China Telecom Corp. (728), the nation’s third-largest wireless carrier, announced subsidies on Apple Inc.’s iPhone 5C and 5S that analysts estimate are about 15 percent less than offered for the earlier model.
China Telecom requires a downpayment of 4,488 yuan ($734) for any plan with a 16-gigabyte iPhone 5C, and 5,288 yuan for the 5S, the carrier said on its website. The handset is free for buyers on a two-year contract with a minimum monthly plan of 329 yuan for the 5C or 389 yuan for the 5S as the price is refunded against monthly usage, according to the website.
Apple unveiled the 5S and 5C models for the networks of China Unicom (Hong Kong) Ltd. (762) and China Telecom on Sept. 11 as it tries to stem a declining share in the world’s largest mobile-phone market. That goal may be challenged as the smartphones get reduced support from carriers looking to reign in subsidy costs and offering less expensive devices from local makers such as as Lenovo Group Ltd. (992), ZTE Corp. and Xiaomi Corp.
“The plan is more conservative this time,” Eva Yip, a Hong Kong-based analyst at Sun Hung Kai Financial Ltd., said of China Telecom’s announced iPhone subsidy. “The handset subsidy as a percentage of upfront payment is less than that of the iPhone 5 plan.”
A monthly plan costing 289 yuan for the iPhone 5S carries a subsidy of 2,890 yuan, 15 percent less than the 3,400 yuan for the iPhone 5 on the same plan, according to Yip. Jacky Yung, a Hong Kong-based spokesman for China Telecom, said he wasn’t immediately able to comment on Yip’s estimates.
China Unicom, the nation’s second-largest carrier, has yet to announce its subsidy plan for the devices. The company may follow its smaller rival in taking a less aggressive approach to iPhone subsidies, Cynthia Meng, a Hong Kong-based analyst with Jefferies Group LLC, wrote in a report to clients today.
“China Unicom and China Telecom are more rational on price competition,” Meng wrote. Both are “balancing between quantity and quality of new 3G subscriber development,” she wrote.
China Mobile Ltd. (941), the nation’s largest phone company, doesn’t have a distribution agreement with Apple for the iPhone.
To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net
To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net
Pedestrians walk past a China Telecom Corp. store in Beijing. Photographer: Nelson Ching/Bloomberg
iPhone 5C
David Paul Morris/Bloomberg
The new Apple Inc. iPhone 5C is displayed for a photograph during a product announcement in Cupertino, California.
The new Apple Inc. iPhone 5C is displayed for a photograph during a product announcement in Cupertino, California. Photographer: David Paul Morris/Bloomberg
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