China Mobile cuts $2 billion from phone subsidy budget

“China Mobile Ltd., the world’s largest phone company by users, will cut $2 billion from its device subsidy budget after government regulators were said to tell wireless carriers to lower their marketing expenses,” Bloomberg News reports. “China Mobile will spend 21 billion yuan ($3.4 billion) to offset the costs of phones for customers this year, or 38 percent less than the 34 billion yuan the carrier planned to spend, Chief Financial Officer Xue Taohai said at a press conference in Hong Kong today. The company already spent 15.3 billion yuan in the first half.”

“Those costs have eroded profitability, with China Mobile today reporting its fourth-straight drop in quarterly net income. The State-owned Assets Supervision and Administration Commission told carriers to cut costs because they overspent on subsidies and advertising for devices such as Apple Inc.’s iPhone, people familiar with the matter said last month. Any reductions may make phones like Samsung Electronics Co.’s Galaxy S5 more expensive in the world’s largest market,” Bloomberg reports. “Even as it cuts spending, Apple ‘must’ still make the carrier one of the first to offer the next iPhone when it’s released, China Mobile Chairman Xi Guohua said today. ‘It’s a must for us to be in the first batch,’ Xi said in Hong Kong. ‘China Mobile has a huge user base. Apple also greatly values China Mobile’s market in China.'”

“The carrier in December agreed to offer the iPhone after six years of negotiations with Cupertino, California-based Apple,” Bloomberg reports. “Sales of the device started in January at China Mobile shops, and Apple said iPhone sales rose 48 percent in the country in the quarter ended June 28. China Mobile today posted profit that beat analyst estimates as the expansion of its fourth-generation network and sales of the iPhone helped it add more subscribers than competitors.”

Much more in the full article here.

MacDailyNews Take: Cut the $2 billion off the iPhone knockoff subsidies and you’ll be fine, China Mobile. Have a nice day, Samsung.

Related articles:
China Mobile lowers 4G charges by as much as 50% after complaints – June 6, 2014
China Mobile added some 1 million new iPhone users in February – March 20, 2014
China Mobile earnings drop most since 1999 on network expenses, iPhone subsidies – March 20, 2014
Q&A: Apple CEO Tim Cook in China discusses deal with China Mobile – January 15, 2014


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