customer acquisition costs and actively addressed unprofitable and low-value products and channels.
He noted the pandemic slowed business development, customer acquisition, 5G network deployment and raised debt risks, but at the same time increased demand for digital services, creating new opportunities for the company.
Wang expects 5G user growth to accelerate in the second half of the year, as it speeds up the network deployment and prices of 5G terminals decline and more innovative applications emerge.
Subs dip
The operator ended March with 311 million total subscribers, down by 12.1 million from Q1 2019. It signed up 321,000 subs in March after restrictions to slow the pandemic led to a loss of 7.78 million users [1] in January and February.
Its 4G user base increased 10.5 per cent year-on-year to 254.5 million. After losing 1.37 million LTE subs in the first two months of 2020, it added 756,000 in March.
Mobile ARPU declined 2.9 per cent year-on-year to CNY40.
The decrease in user acquisition cost led to a 15 per cent year-on-year drop in selling and marketing expenses to CNY7.7 billion.
In late March, China Unicom reported net profit for 2019 increased [2]11.1 per cent year-on-year to CNY11.3 billion, while service revenue was flat at CNY264 billion.
[1] https://www.mobileworldlive.com/featured-content/top-three/china-operators-suffer-first-subs-dip-in-a-decade/
[2] https://www.mobileworldlive.com/featured-content/home-banner/china-unicom-looks-to-5g-to-drive-top-line-growth/
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