China Unicom will discontinue the practice of issuing SIM cards for its CDMA customer base later this year, according to a local press report. Unicom, which runs a distant second in the burgeoning Chinese mobile market to China Mobile, hopes the move will give it faster access to new CDMA handsets made by global vendors. Under the current set-up Unicom claims it doesn’t get timely access to the latest CDMA handsets and many models do not support the SIM cards at all. Unlike GSM, the CDMA standard does not require operators to issue SIM cards; subscriber information is typically loaded onto the phone itself. About five years ago, however, Unicom began issuing SIM cards (known as R-UIMs, or removable user identity modules) to all of its CDMA subscribers, and is reported to have issued tens of millions of the cards since then.
As of the end of June 2006 Unicom had 34.5 million subscribers on its CDMA network, compared to the 100.6 million on its GSM network. Last year the CDMA operation lost in the region of CNY200 million (USD25.1 million), and although profitability has been improving, hefty subsidies to subscribers for CDMA handsets has remained a drag on its financial results. If the reports are correct and Unicom scraps the R-UIM, the decision will no doubt have been tied to an investment in Unicom announced in June by South Korea’s largest telco, SK Telecom, which bought 6.7% of the Chinese operator. SK Telecom, one of the world’s largest CDMA operators, later said it would jointly buy four million CDMA handsets with Unicom, saving about KRW150 billion (USD156 million) over three years. SK Telecom does not issue R-UIM cards to its CDMA subscribers.