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China's Xiaomi announces telecom carrier service, new flagship handset

Xiaomi, China's leading smartphone maker, announced on Tuesday two prepaid wireless plans to mark its debut as a mobile virtual network operator (MVNO) competing against China's national carriers.

MVNOs, which purchase network capacity from large carriers and resell mobile plans under their own branding, have failed to gain traction in China, where three state-owned giants dominate the telecoms industry.

But as China's most popular handset brand, Xiaomi's foray into the sector could finally kickstart the MVNO industry and provide a boost for Chinese telecom regulators who have sought for years to introduce market competition against the trio of state-owned carriers often criticized for their poor profitability and perceived bloat.

Hugo Barra, vice president of global operations at Xiaomi.
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Hugo Barra, vice president of global operations at Xiaomi.

Xiaomi's new wireless business, called Mi Mobile, will offer voice and data services and utilise either the China Unicom or China Telecom networks.

The launch comes less than six months after Google announced it would launch an MVNO service in the United States called "Fi" that piggybacks off Sprint and T-Mobile's networks.

There have been rumors that Apple is similarly mulling an MVNO business, although the iPhone maker has not disclosed any plans.

At a Tuesday launch event in Beijing, Xiaomi, which was valued at $45 billion after a December funding round, also unveiled its new flagship handset called the Mi 4c, a 1299 yuan ($203.76) Android smartphone featuring a Qualcomm processor, 5-inch display and 13-megapixel camera.