This excerpt taken from the CHU 20-F filed Jun 28, 2005.
In 2003, our operating revenue increased by 66.7%, while our operating expenses increased by 77.8%. As a result, our operating income reached RMB8.51 billion, an increase of only 16.3% from 2002 and our operating margin only decreased from 18.0% in 2002 to 12.6% in 2003.
GSM Cellular Business. In our GSM cellular business, operating income reached RMB8.72 billion in 2003, which was an increase of 14.2% from 2002. The growth in the operating income of our GSM cellular business was slower than the overall increase in our operating income, mainly reflecting the 15.8% decline in the ARPU for our GSM cellular business. Our operating margin in the GSM cellular business decreased from 27.2% in 2002 to 21.2% in 2003.
CDMA Cellular Business. We incurred a total operating loss of RMB0.29 billion in 2003 for our CDMA business as compared with the operating loss of RMB0.99 billion in 2002 reflecting improvement in performance as a result of continued subscriber growth of our CDMA business which commenced operation since January 2002. After taking into consideration of the improper accounting recordings and errors we identified in our Jiangxi and Xinjiang branches as described in Item 15 Controls and procedures, the operating losses of our CDMA business for 2003 and 2002 would have been RMB0.42 billion and RMB1.00 billion, respectively.
Long Distance Business. In our long distance business, operating income decreased 31.4%, from RMB1.02 billion in 2002 to RMB0.70 billion in 2003, primarily because of a reduction in the interconnection revenue after we acquired Unicom New Century in December 2002. As a result, the operating margin in our long distance business, at 22.2% in 2003, decreased from 29.5% in 2002.
Data and Internet Business. In our data and Internet businesses, we had an operating income of RMB0.75 billion in 2003, a 97.4% increase from 2002. This resulted from the continued rapid growth in operating revenues in this business, together with our successful efforts to centralize operating expenses, which grew 56.9%.
Paging Business. As our traditional paging business continued to decline, our operating losses from our paging business grew from RMB0.62 billion in 2002 to RMB1.20 billion in 2003.