China Unicom Ltd's partnership deal with Apple for the iPhone in the domestic market has not helped its net profit in 2010 which is set to tumble 50 percent from the previous year, the telco said Monday.
The decline in its net profit was due to the telco's high subsidies on 3G phones, including iPhones, last year, according to analysts. But the telco's profit is set to rebound this year on cheaper 3G service plans to woo users.
Net profit for China's No. 2 telco was expected to drop by 50 percent in 2010 from 2009, when it made a profit of 313 million yuan (US$47.42 million), Shanghai-listed China Unicom said in a statement to the Shanghai Stock Exchange Monday.
"The decrease was in line with our expectations because China Unicom had to invest heavily on handset subsidies in the fiercely competitive market," said Guosen Securities in a note yesterday.
"It's the toughest time for China Unicom in 2010. Its business will turn profitable starting from 2011, thanks to the 3G business," Zhou Jun, Orient Securities' analyst, said in a Monday note.
China Unicom recently said pricing of 3G services would be cut from 68 yuan monthly to 48 yuan to attract more users. The iPhone and lower-entry but cheaper 3G phones will help grow the telco's 3G user base to 25-30 million in 2011, double that of last year, said Guosen Securities.
