China Unicom’s net income in the third quarter plunged 73% because of heavy smartphone subsidies.
The no.2 Chinese mobile operator posted a net profit of 742 million yuan ($111m) for the three months – down from 2.72 billion yuan a year ago - on 11% higher sales of 43 billion yuan.
Analysts had expected a profit of 1.1 billion yuan, according to aBloomberg poll.
Unicom is China’s sole W-CDMA carrier and the only one to formally sell the iPhone and iPhone 4.
Jim Tang, an analyst at Shanghai-based Shenyin Wanguo Securities, estimated the iPhone 4 subsidy at around 4,000 yuan a unit.
The company spent 2.99 billion yuan on handset subsidies in the first nine months of the year, including 1.82 billion yuan in the third quarter, it said. It has said it will spend between 3 billion yuan and 5 billion yuan on handset subsidies this year.
It added 2.99 million 3G users in the third quarter for a total of 10.6 million at the end of September. By comparison China Mobile added 4.82 million 3G subs on its TD-SCDMA network, taking its total to 15.3 million.
China Unicom’s total mobile subs reached 163 million at the end of the quarter.