China wireless carriers to slash contract prices, could spur 4G boom

By Paul Carsten

BEIJING (Reuters) - China's three state-owned wireless carriers said on Friday they will cut mobile data prices and boost data speeds this year, potentially spurring a mass migration of customers to more lucrative 4G contracts.

The carriers have been under pressure to respond to Premier Li Keqiang's push to lower barriers to and expand Internet access throughout the country, with Beijing keen to make industries more efficient as the economy becomes more services-oriented.

By slashing prices in the world's biggest smartphone market, the carriers are set to increase the appeal of 4G beyond premium users, and encourage more subscribers to use those faster speeds to consume more data.

"This is really the year of mass market migration, so I think it's a necessary step to make that happen," said Chris Lane, a senior analyst at Sanford C. Bernstein in Hong Kong who covers Asia-Pacific telecommunications.

"It's happened in every other market, the sky hasn't fallen. If anything, industry profits have continued to grow, because data demand will continue to grow," he said.

China Mobile Ltd, the country's biggest wireless carrier by subscribers, said it would reduce mobile data prices by 35 percent or more by the end of 2015.

China Unicom (Hong Kong) Ltd plans a cut of 20 percent or more per megabyte of data. China Telecom Corp Ltd, the smallest of the three, said its subscriber costs for data will fall by an average 30 percent per megabyte.

As of the end of March, China had 1.3 billion mobile subscribers with half of those on 3G or 4G contracts. China Unicom and Telecom also said they will lower broadband prices.

(Editing by Edwina Gibbs)