China Unicom’s Q1 Revenues Decline On Lower Product Sales And Recent Subscriber Losses

China Unicom (NYSE:CHU), the second largest Chinese wireless carrier, published its financial and operational indicators for Q1 2016 last week, posting a year-over-year decline in revenues and profitability, amid lower product sales,wireless subscriber losses over 2015 and pricing pressure for its high-speed data services. Below we provide some of the key takeaways from the carrier’s earnings release.

Key Takeaways:

• Revenues declined year-over-year, amid lower sales of telecom products, slightly lower mobile service revenues and currency headwinds (RMB down -4.5% vs USD). This was partially offset by higher fixed line revenues.
• Net profit declined on account of higher network operation and support expenses as well as a lower revenue base.
• Net billing subscriber adds turned positive (6.61 million adds vs loss of 1.8 million in Q4’15) on account of the company’s stronger roll-out and promotion of its 4G services since Q4 2015.
• Overall ARPU for mobile billing subscribers trended sequentially higher to RMB 47, likely driven by stronger mix of 4G subscribers (up 5.4% sequentially to 23%).
•  4G ARPUs trended lower to RMB 84 owing to the government’s tariff reduction requirement and unused data rollover policy.
• Growth in broadband and data services helps to more than offset decline in revenues from fixed-line voice services.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for China Unicom