China Unicom’s net income in the third quarter plunged 73% because of heavy smartphone subsidies.
The country’s number two mobile operator posted a net profit of 742 million yuan (€79.4 million) for the three months – down from 2.72 billion yuan a year ago - on 11% higher sales of 43 billion yuan.
Analysts had expected a profit of 1.1 billion yuan, according to a Bloomberg poll.
Unicom is China’s sole W-CDMA carrier and the only one to formally sell the iPhone and iPhone 4.
Jim Tang, an analyst at Shanghai-based Shenyin Wanguo Securities, estimated the iPhone 4 subsidy at around 4,000 yuan a unit.
The company spent 2.99 billion yuan on handset subsidies in the first nine months of the year, including 1.82 billion yuan in the third quarter. It plans to spend between 3 billion yuan and 5 billion yuan on handset subsidies this year.
Unicom added 2.99 million 3G users in the third quarter for a total of 10.6 million at the end of September. By comparison China Mobile added 4.82 million 3G subs on its TD-SCDMA network, taking its total to 15.3 million.
China Unicom’s total mobile subs reached 163 million at the end of the quarter.