(Aug 28, 2009 - Chinavestor) China Unicom (NYSE:CHU), the second largest Chinese mobile carrier after China Mobile (CHL), reported 2009 H1 interim results today. Total revenues amounted to RMB76.32 billion ($11.16 billion), down 4.3% compared to same period last year. Total profit fell 42.1% to RMB6.62 billion ($968.3 million) year-over-year (YoY).
As Chinavestor reported earlier in July, subscriber growth slowed down for China Unicom (NYSE:CHU) in 2009. "China Unicom (CHU) Growth Slows in July". Besides slower growth and deteriorating fixed line business segment, average-revenue-per-user or ARPU amounted to RMB41.7, a decline of 4.3% YoY. So despite a 7.012 million new mobile subscriber in 2009, revenues took a hit on deteriorating earnings/subscriber. The bad news is that lower income/user means lower overall revenue, while cost of running the network remains the same. And this is exactly what's behind the 42% drop in net income: lower revenues but unchanged operating costs.
The good news is that China Unicom (NYSE:CHU) runs on WCDMA network protocol, similar to the U.S. This allows it to go with the iPhone, an agreement that was just announced as part of the 2009 H1 interim report. According to the report China Unicom and Apple Inc. (NASDAQ:AAPL) agreed to supply CHU with the iPhone 3G and iPhone 3G S models for three years starting in the fourth quarter of 2009.
While the iPhone is expected to be a big hit, it may come late compared to China Telecom's other 3G phones. China Telecom covers over 300 cities as of today compared to China Unicom's 56 city coverage. Plus China Mobile (CHL) is on a fast track to come out with a 3G phone developed by Dell and running on Google's Android. So the race is on with a CHA lead and a mammoth CHL on the back. Good luck, China Unicom.