China Unicom Fails its Target for CDMA Users

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Last updated at: (Beijing Time) Wednesday, August 13, 2003

China Unicom Fails its Target for CDMA Users

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China Unicom, the country's second-largest mobile operator, is falling far behind its annual target of signing up new subscribers for its CDMA network. But company executives do not seem too worried and instead said it is better to develop slowly than to attract users aggressively by giving out free handsets at the expense of a bleeding balance sheet.

In the first seven months of this year, 5.3 million new subscribers signed up for Unicom's mobile phone services based on its code division multiple access network.

The company needs to double the growth in its monthly new subscribers to 1.5 million for it to reach the year-end target of 13 million CDMA users.

"If we can add 13 million new CDMA users this year, our CDMA business will turn from being red to black," Yang Xianzu, the former chairman of Unicom said during a previous interview.

"This sector has to become profitable within this year," Yang noted.

Last year, China Unicom deve-loped 7 million CDMA users. To quickly promote the new service, which was launched on January 1, 2002, Unicom gave free handsets to subscribers who signed a two- or three-year contract.

But the company, which is listed in Hong Kong and Shanghai, also paid a huge price for the strategy - the amortization of these mobile phones cost Unicom 6 billion yuan (US$722 million) last year and its CDMA business lost 1.06 billion yuan.

This year Unicom dropped the free handsets promotion and switched to offering various discount packages. "Happy 133," its latest promotion launched last month in seven provinces, allows subscribers to set five phone numbers to which it will charge 0.1 yuan per minute, only a quarter of the standard rate.

Shanghai unicom will offer the service this month.

"It is almost impossible for the company to reach its 13 million tar-get," said Gu Xianli, telecom analyst from Analyses Consulting Co Ltd.

Gu also said another obstacle blocking CDMA's popularity is the comparatively high price for CDMA handsets and its limited models available on the market.

But the Shanghai branch's CDMA business became profitable last month and Shanghai Unicom expected its CDMA business to make a profit of 18 million yuan this year.

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