China Unicom, the country's second-biggest cellular operator, has purchased a new batch of 1 million units of cheap CDMA (code division multiple access) mobile phones as part of a drive to boost its CDMA service which experienced slowing growth last year.

Cellphone providers include Samsung, Motorola, LG, Nokia, ZTE and Hisense.

Those phones will be sold at prices ranging from 700 to 1,300 yuan (US$84-157), targeting medium-range users, Pang Wei, vice-general manager of China Unicom's general office, told China Daily yesterday.

"We hope such cheap phones can help boost sales during the upcoming Lunar New Year holiday as well as the first quarter of 2005," he said.

Pang also confirmed Unicom had ordered a batch of GSM-CDMA dual-mode cellphones from domestic handset maker Yulong Computer Telecommunications Scientific (Shenzhen) Co Ltd.

Last year Unicom ordered a total of 500,000 dual-mode handsets from Motorola, Samsung and LG at an estimated cost of 1.5-2 billion yuan (US$180 million-US$240 million).

Pang would not specify how many phones have been ordered from Yulong, but said this figure will be announced at a press conference next Monday.

The dual-mode phones are designed to target high-end users.

Unicom had been offering generous handset subsidies to customers to boost its nascent CDMA business. But that has put the firm under great financial pressures.

Last year, Unicom started introducing cheaper mobile phones as an incentive to subscribers.

But the telephone operator experienced a slowdown in subscriber growth.

Hong Kong-listed China Unicom Ltd signed up 650,000 CDMA subscribers last November, compared to 686,000 new users in October and 697,000 in September.

Some analysts attributed the slowdown to Unicom's shift of its focus from subscriber growth to profits as well as a poor selection of handsets.

The new order of 1 million CDMA phones will offer customers more than 10 models, which is expected to help ease the shortage.

Pang said Unicom is expecting an uptick in its CDMA business this year.

"We remain confident upon the CDMA business," he said.

"We will aggressively attack the largely untapped rural and youth markets."

China is the world's largest cellular market in terms of subscriber numbers.

The country had 329.9 million cellular subscribers by the end of last November.

The saturation of mobile phones in China's cities means that operators are looking further afield to rural areas in order to spur subscriber growth, and are developing new applications to further open urban subscribers' wallets.

XJ Wang, senior analyst with US research house Yankee Group, suggest Unicom focus mainly on improving CDMA coverage in order to spur its business growth.

"I think Unicom's CDMA business need to improve their fundamentals in terms of services. For example, CDMA coverage is still lagging behind the GSM network," he said.

"All those cool features won't work if you don't have the coverage."

Unicom is operating two different networks, based on CDMA and GSM standards.

Running two different networks is a costly business for Unicom, and also means that its CDMA network coverage is somewhat patchy compared to China Mobile's.

Its arch-rival China Mobile only operates a GSM/GPRS network.

Unicom has upgraded its CDMA service to the CDMA1X standard which offers higher-speed and wider applications such as downloading services compared to China Mobile's GSM/GPRS service.

Despite its advanced technology, CDMA1X has not attracted as great a number of high-end users as expected.

(China Daily January 14, 2005)