China Mobile Focuses on ‘Naked’ Phones as IPhone Unknown

China Mobile Ltd. will focus on selling cheaper phones that don’t require subsidies as the world’s largest carrier said it doesn’t know when Apple Inc.’s iPhone 6 will be available in the nation.

China Mobile will offer unsubsidized phones that work on fourth-generation networks for less than 600 yuan ($98) this quarter, Wang Xiaoyun, general manager of the carrier’s technology department, told an industry forum in Hsinchu, Taiwan, yesterday. About 70 percent of 4G devices will cost less than 1,000 yuan by the end of this year, she said.

China Mobile is cutting $2 billion from the subsidies it uses to help consumers in the world’s largest market pay for high-end smartphones from Apple and Samsung Electronics Co. The carrier, with 794 million subscribers, is expanding its 4G network by 40 percent and shifting to selling “naked devices” without subsidies or contracts.

“The direction of our development is to completely focus on the mass market,” Chairman Xi Guohua told reporters in Taiwan yesterday. “We have 4G devices selling for 1,000 yuan. I believe, subsidy or no subsidy, discount or no discount, the common person will be able to appreciate this.”

China Mobile rose 0.9 percent to HK$95.80 at the close in Hong Kong trading. The stock, which has climbed 19 percent this year, yesterday posted its biggest drop since August 2012.

Apple may have to wait until next year to get approval for new iPhones in China after failing to reach agreement with the Ministry of Industry and Information Technology this month, the state-owned 21st Century Business Herald reported yesterday, citing an unidentified person close to Apple.

Carolyn Wu, a Beijing-based spokeswoman for Apple, said she couldn’t provide a date for the China release.

“China is a key market for us and we will get here as soon as possible,” Wu said in an e-mail.

Xi said he had no information on when the iPhone 6 will be available to carriers in China. Apple unveiled the new device this month with shipments to markets including the U.S., Hong Kong, Australia and Japan starting Sept. 19.

Apple took orders for 4 million of its latest smartphone in the first 24 hours, the Cupertino, California-based company said this week.

The carrier currently lists the iPhone 5s for 5,288 yuan with a contract and offers varying subsidies depending on the user’s data plan. The subsidies can reach 88 percent for the most-expensive plan costing 388 yuan a month.

China Mobile sells Huawei Technologies Co.’s G620 smartphone for 4G services for 1,199 yuan without a contract.

Profit Decline

Xi said China Mobile is “very confident” it can succeed by focusing on less-expensive devices. Global smartphone shipments will rise 19 percent this year as the average selling price falls to $274, Juniper Research said in a report.

The carrier will expand its 4G network beyond previous plans to lure subscribers with faster data speeds, Xi said.

The carrier will have 700,000 4G base stations by year’s end, Xi said, compared with a March projection of 500,000 base stations on the TD-LTE system this year.

China Mobile is counting on 4G to attract users who spend more downloading games and videos to help reverse a decline in profit. The company said expanding the network will help boost 4G users to 300 million by 2016, from 50 million by the end of this year.

“We’ve made a lot of progress” with building the network, Xi told the conference. “We’ve already exceeded our full-year plan in the first half of this year.”

4G License

China Mobile received a license to begin commercial 4G service in December. The 4G push comes at a price, as the carrier said in March that capital spending would rise 22 percent to 225.2 billion yuan this year as it built out high-speed networks.

As a result, the carrier is projected to report an 11 percent decrease in net income to 108.6 billion yuan in 2014, according to the average of 23 analysts estimates compiled by Bloomberg. That would follow a 5.9 percent drop last year and represents the largest annual decline since 1999.

(An earlier version of this story was corrected to fix the attribution of Wang in the second paragraph.)

— With assistance by Edmond Lococo, and Tim Culpan

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