Hong Kong-listed mobile phone companies came under heavy selling pressure on Tuesday as brokerages downgraded earnings expectations to account for increased competition in the sector.
Analysts and investors are worried aggressive price-cutting initiatives will further erode earnings, with China Unicom and China Mobile losing more than HK$14 billion in value yesterday.
The sell-off came after China Unicom implemented what looks like a full-blooded one-way billing system, in which just the calling party pays (CPP) for a mobile call.
Shares in market leader China Mobile fell 3.97 per cent to $15.70 yesterday. China Unicom declined 2.76 per cent to $4.40.
On Tuesday, China Unicom launched a new promotion in Guangzhou, which allows users of its GSM network to receive unlimited free calls from other mobile-phone users.
While CPP pricing schemes are not fully allowed in China, China Mobile and China Unicom have offered limited versions in recent months in response to the aggressive roll-out of city-wide services by fixed-lined carriers known as xiaolingtong.