China Mo­bile ac­cord a juicy deal for Ap­ple

China Daily (Hong Kong) - - BUSINESS - By SHEN JINGTING shen­jingt­ing@chi­nadaily.com.cn

US-based smart­phone gi­ant Ap­ple Inc could sell as many as 17 mil­lion new iPhones to China Mo­bile Ltd’s users in the first year af­ter the two com­pa­nies tie the knot, ac­cord­ing to re­search firm For­rester Corp.

Bryan Wang, vi­cepres­i­dent of For­rester, said in an e-mail to China Daily that Ap­ple has al­ready sold more than 16.8 mil­lion iPhone hand­sets in China in the 12-month pe­riod ended on Sept 30. He noted that if China Mo­bile, the na­tion’s big­gest tele­com op­er­a­tor, part­ners with Ap­ple, iPhone sales will soar in China.

Gene Mun­ster, an­a­lyst with in­vest­ment bank Piper Jaf­fray, said the 17 mil­lion unit sales would rep­re­sent about 2 per­cent of China Mo­bile’s to­tal sub­scriber base (759 mil­lion in Oc­to­ber) or 10 per­cent of the 3G user base (176 mil­lion).

The Wall Street Jour­nal quoted un­named sources on Thurs­day as re­port­ing that China Mo­bile had signed the long-awaited deal with Ap­ple to of­fer iPhones on its net­work. The roll­out by China Mo­bile is ex­pected to be­gin later this month, the pa­per said.

China Mo­bile, to­gether with two smaller Chi­nese car­ri­ers, re­ceived li­censes on Wed­nes­day from the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy to of­fer com­mer­cial 4G tele­com ser­vices.

The 4G li­cense helps re­move tech­nol­ogy ob­sta­cles for China Mo­bile to adopt iPhone hand­sets, as Ap­ple smart­phones did not sup­port the car­rier’s 3G tele­com net­work. But Ap­ple says the iPhones will sup­port the car­rier’s 4G stan­dard.

Be­cause China Uni­com and China Tele­com did not have enough in­cen­tives to widely launch TD-LTE 4G net­works, and the Chi­nese gov­ern­ment has yet to hand out the FDDLTE li­censes that the two car­ri­ers pre­fer, China Mo­bile “might be the only 4G op­er­a­tor in China at least in the next six months”, Wang said.

“The China Mo­bile ver­sion of iPhones will also be the only iPhones with 4G ser­vice in the com­ing months,” he said. Thus, China Mo­bile will be able to sig­nif­i­cantly re­duce its churn rate for high-end users, he added.

Ap­ple also will ben­e­fit from China Mo­bile’s many points of sale in China — China Mo­bile has more than 65,000 sales of­fices across the coun­try, the most in China, For­rester said.

A re­search note from RBC Cap­i­tal Mar­kets LLC said the China Mo­bile-Ap­ple deal could open up a large sub­scriber base for the iPhone prod­uct line.

The up­com­ing Chi­nese New Year shop­ping sea­son will likely also spur do­mes­tic de­mand and bol­ster Ap­ple’s bot­tom line.

Eric­s­son, the lead­ing ven­dor of tele­com gear, fore­cast that by 2019, China will have the largest 4G LTE mar­ket in the world, with the num­ber of LTE sub­scribers to ex­ceed 700 mil­lion.

Re­search firm IDC said to­tal ship­ments of TD-LTE smart­phones in China will sur­pass 180 mil­lion units by 2017. The an­nual com­pound growth rate be­tween 2013 and 2017 will be 230 per­cent. The av­er­age price of a TD-LTE smart­phone in China will be less than 1,500 yuan ($246).

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