China Unicom (CHU) has announced the launch date of iPhone in mainland China yesterday. The second-largest Chinese wireless carrier will unveil the popular smartphone on Oct. 1, 2009. Additionally, the company will launch 80 different types of handsets in October 2009 that will run on its 3G wireless network.

China Unicom has set a retail price tag of approximately RMB5,000 ($732.50) per handset and will offer eight service packages, ranging from RMB126 ($18.5) to RMB 886 ($130) per month. Subscribers signing to long-term service plans will get subsidies of around RMB893 ($131) to RMB4,253 ($623). iPhone will be available in 8GB (gigabyte), 16GB, and 32GB versions.

Along with its interim 2009 earnings release in late August, China Unicom announced a three-year agreement with Apple Inc (AAPL) to launch the iPhone in China. However, the distribution deal is not exclusive, thus opening the path for China Unicom’s biggest rival China Mobile (CHL) to explore its chances for selling iPhones. China Mobile is gearing up to launch 3G “Ophone” which is based on Google’s (GOOG) Android operating system. 

Following the overhaul of the Chinese telecom industry in late 2008, China Unicom secured the license for WCDMA, a widely adopted 3G technology with approximately 70% share of worldwide 3G subscribers. The company will officially commence the commercial roll-out of its 3G wireless services on Oct. 1, 2009 across 285 Chinese cities.

iPhone represents a major opportunity in wireless for China Unicom, as the company continues to face downward pressure on wireless ARPU (average revenue per user) due to stiff competition from China Mobile and China Telecom (CHA). The company reported 4.3% year-over-year decline in ARPU in first-half 2009.

The booming Chinese mobile market (approximately 711 million subscribers) will offer a lucrative platform for China Unicom’s iPhone venture. The company will leverage its 3G WCDMA network to roll out iPhone in mainland China, which will offer a competitive edge over China Mobile while providing significant opportunity to boost ARPU and subscriber base.

We remain bullish on China Unicom’s prospects in the domestic 3G wireless market given the iPhone opportunity. However, the lack of Wi-Fi (wireless broadband) support in the Chinese version of the device, as demanded by the country’s regulators, may serve as a limiting factor in its wide market adoption.
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