China's two mobile phone companies are engaged in a price war in several provinces, pitching prices below the levels set by the government, said the People's Posts and Telecommunications, the official newspaper of the Ministry of Information Industry. A China Mobile branch in Sichuan province was reported to be offering customers rates described as 'a fraction' of the government's Yn0.4 per minute. In a separate instance, a China Unicom branch offered customers 88 minutes of inter-provincial phone calls for Yn138, or Yn0.18 per minute, prompting China Mobile to counter with a cheaper offer that included free call time.
China Mobile made a profit of Yn15.2bn in the first half of 2002, a growth of just 10 per cent on the same period last year. The company's margins are being squeezed by its growing number of less affluent subscribers, which has resulted in a decline in average monthly revenue per user.