China Unicom, the country's No. 2 mobile carrier, will begin to sell Apple Inc's iPhone in China for a retail price of 5,000 yuan ($732.50), as it leans on the phone to launch its 3G service.
The high price tag may force buyers of the popular handsets to sign up for subsidized packages carrying lower handset prices but also longer-term contract commitments, as competition heats up in China's recently reformed telecoms sector.
In August, China Unicom struck a three-year deal with Apple, which has been trying to bring the iPhone to some of China's nearly 700 million mobile subscribers. A majority of users in the world's largest mobile market, however still use older 2G services.
CLSA analyst Francis Cheung said the pricing is likely to limit the phones to the highest end of the market, a relatively small but lucrative segment now dominated by the country's biggest carrier, China Mobile.
They look at this as a high end product, not mass market. All these plans offer subsidized phones, he said.
Most people will not buy a phone separate from a plan. It's very expensive. I do get the sense there are going to be affordability issues.
Unicom said the phones would be available for services starting October 1.
That date would also mark the company's official launch of its 3G service, although it has been trialing its network, based on the standard known as WCDMA, for several months since the industry restructuring earlier this year.
Many companies quote a price for a stand-alone iPhone, but also offer heavily discounted, subsidized prices for people who sign multi-year service contracts.
Eight service packages being offered by Unicom would be available for iPhones, ranging from 126 yuan to 886 yuan per month, Unicom said in a statement. It said it would provide subsidies of 893 yuan to 4,253 yuan for people who sign up for the plans.
A stand-alone iPhone in Hong Kong starts from HK$5,388 ($695), slightly less than the Chinese price.
Unicom rival China Telecom has already said it would increase its own handset subsidies to 37 percent of wireless revenues, from 30 percent.
Unicom announced the prices and plans as it embarks on an aggressive campaign to sign up customers for its third-generation cellular service.
Unicom said it had signed up 530,000 3G users since it started commercial trials of the network in May, including 430,000 cell phone users and 100,000 users of data cards that enable computers connect to the Internet.
China Mobile, the world's largest mobile carrier, and the country's two smaller carriers are all being pressured by margins as they are in the middle of a three-year $58.5 billion spending spree through 2011 to build their 3G networks.
Earlier on Monday, Unicom said it would buy back a stake held by SK Telecom for $1.3 billion, as the South Korean shareholder exited after China Unicom's move to boost its alliance with Spain's Telefonica.
Unicom shares fell 5 percent in Hong Kong versus a 2.1 percent drop in the broader Hang Seng Index.
($=6.83 yuan) ($1=7.750 Hong Kong Dollar)
(Additional reporting by Huang Yuntao in Beijing and Doug Young in Hong Kong; Editing by Chris Lewis and Anshuman Daga)