Red chip China Unicom has 2.36 billion yuan (about HK$2.21 billion) worth of mobile handsets in stock, giving rise to doubts about its plans to cut handset subsidies.
According to Unicom's annual report, released yesterday, the carrier saw handset inventories soar from 11.03 million yuan in 2001 to 2.36 billion yuan by the end of last year.
Assuming an average selling price of about 2,000 yuan, that would leave Unicom with more than one million handsets in stock for its services in 21 provinces.
A Unicom spokeswoman said the handsets were higher speed code-division multiple access (CDMA) 1X handsets for its 2.5-generation CDMA 1X network and older CDMA 95A handsets.
Unicom said it intended to reduce its reliance on handset subsidies to attract users for its CDMA network, but its huge handset stocks suggested otherwise.
DBS Vickers analyst Wallace Cheung said heavy handset costs would continue to weigh on Unicom's earnings.