China Mobile details subsidy spending cuts

Dylan Bushell-Embling
29 Sep 2014

China Mobile has revealed details of its plan to slash spending on smartphone subsidies in line with regulators' requests.

The operator has made moves towards getting rid of $2 billion in smartphone subsidies, Bloombergreported.

This will involve almost doubling the total cost of some smartphones. The cost of the iPhone 5S, for example, is due to increase by 94% over two years under the most expensive monthly plan. The device had previously been subsidized to the tune of 88% of its total cost under this plan.

China Mobile will introduce a new subsidy model involving paying less upfront but offering discounts instead of monthly rebates over the life of the contract.

China Mobile announced last month that it plans to reduce its total subsidy spend to 21 billion yuan ($3.42 billion) from 34 billion yuan.

The company is complying with an Assets Supervision and Administration Commission directive for China's three main operators to cut subsidy and marketing spending by a combined 40 billion yuan ($6.45 billion) over the next three years.

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