Unicom to spend $16b on networks this year

After announcing a 58% increase in full-year profit thanks to the sale of its CDMA network, China Unicom said it would spend 110 billion yuan ($16 billion) on its capital equipment this year.

Net income rose to 33.91 billion yuan ($4.96 billion), from 21.4 billion a year earlier, the company announced yesterday.

The company will increase its capex by 56%, of which 35.2% will be spent on its 3G networks and 23.7 billion on GSM.

But it will also consider raising 30 billion yuan in debt to help it fund its network rollout, chief financial officer Tong Jilu said at the results briefing without elaborating.

China Unicom last year took over fixed-line rival China Netcom and sold its struggling CDMA business to China Telecom as part of the nation's telecom industry restructuring.

Excluding the 26.1 billion yuan gain from CDMA business disposal and a 11.8 billion yuan impairment on the Xiaolingtong business, adjusted profit fell 5.8% to 14.3 billion yuan.

Growth in its mobile business, fixed broadband and data communication remained strong in 2008, but traditional fixed-line continued to decline. Mobile revenue, which represented 44.1% of the company's total revenue, grew 4.3% to 65.25 billion yuan, of which 24.9% derived from value added services.
 
Its fixed broadband and data communication businesses rose 23.9% to 25.17 billion, while fixed-line declined 4.4% to 82.77 billion last year.

Unicom chairman and CEO Chang Xiaobing said the company would capture opportunities brought by 3G to increase its market share.

He said Unicom's W-CDMA network would cover 55 cities by June, and expand to 284 cities nationwide by year-end. The company expects its 2G and 3G networks to cover 96% of the country's population by 2010.

Key operational metrics

20082007
GSM Business

Revenues
65.3 billion yuan
62.6 billion yuan
Subscribers
133.4 million
120.6 million
ARPU
42.3 yuan
45.7 yuan
Fixed-Line BroadbandRevenues
53.2 billion yuan
60.7 billion yuan
Subscribers
100.1 million
110.8 million
Fixed Line
78.3 million
84.7 million
PHS
21.9 million
26.2 million
ARPU
34.8 yuan
38.1 yuan
Local Telephone Lines
38.2 yuan
41.4 yuan
PHS
23.6 yuan
27.7 yuan
Fixed-line Local AccessRevenues
18.1 billion yuan
14.3 billion yuan
Subscribers
25.4 million
19.8 million
ARPU65.2 yuan69.5 yuan

Source: China Unicom

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