China Unicom Parent buys 1million CDMA handsets

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Saw this yesterday....

China Unicom Parent Buys 1 Mln CDMA Mobile Phone Handsets


HONG KONG (Dow Jones) - China United Telecommunications Corp. (Q.CUQ) has bought one million CDMA mobile phones to be distributed to new customers, a move it hopes will push down the market prices for the phones and stimulate demand for its services.


China's second-largest mobile operator paid about 1,500 yuan (US$1=CNY8.28) each for the handsets, which support the high-speed CDMA 1x technology and come equipped with color screens, according to a press statement Monday from its Hong Kong-listed unit China Unicom Ltd. (CHU). That works out to a total expenditure of roughly CNY1.5 billion.

The purchase "enables more users to buy high quality mobile terminals at preferential prices, which facilitates the development of CDMA value-added services," the statement said.

CDMA stands for code division multiple access, and is the technology used for one of China United's two mobile networks. The company also runs a larger network using the GSM, or global system for mobile, technology, but has been putting most of its efforts recently into boosting the money-losing CDMA business.

China United purchased the handsets from several suppliers, including the Chinese operations of Motorola Inc. (MOT) of the U.S. and Kyocera Corp. (KYO) of Japan, as well as domestic Chinese vendors ZTE Corp. (Q.ZTX), Haier and TCL.

The move shouldn't come as a surprise to investors, as chairman Wang Jianzhou said in late August that the company was looking into a centralized purchase of color-screen CDMA phones as a way to push down the market price.

In China, mobile phone handsets are typically sold separately from the service itself. China United Telecom has broken with that tradition by subsidizing phones for new CDMA subscribers if they sign up for a long-term service contract.

That has proved expensive, however, and company executives have said they now want to encourage subscribers to buy their own handsets. China Unicom Ltd., which is leasing a portion of the CDMA network from its parent, aims to raise the proportion of new CDMA subscribers using their own handsets to 80% by the end of 2003, from 66% currently.

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