Sam Oliver
China Telecom said Wednesday that its net income for the second quarter was 4.55 billion yuan, or $716 million, beating analyst expectations of 4.4 billion yuan, according to Bloomberg. China Telecom began offering the iPhone 4S on March 9, ending China Unicom's exclusive claim to Apple's smartphone in mainland China.
Because of the popularity of the iPhone and its subsidy costs, China Telecom expects to see "short-term pressure" on its profit margins, but has also projected long-term growth as subscribers come to the carrier because of Apple's iPhone.
Though China Telecom's subsidy costs increased during the quarter because of the iPhone 4S launch, the effect was not as great as most expected it would be. China Telecom also saw its average revenue per user increase thanks to the iPhone 4S launch.
China Telecom has been aggressive with the iPhone 4S, offering the handset to customers fully subsidized in exchange for a two-year contract starting at $62, or a three-year contract for $46 per month.
With China Telecom and China Unicom seeing strong results from the iPhone, the nation's largest wireless carrier, China Mobile, remains on the outside. Market watchers have predicted that Apple's next iPhone will offer support for China Mobile, which has more than 650 million total subscribers. However, rumors of an Apple-China Mobile deal have persisted for years with no change.
The nation of China has become an intense focus for Apple in recent years, and its interest in the country has paid off with significant growth. Apple will enhance support for Chinese-language users later this year with iOS 6, which will add support for Mandarin and Cantonese to Siri, as well as easier Chinese character input and integration with popular Internet services like Baidu, Sina Weibo, Youku and Tudou.
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4 Comments
Last week we were being told:
"China's Unicom is struggling to benefit from its investment in contract sales of Apple's latest iPhone models...."
I'm confused!
Last week we were being told:
"China's Unicom is struggling to benefit from its investment in contract sales of Apple's latest iPhone models...."
I'm confused!
Maybe now that China Unicom no longer has exclusivity of iPhone, it's putting pressure on them where they had none before.
", an increase credited mostly to the launch of the iPhone 4S."
Hmm.... I read the bberg article, and I don't quite see support for that statement.
Yes, they increased their users, and yes they're happy about the iPhone. But I see nothing to really indicate what fraction of those new users are iPhone users.
[quote name="silverpraxis" url="/t/152067/china-telecom-credits-subscriber-gains-to-iphone-4s-launch#post_2173015"] Maybe now that China Unicom no longer has exclusivity of iPhone, it's putting pressure on them where they had none before. [/quote] The path is clear. Added costs for carrying the iPhone 1. Subsidies - immediate impact 2. Bandwidth expansion - medium term impact 3. Upgrade cycles - long term impact. Benefits 1. Subscriber growth - long term market share stability or growth 2. Profits later One needs to think about phone company profits by "subscriber year". One million new iPhone subscribers in 2012 lead to $x in profit in 2 years. AT&T took early hits because of this but is doing quite well now.