BEIJING-According to China Unicom’s listed subsidiary’s annual report, the company had a handset inventory worth 2.36 billion Chinese yuan (US$285 million) in 2002. The inventory would contain around 1 million CDMA 1x and older CDMA 95A handsets. The huge inventory is depressing the company’s earnings.
According to a report in Hong Kong’s South China Morning Post, China Unicom spent 8.1 billion yuan (US$979 million) in handset subsidies last year, which aided in signing up close to 7 million subscribers.
Last year, 60 percent of the company’s CDMA users were on handset subsidy plans, the newspaper added.
China Unicom wants to sign up 11.4 million CDMA subscribers this year. In 2002, the company registered an operating loss of 990 million yuan (US$120 million) for its CDMA business.
Average revenue per user (ARPU) for its CDMA business was 172.2 yuan (US$20.8) per month. But that does not take into account its huge handset subsidies.
Further promotions could seriously endanger the company’s profitability.
Analysts suggest China Unicom should focus on its data business to attract higher quality customers. Wang Yuquan, president of the telecom consulting firm Frost & Sullivan (China), told the China Business Weekly China Unicom should abandon developing Java technologies to focus only on BREW mobile data applications.
