China Mobile (CHL.NYSE, 0941.HKG) will cut its device subsidy budget for the year to RMB21 billion (US$3.4 billion) from RMB34 billion previously, after government regulators told wireless carriers they were spending too much on subsidies and advertising, Bloomberg reported, citing a Wednesday press conference. Those costs have eroded profitability, with China Mobile reporting its fourth-straight drop in quarterly net income.”Our concern is how will consumers react to this drastic change in marketing style,” said Danny Chu of Macquarie Research. “If China Mobile decides to lower handset subsidy in the near term, we may see higher churn rate.”
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