Discounts for mobile users in China boost growth

Accelerated price discounts from the mainland's mobile phone duopoly have helped push growth rates in China's wireless market back to pre-Sars levels, but analysts warned aggressive cuts would continue to hurt earnings.

The mainland added five million new mobile users nationwide last month, for a total of 239.45 million mobile phone users. This compared with the 4.42 million new users the mobile carriers signed up in June.

China Unicom, the Hong Kong-listed arm of China United Telecommunications Group (China Unicom Group), added one million new CDMA subscribers last month after the mobile carrier launched prepaid plans in six cities and offered other aggressive price promotions.

The red chip's base of CDMA users reached 4.75 million by the end of last month. Its GSM subscribers numbered 60.37 million.

China Unicom plans to launch a prepaid CDMA scheme nationwide this month to help boost subscriber numbers. It has a full-year target of 11.4 million CDMA users by the end of the year.

China Unicom shares climbed 20 cents or 3.67 per cent to $5.65 on Wednesday, but analysts remained sceptical on the stock and the overall wireless sector.

According to Thomson First Call, the counter has a consensus 'hold' recommendation, with a median 12-month price target of $5.40, meaning the stock is fully valued.