China Unicom iPhone price cut may lower margins, Nomura says

“We are concerned about the potentially higher handset subsidy expense per subscriber,” Nomura's Hong Kong-based analyst Danny Chu wrote in a report Monday. Unicom's margin of earnings before interest, tax, depreciation and amortization may decline, Chu wrote.

Unicom last week cut iPhone prices as much as 17 percent, after analysts said the high costs of the device were deterring consumers in the world's biggest phone market. The Beijing-based company started selling Apple's smartphone in October, after beating bigger rival China Mobile Ltd. to become the first Chinese carrier to offer the product.

Unicom started selling the iPhone 3G, the cheapest version in its lineup, for 4,999 yuan (US$732) from May 1, compared with 5,999 yuan previously, it said in an April 30 statement on its website. The price on the highest-specification model iPhone 3GS was cut to 6,999 yuan from 7,999 yuan, Unicom said.

The carrier's shares fell 0.6 percent to HK$9.76 at the midday break in Hong Kong trading, and have declined 5.1 percent this year. This compares with the 5 percent year-to-date gain in China Mobile, the world's biggest phone carrier by market value.

“We caution that during the next 12 months the company's share price could be volatile,” wrote Chu, who has a “buy” recommendation on Unicom stock.

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