John Paczkowski

Recent Posts by John Paczkowski

iPhone Subsidies Working Out Well for China Telecom

China Telecom’s decision to offer Apple’s iPhone 4S fully subsidized in exchange for a two-year or a three-year contract is proving to be strategically wise for China’s smallest mobile operator.

Reporting a better-than-expected second quarter Wednesday, China Telecom said that it added 8.35 million subscribers during the period, and saw its average revenue per user rise, increases the company attributed to the iPhone.

“Our short-term profitability was under pressure due to the launch of iPhone in March and an [associated] increase in marketing,” China Telecom Chairman and CEO Wang Xiaochu said during the company’s earnings call. “[But that] investment is helping us expand into the high-end market and achieve breakthroughs in our mobile business … enhancing our long-term value.”

Looking ahead, Wang said he expected the second half of the year to play out much like the first, with the iPhone luring in more wireless subscribers, even as its subsidy costs weigh on the company’s profitability. Said Wang, “The effect of the iPhone began to show in the second quarter, leading to the increase in mobile subsidies. In the second half, mobile subsidies will be more or less the same as the first half.”


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