Analysts expect China Unicom , the country's only mobile operator offering both GSM and CDMA services, to post net profits of 4.96 billion yuan - up 17.6 per cent from a year ago - when it reports its full-year results tomorrow. They will be waiting for guidance on the company's CDMA handset strategies, a key that might help bolster its struggling CDMA business. The consensus estimate of five analysts was affected after investment banks Merrill Lynch and Goldman Sachs earlier this month cut their profit estimates by 15 per cent and 9 per cent respectively, to 4.46 billion and 4.68 billion yuan. They cited increases in handset subsidies, rising marketing spending and lacklustre sales. The downgrades prompted a sell-off of China Unicom shares. China Unicom reported profits of 4.22 billion yuan in 2003, when it operated networks in 21 provinces. The profit increase expected for last year will be driven primarily by contributions from the nine provincial mobile networks it bought from its parent firm in 2003. After rival firm China Mobile reported that spending on handset subsidies more than doubled to 5.5 billion yuan in the second half of last year, analysts are braced for similar news from Unicom. 'Its CDMA business could even end up in a loss for the full year if it overspent on customer retention,' an analyst said. China Unicom has been struggling with its CDMA business as the company lacks low-cost handsets with which to promote more data-intensive mobile applications in the mass market. It had 112.08 million subscribers at the end of last year, 27.82 million of them CDMA customers. 'Unicom has dual problems: underinvestment in GSM and insufficient supply of low-end CDMA handsets,' CSFB analyst Edison Lee said in a report. China Unicom was bringing in three million low-end CDMA handsets for a nationwide sales push in the second quarter of this year, Mr Lee wrote. This meant it would take on heavier inventory risks. As the price wars in China's fiercely competitive mobile market ebb this year, rival China Mobile may benefit from stronger subscriber growth due to better brand image, another analyst said. He estimates average monthly revenue per user (arpu) for China Unicom's CDMA business at 83.6 yuan, down from 91.3 yuan at June last year. He expects its GSM arpu to fall to 50 yuan, from 51.9 yuan.