China Mobile has warned of a potential price war in the mainland's mobile phone market if rival China Unicom continues to offer handset subsidies.
The warning came as the country's dominant mobile operator announced a 55 per cent surge in net profit to a record 28.01 billion yuan (about HK$26.2 billion) for last year.
China Mobile chairman Wang Xiaochu said: 'Handset subsidies are the last thing we want to see, especially in China, where there are only two operators. Since it has happened, we have got to do something about it.'
Mr Wang threatened to cut tariffs if China Unicom persisted in offering subsidies for its newly launched Code Division Multiple Access (CDMA) service.
'Under current regulations, we are allowed to charge 10 per cent higher than whatever they charge. Our management would be stupid not to react according to market changes.'
China Unicom said this month it would buy up to 500,000 CDMA handsets from licensed vendors to solve a supply shortage.
