China Unicom bets on cheap smartphones

PUBLISHED : Thursday, 21 June, 2012, 12:00am
UPDATED : Thursday, 21 June, 2012, 12:00am

Facing a slowdown in subscriber growth, China Unicom is set to slash prices on its cheapest smartphones as it continues to expand its high-speed 3G network across the mainland this year.

President Lu Yimin unveiled the strategy yesterday at an industry event in Shanghai. Meanwhile, the carrier's shares declined in Hong Kong after it reported adding fewer new 3G subscribers last month.

Shares in China Unicom, the mainland's second-largest wireless network operator, fell 3.88 per cent to close at HK$10.40 yesterday, their biggest drop in two weeks. The stock has lost 36 per cent this year, making it the worst performer of the Hang Seng Index, according to Bloomberg.

Speaking at start of the three-day GSMA Mobile Asia Expo in Shanghai, Lu said China Unicom would offer its cheapest smartphones for less than 700 yuan (HK$860) this year, a 30 per cent discount. Lu did not detail the time frame for selling the cheaper smartphones, Bloomberg reported yesterday.

China Unicom already offers low-end smartphones for less than 1,000 yuan each from domestic brands, including Huawei Technologies and ZTE, China's two biggest telecommunications equipment makers.

According to combined data from Strategy Analytics and Bernstein Research, 84 million smartphones were sold on the mainland last year.

Most of those handsets were priced in the mid-range of 1,200 yuan to 1,900 yuan and in the premium range of more than 1,900 yuan. Prices of Apple's popular iPhone 4S, for example, start at 4,988 yuan.

China Unicom's plan to provide even lower-cost smartphones followed its success in the fourth quarter last year, when it offered 3G smartphones priced around 1,000 yuan and won low-cost customers from market leader China Mobile.

But the carrier reported on Tuesday that it added 2.73 million new 3G users last month, down from 2.92 million in April. It was also the lowest monthly gain since September.

Beijing-based China Unicom had 215.84 million mobile subscribers at the end of May, including 54.5 million 3G users.

Independent analyst Xiang Ligang has said cheaper smartphones are far more effective than the iPhone in attracting users to China Unicom's network. China Unicom was Apple's first mainland carrier-partner for the iPhone, which China Telecom started to support in March.

Bernstein Research forecast the standard key specifications for low-end smartphones on the mainland this year would include four-inch multi-touch screen, one-gigahertz processor and 512 megabytes of memory.

China Unicom has vowed to turn around its loss-making 3G operation this year by increasing market penetration and network coverage, especially outside major urban areas.

Macquarie Securities analyst Lisa Soh said China Unicom 'has to find subscriber growth from lower-tier cities this year'.


The number of smartphones that were sold on the mainland last year