China Unicom (Hong Kong) Ltd. (CHU) plans to offer the 8-gigabyte version of Apple Inc.'s (AAPL) iPhone 3GS smartphone without a mobile service contract starting Saturday, but it will offer buyers of the device a discounted service plan, Unicom's parent company said Friday.

The move comes as China Unicom has invested heavily in handset subsidies to compete with China Mobile Ltd. (CHL) and China Telecom Corp. (CHA) for users of third-generation mobile services, which are more expensive but offer faster data speeds than second-generation services.

China Unicom, which only sells iPhone handsets bundled with mobile service contracts at present, will sell the 8GB version of the iPhone 3GS with no contract for CNY3,999 ($603), said a spokesman for its parent, China United Network Communications Group Co.

Unicom will also offer buyers of the CNY3,999 iPhone 3GS a two-year service plan that includes CNY33-CNY158 in free phone expenses each month, depending on the monthly subscription price, Unicom's parent said on its website.

The spokesman, who asked not to be named, declined to comment on whether China Unicom could also offer the newer iPhone 4 with no service contract, but said that version of the phone is still in short supply.

China Unicom's parent this month launched rules that it said were aimed at preventing users from buying iPhone handsets and reselling them at high prices, given the tight supply. The rules say users of iPhones from China Unicom could have the handset locked and their bundled Unicom phone number suspended if the company discovers the two are being used separately.

An Apple spokeswoman didn't immediately reply to a request for comment.

-By Owen Fletcher, Dow Jones Newswires; 8610 8400 7702; owen.fletcher@dowjones.com
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