Highlights1:

  • Industry leading in revenue growth: Operating revenue was RMB121.69 billion, up 20.0%.
  • Continuous improvement in revenue structure: Mobile's share of service revenue at 59.1%, up 4.9pp; Non-voice's share of service revenue at 52.3%, up 4.2pp.
  • Rapid development of key businesses: 3G service revenue doubled, with rapid increase in its net adds market share; Broadband service revenue up 13.0% and subscribers up 15.7%.
  • Continuous increase in profitability: EBITDA up 12.5%; Net profit was RMB3.43 billion, up 31.9%.

Hong Kong, 23 August 2012 - China Unicom (Hong Kong) Limited ("China Unicom" or "the Company") (HKSE: 0762; NYSE: CHU) announced its 2012 interim results1 today.

the first half of 2012, the Company continued to lead the industry in terms of revenue growth, with a continued improvement in its business structure and enhanced profitability and overall strength.

In the first half year, revenue of the Company totaled RMB121.69 billion, an increase of 20.0% over the same period last year (excluding deferred fixed-line upfront connection fee for the same period last year, same hereinafter unless otherwise specified). Service revenue was RMB102.39 billion, an increase of 13.3% over the same period last year.

While revenue grew rapidly, the Company saw a continued improvement in its profitability and operating cash flows. EBITDA reached RMB36.04 billion, an increase of 12.5% over the same period last year. Net profit was RMB3.43 billion, an increase of 31.9% over the same period last year. Basic earnings per share was RMB0.146. Operating cash flows was RMB35.54 billion, an increase of 3.3% over the same period last year. Capital expenditure was RMB38.94 billion. As at 30 June 2012, the net debt-to-capitalisation ratio of the Company was 29.6%. The Company's debt-to-capitalisation structure remained solid.

Facing a complex macroeconomic situation and an increasingly intense market competition, the Company continued to grasp the good opportunities of industry development and accelerate the scale development of its key businesses. The Company's revenue continued to grow rapidly, with its growth rate maintaining at an industry-leading level. The period-on-period growth rate of service revenue exceeded the industry average by 4.1 percentage points. The market share of revenue continued to increase. The revenue structure continued to improve. Revenue from the mobile business and the non-voice business accounted for 59.1% and 52.3% of its total service revenue respectively.

In the first half year, service revenue from the mobile business of the Company was RMB60.48 billion, an increase of 23.4% over the same period last year. The number of mobile subscribers of the Company reached 219.249 million, an increase of 20.7% over the same period last year. The ARPU of mobile subscribers was RMB48.1, an increase of 2.8% over the same period last year. Revenue from the non-voice business and 3G business accounted for 40.6% and 44.5% of the service revenue from the mobile business respectively. The mobile business achieved scale and rapid development amidst the transformation and upgrade of the industry.

The Company focused on developing the business scale of its 3G business. In the first half year, the net additions of 3G subscribers were 17.511 million and the total number of 3G subscribers reached 57.530 million. The ARPU of subscribers and average monthly data flow of mobile phone subscribers were RMB91.8 and 138.3MB respectively, continuing to maintain at an industry leading level. Service revenue from the 3G business was RMB26.90 billion, which doubled the amount of the same period last year, and economy of scale has been gradually emerged. While 3G subscribers grew rapidly, the penetration rate of contract subscribers also increased rapidly. As at 30 June 2012, the contract subscribers accounted for 47.7% of total 3G subscribers, an increase of 12.3 percentage points from the end of last year, further optimizing its 3G subscribers mix.

As for the GSM business, due to the impacts of increasing competition and the substitution by data services, the Company's GSM business faced with greater pressures in the first half year. Service revenue was RMB33.58 billion, a decrease of 6.3% over the same period last year. The decrease in revenue was mainly attributed to the decline in the traditional GSM businesses including voice and SMS. Revenue from businesses such as GSM mobile Internet and information navigation increased rapidly over the same period last year, with revenue from the mobile Internet business increased by 16.2% over the same period last year.

In the first half year, driven by the revenue growth from the fixed-line broadband business, the Company's service revenue from the fixed-line business was RMB41.50 billion, an increase of 1.5% over the same period last year. Revenue from the non-voice business accounted for 69.0%. The business structure continued to improve.

By capitalizing on the favourable opportunity presented by the implementation of the Broadband China strategy, the Company actively promoted the broadband popularization and speed enhancement project and further carried out marketing on speed enhancement. The net additions of fixed-line broadband subscribers were 4.876 million and the total number of subscribers reached 60.527 million. Service revenue from the fixed-line broadband business was RMB19.40 billion, an increase of 13.0% over the same period last year, and accounted for 46.7% of the service revenue from the fixed-line business. The fixed-line broadband business became the top revenue contributor of the fixed-line business. The local telephone business2 continued to decline. The service revenue in the first half year was RMB15.07 billion, a decrease of 14.7% over the same period last year. The decline gradually slowed down.

In the second half year, the Company will firmly grasp the strategic development opportunity to facilitate the continued rapid growth. The Company plans to optimize its development model and accelerate the pace of its transformation and upgrade; continue to accelerate the construction of the target network to ensure the needs of market development, and further strengthen its management capabilities and profitability. The Company will endeavour to achieve greater breakthroughs in its scale of development and efficiency level.

Note 1: Except for basic earnings per share, all revenues and profit figures herein exclude the effects of deferred fixed-line upfront connection fee of RMB15 million for the first half of 2011.

Note 2: Local telephone business includes local voice service, long-distance service, fixed-line value-added service and interconnection services.


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