China Unicom, the country's second-biggest mobile phone firm, yesterday said its first-quarter profit fell 68 percent due partly to costs from adding 3G services.

Profit for the three months ended March 31 was 1.1 billion yuan (US$161 million), or 0.05 yuan per share, the Beijing-based company said. Revenue edged up 6.6 percent to 40.4 billion yuan.

Expenses for the early stages of its 3G business, depreciation, marketing and other expenses were "relatively significant," it said.

Unicom merged with China Netcom Ltd in late 2008 in a government-led restructuring of the country's phone industry to boost competition.

Unicom and other carriers got 3G licenses last year, which are set to drive revenues as users buy more services the technology supports. But carriers face high costs initially to upgrade their networks and sign up customers.

Unicom is the licensed carrier for Apple Inc's iPhone in China but sales have been lackluster. It forecast sales of 5 million iPhones over three years but had sold only 300,000 so far.