China Unicom CHINA UNICOM is banking on low-cost handsets and a new network leasing deal with its parent to turn its loss-making CDMA business around. Management said that large handset subsidies had contributed substantially to losses of 588 million yuan in the CDMA division last year. 'We failed to reach our profit target for the business last year. But we aim to turn to profitability [this year],' chairman and chief executive Chang Xiaobing said. CDMA losses worsened towards the end of the year even as competition in the mobile sector began to ebb after the central government intervened to stop price wars and aggressive marketing practices. Fourth-quarter CDMA losses alone totalled 580 million yuan. The world's No3 mobile operator had 112.08 million subscribers at the end of December, about 75 per cent of whom used GSM. Unicom reported full-year net earnings growth of 4 per cent to 4.38 billion yuan, up from 4.21 billion yuan in 2003. The firm said it had ordered three million low-end handsets priced below 700 yuan to cut costs and attract mass-market subscribers. Handset subsidies averaged 456 yuan per CDMA user last year. The company said it would seek shareholder approval this month for a new CDMA network leasing arrangement with its parent firm that would cap network leasing fees at 29 per cent of CDMA service revenues this year and 30 per cent next year. 'Capping [network leasing fees] would ensure that our CDMA network costs in relation to revenue will not rise,' executive director William Lo said.