China Unicom’s Revenues Should Trend Steadily Higher, Driven By Wireless Business
China Unicom (NYSE:CHU) is a telecommunications company that provides wireless and wireline-based voice and data services and related applications across Mainland China. The company has two segments: (1) Mobile Services & Phones: provides wireless and data services across Mainland China. The segment also sells mobile handsets. (2) Wireline Services: provides wireline voice and broadband services. In this analysis, we breakdown the key revenue drivers for the company.
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China Unicom’s Total Revenue has grown 7% from $41 billion in 2016 to almost $44 billion in 2018 and is expected to grow 7.5% to over $47 billion in 2 years
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Revenue growth of about $3.5 billion over two years to be driven by $3 billion increase in (A) Mobile Services & Phones and $0.5 billion increase in the (B) Wireline Services Revenues
(A) Revenue from Mobile Services & Phones to increase 10% (about $3 billion) in the next two years, with its share of Total Revenue expected to be about 67% by 2020
- Segment revenues grew from $27 billion in 2016 to $29 billion in 2018, driven by a higher number of wireless subscribers, although this was partly offset by falling ARPUs.
- We expect revenues to grow to about $32 billion in 2020, driven by further growth in the number of subscribers as well as slightly higher ARPUs.
(B) Revenue from Wireline Services to increase 3% (about $0.5 billion) in the next two years, with its share of Total Revenue expected to be about 33% by 2020
- Segment revenues grew from $14 billion in 2016 to almost $15 billion in 2018, driven by higher revenues from its Other Wireline business – which includes Internet data center, IT services, and leased line services – although this was partly offset by a decline in Broadband Revenues, amid stiffer competition from China Mobile.
- We expect segment revenues to grow to about $15.5 billion in 2020, driven by a recovery in the Broadband business.
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