2010-03-25 09:51

HONG KONG - China Unicom Ltd, the country's No 2 mobile-phone company, reported a 73 percent drop in full-year profit, missing estimates, on increased spending for high-speed services and a lack of a one-time gain.

Net income declined to 9.56 billion yuan ($1.4 billion), or 0.4 yuan a share, compared with a restated 35.4 billion yuan, or 1.48 yuan, a year earlier, Unicom said in a statement on Wednesday. The Beijing-based carrier was expected to post a profit of 10.6 billion yuan, the median estimate of three analysts surveyed by Bloomberg News.

The company spent more on marketing to win subscribers to its third-generation network amid rising competition from China Mobile Ltd and China Telecom Corp. Unicom, the only carrier offering Apple Inc's iPhone handset in China, was foiled in its efforts to provide two new phones co-developed with Google Inc amid a dispute row between the Chinese government and the US Internet giant.

"China Unicom's strategy for 3G has been to attract high-end customers from China Mobile," Samsung Securities Co analyst Paul Wuh wrote in a March 15 report.

"We do not think that investors have factored in the full amount of higher 3G marketing expenses - including much higher handset subsidies."

Unicom shares fell 1.5 percent to HK$9.22 in Hong Kong trading before the announcement, extending the stock's decline this year to 10 percent, the worst performer among China's three phone carriers. China Telecom has gained 16 percent this year, while China Mobile has advanced 3.1 percent.

The company's profit in 2008 was boosted by a 26.1 billion yuan one-time gain from the sale of one of its two mobile-phone units to China Telecom.

Unicom started selling the iPhone in October, and signed up more than 100,000 customers for the device by December. Apple's handset will become the top-selling smart phone in China, Unicom Chairman Chang Xiaobing said in November.

Google, the world's biggest Internet search engine, said in January that it would postpone, to an unspecified date, the sale of two handsets co-developed with Unicom.