Tax scheme bites into Unicom’s net income
Print Edition
CHINA Unicom, the country’s second-biggest wireless carrier, fell short of expectations when it reported its first-half net income as China’s new value-added tax scheme began to cut into earnings.
Net income for the six months ended on June 30 rose 26 percent to 6.7 billion yuan (US$1.1 billion), the company said yesterday.
That missed projections of 7.35 billion yuan, estimates compiled and calculated by Thomson Reuters show.
The new VAT, which replaced a flat business tax of roughly 3 percent, came into effect on June 1. China Unicom did not disclose its current effective tax rate — calculated by some analysts to be as high as double-digits — saying only that “there will be pressure on the company’s revenue growth and profitability growth.”
First-half revenues gained 3.6 percent to 149.6 billion yuan. But average revenue per user for 3G and 4G subscribers, a key industry metric, fell to 68.70 yuan during the period, down 11.5 percent from a year earlier.
Still, the carrier has continued to ride a wave of subscriber growth as more and more people in the world’s most populous country log onto the mobile Internet.
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