China Unicom (Hong Kong) Limited (CHU) is committed to provide faster broadband network, improve service quality and offer efficient bundled services to its customers. Based on customer demand, the carrier plans to focus on integrated innovation, transform its developmental model and accelerate the growth of its fixed and mobile broadband business to maintain its industry leadership and improve overall market share profitability.
3G remains a compelling opportunity and represents the single biggest driver of the company’s long-term growth. In the third quarter of 2014, China Unicom added 4.9 million 3G/4G subscribers. Management stated that all 3G smartphones offered by the company will support high-speed mobile network and faster download speed. The 3G subscriber base is growing rapidly, mainly attributable to improving customer retention strategy and enhanced overall customer experience.
Over the years, China Unicom has undertaken several initiatives to enhance its 3G network. In the first half of 2014, the carrier expanded its 3G/4G base stations by 84,000 to 491,000. The company has also launched star handset terminals, innovative tariff plans, High Speed Packet Access (HSPA+) networks and advanced mobile Internet services.
In the fixed-line business, China Unicom is poised to benefit from expansion and speed enhancement of fiber-optic service in its broadband business. The company’s broadband access ports reached 124.90 million at the end of the first half of 2014 of which 73.8% are FTTH.
On the flip side, we are concerned about stiff competition that can affect China Unicom’s ARPU (average revenue per user). The carrier continues to lag rival China Mobile in 4G investments and subscriber addition. Additionally, access line loss and high operating expenses can be a drag on its profits.
China Unicom currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other well-ranked stocks that warrant a look in this sector include America Movil S.A.B. de C.V. (AMX), BlackBerry Limited (BBRY) and TIM Participacoes S.A. (TSU). All the three stocks carry the same Zacks Rank as China Unicom.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment