State-owned telecommunication giant China Unicom expects its net profit in 2017 to have grown 193% from the previous year, thanks to the accelerating development of its mobile services.
The company’s profit attributable to shareholders in 2017 is expected to be around 1.83 billion yuan ($288 million), nearly three times 2016’s profit, Unicom said in a Hong Kong stock exchange filing Thursday.
Changes in the company’s method of expanding its mobile subscriber base, as well as “cost control” and “growth promotion” boosted profits last year, the filing said. The company also had a one-time write-off of 2.9 billion yuan related to optical fiber network assets.
Net profit in the first three quarters of 2017, announced in October, was 4.054 billion yuan, suggesting that the write-off happened in the fourth quarter of the year.
Unicom’s overall service revenue last year is expected to have been approximately 249 billion yuan, up 4.6% from 2016, and the company saw a net addition of 20.34 million mobile subscribers, bringing its total to 284 million.
The firm’s Shanghai-listed parent, China United Network Communications Ltd., on the same day forecasted 177.6% growth in 2017 net profit to 430 million yuan.
But while Unicom saw substantial profit growth in 2017, its expected performance fell below some analysts’ forecasts.
Its net profit last year faced an “abnormally high” tax rate of 27%, and was also likely affected by the company’s “kitchen sinking” costs — reporting all of its costs at the same time — in the fourth quarter, before it begins 2018 under a new mixed-ownership “regime,” researchers from global investment firm Jefferies said in a note Thursday.
Unicom has been undergoing major reforms over the past year aimed at improving efficiency.
In October, the Shanghai-listed unit brought in 14 strategic investors, including private tech giants Baidu Inc., Tencent Holdings Ltd. and Alibaba Group Holding Ltd., who are now also represented on Unicom’s board of directors.
At the same time, the telecommunications group is implementing an employee incentive plan, offering stock options to key personnel in the hope of boosting performance.
Contact reporter Teng Jing Xuan (firstname.lastname@example.org)