China Unicom, the country's second-largest cellular operator, is ordering a new batch of GSM-CDMA dual-mode mobile phones, in its latest effort to lure subscribers to its underused CDMA networks.

The order is expected to broaden a battle between China Unicom and its arch rival China Mobile for so-called high-end users who spend more money using mobile phones.

Yulong Computer Telecommunications Scientific (Shenzhen) Co Ltd is in talks with China Unicom to provide dual-mode cellphones, a spokesman with Yulong told China Daily in a telephone interview yesterday.

"Soon China Unicom will have a new dual-mode cellphone model, the first of its kind made by a domestic firm, which supports its GSM-CDMA dual-mode service," the spokesman said.

The dual-mode service enables users to switch between GSM and CDMA networks and allows GSM users to enjoy high-speed data service offered by Unicom.

China Unicom, after launching the service in August 2004, ordered a total of 500,000 compatible handsets from Motorola, Samsung and LG at an estimated cost of 1.5-2 billion yuan (US$180 million-240 million).

Insiders said Unicom will order 60,000 dual-mode phones from Yulong.

Yulong's spokesman declined to confirm the number, saying the two firms have yet to officially sign the contracts.

But he said Yulong plans to hold a news conference in Beijing next week to announce the deal.

It is unclear if Motorola, Samsung and LG will provide Unicom with more phones in addition to the previous order.

Unicom officials were not immediately available for comment.

Yulong's spokesman said the firm expects its dual-mode phone, which is a smartphone combining phone and PC functions, will be sold at about 8,800 yuan (US$1,060) each.

That is almost double the price of those made by Motorola, Samsung and LG.

The new orders for dual-mode phones would not greatly improve Unicom's business, said Wang Yuquan, president of consulting firm Frost&Sullivan China.

That is because the dual-mode phone subscription base is very small so far and many users find it unnecessary to subscribe to two different mobile services, Wang said.

The new order for dual-mode phones comes at a time when Unicom considers its CDMA business is underperforming. The growth of the number of CDMA users slowed down in 2004.

The GSM network has been the largest revenue contributor to Unicom, even though the firm has been focusing more on CDMA.

The dual-mode service is designed to prevent Unicom's GSM users from switching to other service providers and lure China Mobile's GSM users to subscribe to Unicom's CDMA service.

(China Daily January 6, 2005)