Unicom's Profit Soars as Private Investors Are Lined Up

China Unicom is set to announce a near 69% increase in net profit for the first half of the year following the introduction of tighter cost controls at the network operator.

In a preliminary financial report for the first six months of this year, China Unicom Ltd. (NYSE: CHU), the country's third-largest operator, announced that its net profit is expected to be RMB 2.4 billion (US$360 million), up by about 68.9% year-on-year, even though its total revenues are set to dip by 1.5% to RMB 138.2 billion ($20.7 billion).

The news is obviously positive for investors, and the operator's share price accordingly ramped up by 5.6% to HK$12.02 on the Hong Kong exchange.

The news will also be noted by the country's large private Chinese companies, which will get the chance to become private investors in Unicom if a new scheme comes to fruition. The operator ended June with 269.5 million mobile customers, of which 138.8 million were 4G customers, and 76.9 million fixed line broadband customers.

Unicom is to participate in a pilot for "mixed ownership reform" that will allow state-owned Chinese companies to bring in private investment. Media speculation has already suggested that digital services giants Alibaba and Tencent are being lined up, but Unicom has issued a statement saying that while it has "established e-commerce operating centers for cooperation with Tencent and Alibaba," those relationships are "not related to the mixed ownership reform plan."

As Light Reading has previously noted, though, the plan might struggle to light a fire under Unicom. (See Ownership Reform Won't Save Unicom .)

Unicom's numbers might appear impressive but are dwarfed by those of market leader China Mobile Ltd. (NYSE: CHL). It finished June with 866.5 million mobile subscribers, of which 593.7 million were 4G customers, and 93 million fixed line broadband customers.

Its revenues for the first half of 2017 were up by 5% year-on-year to RMB 388.9 billion ($58.3 billion), while net profit was up 3.5% to RMB 62.7 billion ($9.4 billion).

China Telecom Corp. Ltd. (NYSE: CHA) is yet to publish its financials for the first half of the year, but ended June with 229.9 million mobile customers, of which 152 million were 4G users, and 128.1 million fixed line broadband customers.

For more on China Unicom and China Mobile, see:

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, International Group Editor, Light Reading

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