Struggling to benefit from its investment in contract sales of Apple’s iPhone, China Unicom is reportedly considering doing away with pricing discounts on the devices for customers signing two-year service agreements.
As the only WCDMA carrier in China, China Unicom signed a two-year agreement with Apple back in September of 2010 to offer its iPhone subscribers the handsets at reduced pricing if they agree to 24-month service contracts.
However, the high costs for the devices themselves, the need for continued investment in infrastructure to support surging growth and increased data use by iPhone users has China Unicom considering a a move to end the discounts on the phone next month.
A report from tech.sina.com says that China Unicom “has not substantially profited from sales of the iPhone 4,” and may not renew its agreement with Apple for continued sales of the 4S, or the upcoming new model scheduled to make its debut in September.
Phone carriers offer the iPhone 4S to consumers at prices from $199 to $399 USD. They buy the devices from Apple at a higher price than that, but count on making the money back over the life of their contract with the consumer, making a profit from high profit margin two-year service contracts.
China Unicom had been among the most aggressive with its subsidies, offering the 16GB iPhone 4S at no charge to customers who sign up for multi-year service contracts.
China Unicom is China’s second largest cell phone service provider, with over 125 million subscribers. It is the tenth largest worldwide.
