The Chinese government has told the country’s three leading carriers that they need to cut phone subsidies and advertising costs by a combined 40 billion yuan within the next three years, anonymous sources tell Bloomberg.
China Mobile, China Telecom, and China Unicom have been told by the state-owned Assets Supervision and Administration Commission that they have been spending too much money promoting high-end devices such as the iPhone, according to sources.
You may recall that negotiations between Apple and China Mobile lasted for years, and the world’s biggest carrier finally started selling the iPhone this January. The device is compatible with China Mobile’s 4G network (among other high-end handsets as well), and the carrier has big plans for this year: It wants to reach 50 million 4G users. According to the latest public info, iPhone users account for about half of the 2.8 million 4G subscribers China Mobile has added as of end of April.
The iPhone also comes with costs: China Mobile pointed to the Apple handset as the reason why subsidies on all phones will rise 29% this year, chief financial officer Xue Taohai said in March.
In an email statement sent to Bloomberg today, China Telecom said the carrier “has been incurring appropriate selling expenses according to the market development needed,” and “it has been implementing stringent control of the selling expenses to ensure operating profitability.”