Unicom will sell phones at 400 yuan to rural users

PUBLISHED : Wednesday, 10 January, 2007, 12:00am
UPDATED : Wednesday, 10 January, 2007, 12:00am

China Unicom, the country's No2 mobile operator, will sell CDMA handsets at 400 yuan each next month to compete with larger rival China Mobile for rural users.

Unicom announced that over the next two years it would source two million low-cost handsets to be sold at that price for its smaller, struggling CDMA service from seven major vendors, including international giants Motorola, Nokia and Samsung as well as two mainland-based vendors ZTE Corp and Huawei Technologies.

The purchase will be of 10 models, which the company hopes will offer enough of a selection to meet the demand from users.

One of the hurdles CDMA has faced in China is the higher cost and more meagre menu of handset models that work on the US-created mobile-telephone technology compared with the more broadly used European-produced GSM system, upon which China Mobile's only network is based. Unicom's larger network also runs on the GSM format.

'The price level of the low-ended CDMA handsets is near those of low-ended GSM phones. This would make CDMA service more competitive with China Mobile's GSM service,' said Marvin Lo, an analyst at BNP Paribas Asia.

Mr Lo said the new range of low-end CDMA handsets would help Unicom compete for rural users with China Mobile, which treats the relatively unsaturated countryside as a major growth target.

'The low-priced handset from Unicom should break the monopoly of China Mobile in the rural market, as those users only want a phone for voice and text communication,' Mr Lo said.

Unicom had about 36 million CDMA users and 104 million GSM subscribers by the end of November last year. China Mobile had 296 million subscribers at the end of November.

Shares in Unicom fell 0.73 per cent to close at HK$10.94 yesterday.