Home > Business & Strategy, Technology & Telecom > Competition to weigh on China Mobile, China Unicom 2009 earnings

Competition to weigh on China Mobile, China Unicom 2009 earnings

But rival China Telecom seen reporting sharp rise in full-year net profit. 

China Mobile Ltd. and China Unicom (Hong Kong) Ltd. will likely report weak 2009 results as intensifying competition has slowed subscriber growth and higher marketing and depreciation expenses for third-generation mobile services continue to weigh on their earnings.

But rival China Telecom Corp. will likely report a sharp rise in 2009 net profit mainly as its year-earlier result was bogged down by a huge impairment loss on assets associated with its low-cost, limited wireless service.

“2010 will still be a tough year for Chinese telecom companies as competitive dynamics have not improved and average revenue per user is still trending down. Hefty handset subsidies will continue to weigh on their profitability this year,” said Steven Liu, an analyst at DBS Vickers Securities.

China Mobile Ltd. (18 March)
Market Expectations: China Mobile will likely report its 2009 net profit rose 1.9% to CNY114.88 billion from CNY112.79 billion a year earlier, according to the average forecast of eleven analysts surveyed by Dow Jones Newswires.

Full-year revenue likely rose 8.6% to CNY447.63 billion from CNY412.34 billion.

China Mobile added 65.0 million subscribers last year, bringing its total subscriber base to 522.28 million at the end of December.

Key Issues: Investors will be watching out for any comments on China Mobile’s ramp-up plans for its 3G mobile operation, progress on a planned A-share listing, its dividend payout policy and capital expenditure guidance.

China Telecom Corp. (22 March)
Market Expectations: China Telecom, China’s largest fixed-line operator by subscribers, is expected to report that its 2009 net profit likely rose sharply to CNY14.59 billion from CNY884 million a year earlier. In 2008, the company’s net profit was dragged down by a CNY24.17 billion impairment loss on property, plants and equipment.

Revenue likely rose 13% to CNY211.47 billion from CNY186.80 billion as it added more mobile subscribers.

Key Issues: Investors will be on the lookout for any comments from management on how China’s dominant fixed-line company plans to add more subscribers to its mobile business which started in late 2008. Any guidance on handset subsidies, subscriber target and profitability will also be closely watched.

China Unicom (Hong Kong) Ltd. (24 March)
Market Expectations: China

Unicom, China’s second largest wireless carrier by subscribers, will likely report net profit of CNY10.16 billion for the twelve months ended Dec. 31, 2009, compared with CNY33.91 billion a year earlier, according to the average forecast of eleven analysts polled by Dow Jones Newswires.

China Unicom said in January it expects its 2009 net profit to more than halve because a one-off disposal gain boosted its 2008 results significantly.

China Unicom sold its code division multiple access mobile operations to China Telecom in October 2008, which generated an after-tax gain of CNY27.57 billion for 2008.

China Unicom’s 2009 revenue likely came in at CNY154.72 billion, up from CNY148.91 billion a year earlier according to the poll.

Key Issues: Investors will be focusing on the company’s 3G mobile strategy, guidance on handset subsidies, subscriber target and profitability.

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: