China Unicom, China’s second-largest mobile operator, says it has signed up more than 1 million subscribers to its new WCDMA-based 3G network to date, but warned that the costs of rolling out and promoting 3G will continue to weigh on margins. According to a Reuters report, Unicom Chairman Chang Xiaobing said today that the operator has also signed up 5,000 iPhone customers since launching the device in early October. “We are satisfied with iPhone sales so far, and we aim to have an additional 1 million new 3G subscribers each month in the near future,” he said. However, while Xiaobing said that iPhone sales would help boost revenues in the fourth quarter, he added that the company would also incur expenses for handset subsidies and advertising, which could pressure profit margins. “Marketing expenses and network construction costs increased in Q3 from Q2 and this situation will continue for a time,” added Tong Jilu, vice-president and chief financial officer. Jilu said the company expects 3G operating expenses, which include handset subsidies and advertising expenses, to account for 30 percent of total 3G revenue in 2010.

All three Chinese operators are in the process of rolling-out 3G and competing to attract subscribers to the new networks, which analysts say led to all of them reporting disappointing quarterly earnings last month. Unicom said last week that its third-quarter net profit slipped to CNY2.72 billion (US$398 million), down 11 percent from the previous quarter. “We expect the EBITDA margin to drop from 39 percent to 36 percent in the fourth quarter on higher handset subsidies and competition,” said Tiffany Feng, an analyst at Guotai Junan. It was separately reported this week that China Unicom has launched 3G femtocell services under the brand ‘3G Inn’ in ten northern provinces in China.