Shows the danger of underinvesting when competitors are upgrading. Unicom is the small carrier in China, with only 264M mobile and 75M broadband subscribers. In 2016, they added 11M mobile customers but only about 2M broadband. China Mobile's 1.3M LTE cell sites and massive fiber home build is pulling ahead. In 2016, they added 27 million mobile subs (to 849M) as well as 22M broadband (to 77M.) China Telecom has been adding LTE towers at a rapid pace. In 2016, China Telecom added 17M mobile (to 215M) and 10M broadband (to 123M.) 

China Unicom did not match the investments of the others. They had no choice but to cut prices & raise marketing expenses. Apparently, the Chinese market knew this profit warning was coming. The stock was not forced down. (This week, BT was down $8B and Verizon down $10B.) I wasn't particularly surprised either. I have been watching the nearly incredible build by China Mobile. China Telekom responded but CU held back. It looked like they were burying their heads in the sand.

I do not pick stocks, especially from 12,000 miles away and without a good knowledge of the market.

 It is quite possible the share price, down >30% in the last year, already reflects the problems I'm reporting.

The Chinese government is among the first to recognize that the physical network is close to a natural monopoly. They told the companies to come together with a single tower company, which is now operational and hoping to IPO. That savings from the shared network will be in the billions. That should be a major improvement for Unicom.

Telecom reports 106M on fiber home, up 35M on the year. Nearly all the 77M at China Mobile are fiber home. I don't have a number on China Unicom's fiber base. Loring Wirbel notes China over 200M fiber home lines, 3/4ths of the global total. Mobile figures can be somewhat creative, but a check on equipment sales confirms both mobile and landline figures are reasonably accurate. 

A MTW (More to Write) article is one that I feel is incomplete. If I ever have time, I'll come back and research in more depth.  

 Profit Warning 

This announcement is made by China Unicom (Hong Kong) Limited (the "Company", together with its subsidiaries, the "Group") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). In 2016, the Company endeavoured to attain long-term sustainable development, actively promoted the implementation of the new development strategy centred on “Focus, Cooperation and Innovation” and strived to mitigate the underlying shortcomings. The Company showed early signs of turning around the unfavourable conditions in business development. Business momentum and service revenue stopped deteriorating and stabilized. Our mobile business has achieved initial success in overcoming operational challenges and mobile billing subscribers reached 264 million in 2016, registering a net addition of 11.505 million and successfully turning around the downward trend in mobile subscribers for consecutive months in 2015. Within that, the number of 4G subscribers reached 105 million, representing a net addition of 60.395 million. To promote long-term sustainable development, the Company braved short-term profit pressure, strengthened its fundamental capabilities, and increased cost initiatives as appropriate to strive for a gradual turnaround. The profit attributable to the equity shareholders of the Company in 2016 is expected to be down by about 94% as compared to 2015, but it showed significant improvement from the loss attributable to the equity shareholders of the Company (excluding the gain on disposal of tower assets) of approximately RMB 3,363 million in the second half of 2015. The profit attributable to the equity shareholders of the Company decreased in 2016 mainly because no gain on disposal of tower assets was expected in 2016, the addition of tower usage fee, higher energy charges and property rentals, etc. led to an expected substantial increase year-on-year in network, operation and support expenses in 2016, and selling and marketing expenses were expected to increase substantially yearon-year in 2016. Going forward, the Group will strengthen the determination in upholding the strategies and execution capability, and continue to deepen implementation of Focus Strategies in order to steer the Group onto the path of healthy development

Latest issue

Jan 18

300,000 Indian Villages Fibered; 325,000 More To Come
Verizon, NTT, AT&T: ?$200-$400 5G Costs Much Lower Than Expected
Important: 5G Handles 10x More Data Than 4G
India Passes U.S. in Smartphones
AT&T Probably Will Not Have a 5G Mobile Phone in 2018
Pai, Speaking of Immigration, Put His Career on the Line
35b: Ready or Not? Germans Say Not, Some Say Yes
Qualcomm's Not To Be Believed Comeback in

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Manoj Sinha announced that 300,000 Indian villages have been connected by fiber and BharatNet is on target for 325,000 more early in 2019. This is by far the largest rural broadband project in history. Bids are out for 500,000 Wi-Fi hotspots and 130.000 post offices will connect. The telcos are offered low prices to bring in LTE and fiber home. Programs are underway for > 100,000 local business to offer connectivity.  

Ajit Pai risked his career by challenging Trump's immigration policy. "My love and reverence for this country comes from living in the house of Raj and Radha Pai. My parents know a little something about the American Dream. They came to this country 46 years ago with literally no assets other than $10, a transistor radio, and a desire to achieve that dream." I never imagined America would plan to deport four million people. 

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