China Unicom :3G users continue to grow rapidly, once again breaking the 4 million mark

China Unicom 600050 communications and communication equipment

Research Institute: Changjiang Securities Analyst: Chen Zhijian, Hu Lu Date: 2013-05-21

Key points of the report

Event Description

China Unicom announced its key operating data for April 2013. Data show that in April 2013, China Unicom 3G users a net increase of 4.076 million, 3G users accumulated to 91.892 million; Meanwhile, the number of 2G users of China Unicom decreased by 156,000 in March, bringing the total number of 2G users to 163 million.

In terms of fixed network, in April 2013, the number of local telephone users of China Unicom decreased by 584,000, bringing the total number of fixed lines to 90.691,000. The number of broadband users increased by 514,000, reaching 61.427 million.

Event comments

The monthly net increase of 3G users once again exceeded the 4 million mark, maintaining continuous rapid growth: Although the monthly net increase of 3G users of China Unicom in April 2013 decreased compared with March 2013, it still exceeded the 4 million mark, maintaining the momentum of rapid growth. We believe that the main reasons are :1, with the popularization and application of intelligent terminals, the industry is at the inflection point of 2G users to 3G users quickly turn to the network; 2. Since the end of 2012, the company began to promote the implementation of 2G/3G convergence package, and accelerated the migration of 2G users to 3G network by launching 3G data packets to 2G users, and achieved good results.

Steady growth of broadband users and continuous loss of fixed-line users: The Company's broadband user growth data is relatively flat, partly affected by the adjustment of the company's user caliber. On the whole, the company has built a solid support network in the broadband field after 2 years of construction of FTTH thin coverage network. With the continuous expansion of users' demand for high-speed data network, the company's FTTH users will enter a period of increase in the actual installation rate in 2013, which will drive the steady growth of broadband users. On the other hand, the loss of fixed-line users is accelerating; In the long run, the loss of traditional fixed-line users is still inevitable, but the introduction of fixed-line convergence services will help delay and reduce the loss rate of fixed-line users.

3G still has a time window, and the industrial chain in the 4G era still has advantages, while OTT charging provides a solid guarantee for its long-term growth: due to the immaturity of terminals and the pace of commercial promotion, China Unicom can still get about 2 years of 3G time window. Even if it enters the 4G era, and FDD-LTE as the mainstream technology solution in the 4G era, the company will still have obvious industrial chain advantages. On the other hand, recently, the Ministry of Industry and Information Technology has clarified the rationality of wechat charges, which undoubtedly indicates that the OTT charges of telecom operators will enter the substantive operational stage. If the mechanism of charging OTT vendors additional traffic fees is promoted, the value obtained by telecom operators from the growth of data traffic will increase significantly, thus providing a solid guarantee for the long-term growth of operators.

Investment recommendation: We expect the company's fully diluted EPS for 2013-2015 to be $0.17, $0.25 and $0.33, respectively, and maintain our 'recommended' rating on the company.

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