China Unicom, the second largest operator in the mainland, continued to face stagnant service growth and rising costs but showed some signs of recovery in Q3.

Revenue during the first nine months of the year fell 2.3 per cent to CNY207 billion ($31 billion), with mobile service revenue flat at CNY109.6 billion, but that was a slight improvement from a 0.6 per cent decline in the first half of the year. Overall service turnover rose 1.7 per cent to CNY183 billion (up from a 1.4 per cent rise in H1), with fixed-line revenue rising 3.9 per cent to CNY71.9 billion. Equipment sales dropped 24 per cent to CNY24.4 billion during the period.

China Unicom, with 262 million mobile subscribers, last week issued its third profit warning of 2016, stating a substantial increase in network, operation and support expenses led to a 80.6 per cent year-on-year drop in its net profit to CNY1.59 billion ($292 million).

EBITDA for the nine-month period dropped 16.8 per cent year-on-year to CNY61.7 billion.

Selling and marketing expense increased 14.3 per cent to CNY25.4 billion during the period, while network, operation and support costs jumped 32 per cent year-on-year to CNY38.6 billion due to the addition of tower usage fees and higher energy and property costs.

The company, which lost 12.5 million mobile subscribers in the first nine months of 2015, added 9.8 million subs in the January-September period. Its 4G user base rose by 45 million to a total of 89 million. Market leader China Mobile has 481 million 4G users, while China Telecom has 101 million.

ARPU was up slightly to CNY47, and 4G ARPU was CNY79.30. Mobile data traffic more than doubled to 999 petabytes.