What To Watch As China Unicom Reports FY’18 Results

by Trefis Team
China Unicom
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China Unicom (NYSE:CHU) the second largest Chinese wireless player, is expected to publish its Q4 and FY’18 results on March 13. We expect the company’s results to be driven by higher wireless subscriber additions, which should bolster service revenues, and also by lower subsidy-related costs, amid lower handset sales. In this note, we take a look at some of the factors that likely drove the company’s results over the quarter.

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Wireless Subscriber Growth To Drive Service Revenue

China Unicom added a total of 30.9 million wireless subscribers over the year, marking a significant improvement from the 20.34 million users it added in the year-ago period. That said, the figure is behind China Mobile and China Telecom, which added 38 million and 53 million wireless users, respectively, over the last year. The growth is driven by the company’s focus on expanding its network coverage and capacity, reaching more users. Over the first half of the year, the company added a total of 60k 4G base stations, taking its total figure to 910k. The company has also been using big data and analytics tools to identify traffic hotspots for more accurate capacity expansion, improving its network performance.

However, the company’s wireless ARPU could come under some pressure, due to the Chinese government’s move to cut long-distance and roaming charges, while also reducing data prices. This could be partially mitigated by a higher mix of 4G subscribers on its network (70% of the base was on 4G connections as of the end of 2018). 4G ARPU is about 20% higher than the company’s overall ARPU.

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