An iPhone 4 poster at a China Unicom store in Nanjing, Jiangsu province. The Chinese telecom operator has benefited after working with Apple Inc. [Photo / China Daily]

China Unicom's chief expects its business to grow faster this year than in 2010

BEIJING - When he attended the recently concluded national political advisory session early this month, Chang Xiaobing did not have to tell the other members, "I am the chairman of China Unicom" because his actions plainly showed he is a representative of China's second-largest telecom carrier and an efficient salesman for his company.

Chang Xiaobing,chairman of China Unicom

During breaks in group discussions, he took out his mobile phone, demonstrated new applications and drew the attention of some of China's most powerful people, including Liu Yonghao, chairman of New Hope Group, and Li Rongrong, former chairman of the State-owned Assets Supervision and Administration Commission.

He said more members of the Chinese People's Political Consultative Conference, the nation's top political advisory body, were trying Third Generation (3G) applications this year, rather than simply using their phones to make calls.

"I am delighted to see that they have undergone a significant change," Chang told China Daily.

As China Unicom is the sole Chinese carrier offering Apple Inc's iPhones with a contract, Chang also noticed an increase in the number of members using an iPhone.

"I saw at least 10 people in my discussion group holding an iPhone last year, which was really a high rate then. The figure this year is definitely not lower than the previous year," Chang said.

He said China Unicom achieved unexpected progress in the development of 3G in 2010, specifically in three areas - networking, smartphones and applications.

The company has built up the world's largest WCDMA (Wideband Code Division Multiple Access) network, by providing full coverage at county level and above, nationwide.

"Our cooperation with Apple resulted in a win-win situation, which also benefited our customers," Chang said.

"Apple's iPhone and our other smartphone brands, both at home and abroad, participated in the 3G race and offered different choices to clients."

Initially, Chang didn't expect the number of smartphone models to rise significantly. But he is pleased that Chinese customers can now purchase a smartphone at an acceptable price - some of them even as low as 1,000 yuan ($148.70).

Chang said that mobile phone applications are critical in attracting people to smartphone use. Well-developed mobile applications make people feel that "the 3G era is with us", he said.

"China Unicom is embracing an extremely good opportunity to develop its 3G business now. I say our company wants to move as quickly as possible and will not lower its pace," Chang said.

Faced with a choice between attractive financial reports and long-term development target, Chang said his company chose the latter.

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The carrier issued an earnings warning in January, stating that it expected last year's net profit to fall by more than 50 percent, from 9.56 billion yuan in 2009.

Chang blamed the shortfall on the nascent 3G business and large-scale amortization incurred by network building, as well as huge 3G terminal subsidy fees.

"I expect our 3G business will grow faster in 2011 than last year," Chang said, but declined to reveal the company's specific annual target.

China Unicom's 3G user numbers had surged to 15.48 million by January 2011, as the total user number for the technology in China reached more than 50 million during the same period.

China Mobile Ltd, the world's biggest telecom carrier by market value, still led the 3G race with a total of 22.6 million users by January.

"China Unicom is expected to see its 3G user numbers increase by 30 million this year," Chen Haofei, a telecom industry analyst with China International Capital Co Ltd, wrote in a research note.

Chang said he did not know whether the three Chinese telecom carriers can meet the target of 150 million 3G users by 2011, as suggested by the Ministry of Industry and Information Technology in 2009. However, the 3G penetration rate in China no doubt will surpass 10 percent this year, he said.