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Smartphone Subsidies in China Still Under Review

10A News - Rumor
Back in March Bloomberg reported that China Mobile faced a triple whammy of apps, iPhone subsidies and regulations that would likely cost them as much as $1.8 billion in profit this year. The state-run phone company is contending with falling income as customers flock to free messaging applications such as Tencent Holdings Ltd.'s WeChat and buy Apple Inc. devices at a subsidized price. The report noted that the government would impose a new telecommunications tax as part of an effort to lower prices and improve customer service. The reduction of smartphone subsidies and talk of it isn't new and is certainly not in concrete yet despite a new UBS report.

 

Business Insider presents a research note from UBS that is stirring things up in the blogosphere today. The note basically states that "There are a couple developments in China that could negatively affect Apple's iPhone business." The smartphone subsidy cuts are still under review and could result in subsidies cuts in the 33-60% range. But nothing is concrete as of yet. You could read more about the research note here.

 

This isn't a new topic as the Wall Street Journal reported in September 2013 that China Telecom had begun to offer plans that cut back on iPhone subsidies. However, if the subsidies are enforced at the higher-end of the scale as noted above, then Apple, Samsung and other smartphone leaders would be in the same boat of having to compete on a new playing field. Yet there's a good chance that any subsidy cut would be phased in over time which would give Apple and others time to adjust to the new pricing environments.

 

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