For the full year ending December 31, 2003, it reported net profit down 8.3% at CNY 4.22bn ($509m), compared with CNY 4.6bn ($555.7m) in 2002. This was below analyst expectations of CNY 4.95bn ($598m).
China Unicom made a CNY 557m ($67.3m) impairment loss plus asset write-off on the paging operations, and a CNY 663m ($80.1m) disposal loss on the sale of the division to its parent. Excluding these charges, the company’s net profit for 2003 should be CNY 5.08bn ($613.7m), up 10.5% on year.
The one positive note however was that revenue rose 66.7% to CNY 67.64bn ($8.17bn) from CNY 40.58bn ($4.90bn) in 2002.
Chairman Wang Jianzhou said the earnings decline was mainly due to its write-off of ailing paging assets and disposal losses from the sale of the division to its parent.
But analysts didn’t agree and pointed out the full-year results also showed a series of weak fourth-quarter operating data, including thinner earnings margin, a higher churn rate, rising sales and marketing costs, as well as looming doubtful subscriber accounts. Shares in the company were consequently hit hard.
Last November, China Unicom announced it would pay HKD 3.02bn ($388.9m) in cash to acquire nine remaining networks from its state-owned parent, China United Telecom. It also assumed HKD 7.6bn ($978.9m) of net debt.
As part of the deal, China Unicom disposed of its entire paging business back to its state-owned parent, China United Telecom, for HKD 2.59bn ($333.6m).
This article is based on material originally published by ComputerWire
