China Unicom (CHU.NYSE, 0762.HK) reported a fall in first-half profits of 9.2%, but still beat analysts’ forecasts, the Wall Street Journal reported. The company reported 9.9 million new 3G customers in the first half, and expects to add another 15 million before the end of the year; average revenue for mobile customers increased 9.3% to US$7.32 per month. China Unicom is Apple’s (AAPL.NASDAQ) only official iPhone partner in China at present, and has relied on growth in data services for its third-generation (3G) network for growth. However, competition from China Mobile (CHL.NYSE, 0941.HK) and China Telecom (CHA.NYSE, 0728.HK) has intensified, and the discounts Unicom offers its customers to encourage them to buy 3G handsets have cut into earnings. Some analysts believe that subsidies for handsets will begin paying off later this year in the form of increased data revenue. Unfortunately, Unicom’s alliance with Apple looks tenuous. Apple has already agreed to support China Mobile’s fourth-generation technology for its upcoming iPhone 5 model, and there are persistent industry rumors that Apple is preparing to unwind its relationship with Unicom in favor of China Mobile.
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