CDMA helps China Unicom sustain growth
By Chen Zhiming (China Daily)
Updated: 2004-08-28 08:56

Shanghai-listed A share China United Telecommunications Co Ltd (China Unicom) posted a first-half profit of 1.56 billion yuan (US$188 million) on Friday, registering growth of 20.25 per cent over the same period a year ago.

Turnover for its core businesses reached 35.36 billion yuan (US$4.26 billion), up 22.2 per cent from a year earlier, the company said in a statement.

Profits rose after sales of its CDMA (code division multiple access) products jumped 60.7 per cent to 11.23 billion yuan (US$1.35 billion), and sales of GSM (global system for mobile communications) products climbed 15.9 per cent to 22.09 billion yuan (US$2.66 billion) over the same period a year ago, it said.

Earnings per share stood at 0.08 yuan (0.96 US cents).

"Though not eye-catching, the improved performance of the CDMA network helped the company sustain its growth," said Dai Chunrong, an analyst with China Securities.

The company statement said that profits strengthened at its second network - a CDMA network turning profitable.

The network made a profit of 30 million yuan (US$3.6 million) for the first half of this year, reversing a loss of 590 million yuan (US$71 million) for the same period last year.

China Unicom says it expects the network, which had already become profitable on an operating basis late last year, to post a net profit as well for all of 2004.

The network had 24.4 million subscribers at the end of July, accounting for about 23 per cent of China Unicom's total.

"However, the result is not very encouraging," said Dai, adding China Unicom could perform better as it now has a nationwide coverage since it bought nine provincial networks from its State-owned parent late last year.

She attributed the lacklustre performance to fiercer market competition brought by its rival China Mobile at the high-end wireless services market and low-cost wireless services offered by the nation's two fixed-line carriers at the low end.

But China Unicom's President Wang Jianzhou said he was confident that performance would bounce back in the second half after new regulations governing tariffs - now under discussion - go into effect.

To differentiate its service from its rivals, China Unicom announced a dual-mode mobile phone service early August, hoping to lure more high-end customers.

Under the brand name of "World Wind," the dual-mode mobile phone service supporting both GSM and CDMA networks enables users to choose GSM or CDMA networks automatically.

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