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Telco plans to raise subsidies for 3G users

CHINA Mobile Ltd, the world's largest wireless phone company by users, plans to increase handset subsidies this year by as much as 25 percent to attract more customers for its high-speed services.

The company may raise subsidies to as much as 10 billion yuan (US$1.5 billion) this year to promote so-called third-generation, or 3G, services, from an average of 8 billion yuan in previous years, Chairman Wang Jianzhou said in a Bloomberg News interview last Saturday at the World Economic Forum in Davos, Switzerland.

China, home to more mobile phone users than the total populations of Japan, the United Kingdom and the United States, projects its telecommunication carriers will invest 280 billion yuan to provide 3G services, bolstering an economy where growth has slowed to a five-year low.

China Mobile plans to spend 59 billion yuan this year to expand its 3G network and aims for the subsidy to woo more customers to its services based on a domestically developed technology.

"In order to promote our 3G business, we'll increase subsidies for handsets," Wang said. "Ten billion yuan is possible" and the spending would include 2G services, he said.

The global recession may slow growth for the telco, Wang said, without elaborating. A weaker economy in China has cut network usage, and slumping trade has caused international call traffic to decrease, he said.

China Mobile added 7.07 million subscribers in December to end the year with more than 457 million users. Still, the pace of additions slowed from a record 7.97-million increase in February last year.

China's economy grew 9 percent in the third quarter last year due to the global financial crisis.


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