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PRC slashes rate for long distance mobile services

China's telecommunications regulator plans to cut prices for long-distance wireless phone calls within the country by as much as 50 percent in a move that may prompt more consumers to switch to mobile services.

Incoming domestic long distance calls should cost a maximum of 0.4 yuan (US$0.06) a minute, while subscribers should pay no more than 0.6 yuan for making a call outside their area, the Ministry of Information Industry said in a release posted on its Web site yesterday.

The proposed price cuts could allow China Mobile Ltd (中國移動通信) and China Unicom Ltd (中國聯通) to accelerate user gains from fixed-line phone companies.

China, the world's largest mobile-phone market by users, added 86.2 million wireless subscribers last year after the two carriers lowered charges, while the number of landline customers declined.

"We have seen that previous cuts in call charges haven't had a big impact" on average revenue per user as "they had been offset by higher call volumes," said Bertram Lai at CIMB-GK Securities in Hong Kong.

"The impact should be insignificant" for the mobile carriers, he said.

Lai rates China Mobile "outperform."

China Mobile, the world's largest wireless carrier by subscribers, said average revenue per user was unchanged at 89 yuan per month in the first nine months last year after the company introduced a caller-pays system for some users last February. The move to waive charges for receiving calls was followed by China Unicom.

Under existing rules, China Mobile and Unicom are allowed to charge a maximum of 0.8 yuan a minute for long-distance domestic calls made by pre-paid customers, and 0.6 yuan a minute for contract customers, according to an April 28 statement by the Ministry of Information Industry.

The regulator will conduct more consultations on the plan for the fee cut, according to the statement.

The proposal is supported by the country's top planning agency, the National Development and Reform Commission, the statement said.
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