Unicom: still falling short on CDMA goal?

20 Jun 2003

China’s number two mobile operator China Unicom reported 9.218 million code division multiple access (CDMA) users at the end of May, having added around 638,000 users over of the month, although the cellco is still well short of achieving its target for full-year net additions. In the first five months of the year the company has managed to sign-up 2.973 million CDMA users, with 2.268 million coming from its original twelve provincial networks and the remainder from its newly acquired service areas. However, the figure is still significantly lower than the 4.75 million figure needed to keep the company on track to reach its full-year target of 11.4 million CDMA customers. It will be interesting to see how the company fares in June. At the start of the month Unicom slashed its prices for CDMA handsets in a bid to meet its target, even though the move looks likely to prevent the new network from turning a profit in what is paradoxically the world’s largest mobile market. In Guangdong Province, the operator has reportedly begun selling handsets on a yearly contract at USD36 – 72% lower than the equivalent model with a pre-pay option. The decision to discount has obviously been interpreted as indicative of its urgent desire to kick-start subscriber growth, although the move could yet backfire, as a greater number of people seem to be opting for the more widely available GSM standard.

China Unicom signed up 827,000 GSM customers in May to take its total to 58.89 million. Although overall mobile growth in China is slowing – China Mobile announced disappointing results for April with the total number of new subscriptions rising only 1.37% to 125.5 million, while Unicom fared only slightly better with growth of 2.67% – GSM uptake continues to outstrip that of CDMA. In the first five months of 2003 Unicom signed up 5.425 million GSM users with much of the growth, around 3.71 million, coming from lower end pre-paid users. Added to this competition for the two dominant operators is hotting up with the entrance of an alternative cut price service, Xiaolingtong, operated by China Telecom and China Netcom through a personal access system. Although the emerging cellco is still to receive official approval from the authorities, no objections have been raised over the rollout of local services in Guangzhou, Shanghai and Beijing.

CIT’s Datafile of Asia-Pacific Telecommunications