China Unicom Hong Kong Ltd. CHU reported weak financial results for the fourth quarter of 2014 with net income of approximately $241 million, down 8% year over year. Earnings per ADR (American Depository Receipt) also fell 50% year over year to 10 cents per share.
Revenues
Total revenue (excluding deferred fixed-line upfront connection fee) declined 5.1% year over year to $11,203 million in the fourth quarter of 2014.
For fiscal 2014, total revenue was a little over $46,289 million, down 3.5% year over year. Total Service revenue was approximately $39,817 million (constituted 86% of the total revenue), up 2.6% year over year. Within this segment, Mobile revenues were $25,218.5 million and Fixed-Line Revenues were $14,387 million, up 2.6% and 2.3% year over year, respectively. Revenues from Telecom Product Sales totaled $6,472 million, down 29.5% year over year.
Expenses and Margins
For fiscal 2014, total operating expenses decreased 4.8% year over year to $43,215.5 million. Operating profit stood at $3,073.6 million, up 19.9% year over year. Operating margin was 6.6% compared with 5.3% in 2013. EBITDA in fiscal 2014 came in at $15,084.6 million, up 10.5% year over year. EBITDA margin was 32.6% against 28.5% in 2013. Net profit in fiscal 2014 was approximately $1,960 million, up 15.8% year over year.
Liquidity
In fiscal 2014, operating cash flow was $14,324.1 million, up 12.25 year over year. However, free cash flow was $522.4 million, down a substantial 36% year over year. China Unicom exited fiscal 2014 with cash and cash equivalents of $4,115 million compared with $3,514.3 million at the end of 2013. The debt-to-capitalization ratio at end-2014 was 0.31 compared 0.34 at end-2013.
Subscribers Statistics
As of Dec 31, 2014, China Unicom had 299.098 million (up 6.4% year over year) mobile subscribers, of which, 149.105 million (up 21.6% year over year) were mobile broadband users. Overall Mobile average revenue per user (ARPU) was $7.17, down 8.5% year over year while Mobile broadband ARPU was $10.34, down 15.3% year over year.
The company had 82.056 million (down 6.4% year over year) Fixed-line subscribers, of which, 68.79 million (up 6.4% year over year) were Fixed-line broadband customers. Overall Fixed-line ARPU was $3, down 9.8% year over year while Fixed-line broadband ARPU was $10.11, up 1.3% year over year. In the reported quarter, China Unicom added 3.4 million 3G/4G subscriber.
China Unicom is the second largest telecom operator in China after China Mobile Ltd. CHL. However, China Unicom lost its exclusive right to distribute Apple Inc.’s AAPL iPhones to China Telecom Corp. Ltd. CHA.
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