China Telecom bets on iPhone for high-end segment

Fiona Chau
China Telecom, the country’s smallest mobile operator by subscribers, expects the recent launch of iPhone to help the company break into the high-end segment.
China Telecom began offering an EVDO iPhone on March 9, in its latest attempt to catch up with bigger rivals China Unicom and China Mobile in the 3G race.
China Telecom chairman and chief executive Wang Xiaochu said sales of the iPhone have been “better than our expectation” but declined to reveal the number sold so far. 
He said the introduction of iPhone would help enhance the company’s branding image and promote further breakthroughs in the high-end segment, which is dominated by rivals China Unicom and China Mobile.
Wang said China Telecom would introduce heavy subsidization on iPhone, but declined to disclose the amount of budget the company would spend on promoting and marketing the device.
He said the subsidy would put “a short-term pressure on our revenue, but we expect the iPhone would help increase APRU this year and accelerate revenue growth in the second and third year,” Wang told a press conference on Tuesday.
Excluding the subsidization on the iPhone, China Telecom said it would maintain handset subsidy budget at a proportion of 22.9% of the mobile revenues, the same level as last year. The company also plans to increase its capex to 54 billion yuan this year from 49.6 billion yuan in 2011 as it continues to expand its mobile business and increase investment on wireline broadband infrastructure and internet business.