China's two mobile network operators, China Mobile (Hong Kong) and China Unicom, said yesterday they would make reining in handset subsidies a priority this year due to a sustained decline in revenues. For China Unicom, the need to keep its subscribers happy is particularly pressing if it hopes to turn around its struggling code-division multiple access (CDMA) business by the end of this year. Last year, the CDMA division posted a net loss of 588 million yuan, due mainly to spending 6.12 billion yuan on low-cost and free handsets to woo customers. 'Our CDMA business has been improving since the fourth quarter of last year and we are confident that this year it will become profitable,' said chairman and chief executive Chang Xiaobing after the company's annual general meeting yesterday. 'But we need to strictly control our handset subsidies,' he added. The company is now offering CDMA handsets for between 500 yuan and 700 yuan. It used to give away phones worth more than 2,000 yuan. Mr Chang said the handsets had been well received by the market. China Unicom, which also runs GSM services, saw its net profit fell 26 per cent to 1.06 billion yuan in the first quarter. It also added fewer CDMA subscribers in the first three months of the year - 1.62 million compared with 2.67 million during the first quarter last year. Meanwhile, China Mobile (Hong Kong) chairman Wang Jianzhou said the company would only offer handset subsidies to high-spending customers. 'Last year, we spent about eight billion yuan subsidising customer handsets. 'This year, we won't pay more than that,' he said. 'We need to control costs, as average revenue per user is still dropping,' The company's average revenue per user at the end of March was 89 yuan, down from 91 yuan at the end of December. Its first-quarter net profit rose 19.8 per cent to 11.25 billion yuan from 9.39 billion yuan a year ago.