A decision by China Telecom Corp to halt heavy subsidies on its xiaolingtong handsets in Guangdong province at the weekend has benefited rival China Unicom, whose shares rose as much as 6.4 per cent yesterday on hopes of easing competition for budget mobile users.
China Unicom shares rose to an intraday high of $5.80 yesterday before closing at $5.70, a 4.6 per cent gain.
UOB-Kay Hian Hong Kong director Steven Leung Wai-yuen said investors chased the counter because of talk that China Telecom had stopped its xiaolingtong promotion.
Fixed-line giant China Telecom ended its aggressive handset subsidy plans for the service - which offers a limited mobile phone service - in five major cities in Guangdong on Sunday after recording an overwhelming response over the past two months.
'We only stopped the discount sales of xiaolingtong handsets, but the promotional tariff plans are still going on until the end of this month,' a China Telecom sales representative said.
Instead of paying as little as 99 yuan (HK$92.79) for a phone that originally cost 680 yuan, users now have to pay 499 yuan or more. 'The handsets are still cheaper than before, but are not as much as they used to be during the promotion period,' the sales representative said.
