China Mobile and China Unicom will likely report strong first-half results as they continued to snatch away customers from fixed-line operators China Telecom and China Netcom Group Corp. (Hong Kong).

But analysts say China Mobile, the world's biggest telecom operator by subscribers, will likely face stiffer competition in coming months once China's restructuring of its telecom sector - which merges six operators into three - is completed by the fourth quarter.

Analysts say the merger of China Unicom and China Netcom as well as China Telecom's purchase of the code division multiple access mobile network of China Unicom, will likely eat away at China Mobile's dominance in coming years.

"We believe that investors are less likely to pay attention to near-term earnings. Rather, we would focus on updates of the companies' competitive strategies and post-restructuring regulatory policy changes," said Marvin Lo, an analyst at Daiwa Securities.

COMPANIES TO WATCH:

China Mobile - (August 27)

Market Expectations: China Mobile will likely report its net profit for the six-months ended June 30 rose 37% to CNY51.77 billion from CNY37.91 billion a year earlier, according to the average forecast of nine analysts surveyed by Dow Jones Newswires. Revenue likely rose 19% to CNY197.44 billion from CNY166.58 billion.

China Mobile added 45.3 million subscribers in the first six months of this year, bringing its total subscribers based to 414.6 million at the end of June 30. Analysts said its earnings also got a boost from lower taxes and depreciation charges.

Key Issues: Investors will be watching out for any comments on how China Mobile plans to tackle rising competition from other players following the industry restructuring.

China Unicom - (August 25)

Market Expectations: China Unicom, China's second largest wireless carrier by subscribers, will likely report its net profit jumped 96% to CNY4.18 billion for the six months ended June 30 from CNY2.13 billion a year earlier, according to the average forecast of seven analysts polled by Dow Jones Newswires.

A year earlier, China Unicom booked a loss of CNY1.64 billion from the change in the fair value of its convertible bonds in SK Telecom.

China Unicom's first-half revenue likely rose 3.8% to CNY51.03 billion from CNY49.17 billion a year earlier.

Key Issues: Investors will be focusing on the company's future mobile strategy following the merger with China Netcom.

China Telecom - (August 28)

Market Expectations: China Telecom, China's largest fixed-line operator by revenue, is expected to post a first-half net profit of CNY13.14 billion, down 2.5% from CNY13.48 billion a year earlier, according to the average forecast of four analysts in a Dow Jones Newswires poll.

Revenue likely inched up to CNY87.16 billion from CNY86.96 billion a year earlier.

Key Issues: Investors will be on the lookout for any comments from management on how the company plans to integrate the newly acquired CDMA operations from China Unicom and how the acquisition might impact its future margins.

China Netcom Group Corp. (Hong Kong) Ltd. - (August 25)

Market Expectations: Fixed-line operator China Netcom will likely report a net profit of CNY5.99 billion for the six-months ended June 30, down 11% from CNY6.71 billion a year earlier, according to a poll of four analysts by Dow Jones Newswires.

First-half revenue likely fell 1% to CNY40.25 billion from CNY40.65 billion a year earlier.

Key Issues: China Netcom's shares will be delisted once its merger with China Unicom is completed in October. Investors will focus on any updates from management on future business strategies following the industry restructuring.

Source:Dow Jones