China Unicom Underperformed the Broader Market

SHENZHEN, Sep 23, 2008 (SinoCast China IT Watch via COMTEX) -- CHU | Quote | Chart | News | PowerRating -- As China Unicom is speeding up its steps of restructuring, its stock price has underperformed the broader market. In a stark contrast to the telecom carrier, stock price of telecom equipment makers like ZTE has been more resistant.

Stock price of China Unicom closed at CNY 4.09 on September 17, falling about 70% from months ago. However, ZTE closed at CNY 28.25 on that day, showing strong resistance against the sluggish market sentiment.

Industry analysts attribute the backslide of China Unicom mainly to the fact that the telecom restructuring is so complicated and far from conclusion.

As for ZTE, it is likely to win more big orders from the second stage procurement of the TD-SCDMA network expansion project of China Mobile.

But in the long run, experts point out that China Unicom is likely to be the fourth largest telecom carrier in the world in terms of subscribers after it puts an end to the merger with China Netcom.

The latest financial report released by China Unicom shows that the new China Unicom will possess mobile, fixed-line, broadband Internet access, data, and value-added telecom services. And it will probably get the WCDMA license. And broadband multimedia and 3G services will be the main driving force of the telecom carrier in years ahead.

After the merger, the new China Unicom will have 18,000 sales outlets, with 600,00 base stations and 5.74 million kilometers of long-distance cable.

China Netcom lately reported that its broadband service was on the fast track of growing, with sales accounting for 40.5% of its total revenues. The broadband service of China Netcom will to a great degree make up the weakness of China Unicom.

China Unicom saw negative growth in pre-paid and post-paid CDMA cell phone subscribers in this July, reducing 413,000 from the previous month. The reduction is within expectation as China Unicom is delivering its CDMA networks to China Telecom.

By the end of July, the number of CDMA cell phone users of China Unicom declined to 42.756 million, in contrast to 43.169 million in June. The number of its GSM cell phone users increased 952,000 to 128.55 million during the period.

China Unicom says that it will have 259 million subscribers after the merger with China Netcom, which will consist of 128 million GSM users, 109 million fixed line telephone users and 23.36 million broadband users.

From www.hexun.com, Page 1, Monday, September 22, 2008 info@SinoCast.com

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