World’s largest mo­bile car­rier gets its bite of Ap­ple

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

Ap­ple Inc’s part­ner­ship with China Mo­bile Ltd, the world’s big­gest telecom car­rier by sub­scriber base, is likely to mean a sig­nif­i­cant sales bounce for the United States-based smart­phone ven­dor next year, an­a­lysts said.

On Mon­day, Ap­ple and China Mo­bile of­fi­cially an­nounced a mul­ti­year agree­ment to bring iPhone smart­phones to the main­land mar­ket. China Mo­bile, with a sub­scriber base of 760 mil­lion, or seven times as big as that of Ver­i­zon Wire­less, is the last Chi­nese telecom op­er­a­tor to in­tro­duce iPhone hand­sets on con­tract in China.

China Uni­com ( Hong Kong) Ltd, the na­tion’s sec­ond-big­gest telecom car­rier, be­came the first op­er­a­tor to in­tro­duce iPhone de­vices on its net­work in mid-2009. China Telecom Corp Ltd, the small­est wire­less car­rier, tied the knot with Ap­ple at the be­gin­ning of 2012.

Chi­nese buy­ers can pur­chase iPhone 5s and iPhone 5cs through China Mo­bile’s more than 65,000 points of sale, as well as Ap­ple re­tail stores across the coun­try, be­gin­ning on Jan 17.

Peo­ple can pre-reg­is­ter on China Mo­bile’s of­fi­cial web­site and cus­tomer ser­vice hot­line be­gin­ning on Wednes­day.

Zhang Xuan, gen­eral man­ager of China Mo­bile’s depart­ment of cor­po­rate af­fairs, said on Mon­day that the com­pany plans to re­lease con­tract prices soon for Ap­ple’s iPhone hand­sets.

“We ex­pect the al­liance ( be­tween Ap­ple and China Mo­bile) to help Ap­ple re­al­ize a year-on-year growth rate of more than 50 per­cent in terms of ship­ments in China dur­ing 2014,” James Yan, se­nior an­a­lyst with IDC China, said on Mon­day.

The up­com­ing Chi­nese New Year shop­ping sea­son, which falls at the end of Jan­uary, will spur do­mes­tic de­mand and bol­ster Ap­ple’s bot­tom line, ac­cord­ing to a re­search note from RBC Cap­i­tal Mar­kets LLC.

“The China Mo­bile ver­sion of the iPhones will be the only iPhones with 4G ser­vice in the com­ing months,” Bryan Wang, prin­ci­pal an­a­lyst with For­rester Mar­ket Ad­vi­sory (Bei­jing) Co Ltd, said.

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 ex­plained.

China Mo­bile will be able to sig­nif­i­cantly re­duce its churn rate for high- end users, he added.

For­rester pre­dicted that Ap­ple could sell as many as 17 mil­lion new iPhones to China Mo­bile users in the first year of the al­liance, Wang said.

Ap­ple ranked eighth in China’s smart­phone mar­ket in the third quar­ter, with a share of 3.5 per­cent, ac­cord­ing to Bei­jing-based re­search firm Analysys In­ter­na­tional. South Korea-based Sam­sung Elec­tron­ics Co Ltd led the list with 18.4 per­cent and Len­ovo Group took sec­ond place with 12.5 per­cent.

Kevin Wang, an an­a­lyst with the re­search firm IHS iSup­pli, said Ap­ple has a chance to emerge as a top five smart­phone ven­dor in China next year, af­ter the com­pany ex­pe­ri­enced a flat phase in the Chi­nese mar­ket this year.

In Hong Kong, China Mo­bile shares edged up 0.8 per­cent and closed at HK$80.55 ($10.40) on Mon­day, out­per­form­ing the broader Hang Seng in­dex, which was up 0.48 per­cent.

Chi­nese me­dia quoted uniden­ti­fied sources as say­ing that China Mo­bile achieved a more fa­vor­able deal with Ap­ple, com­pared with other telecom car­ri­ers world­wide.

“Even if China Mo­bile hadn’t signed an agree­ment with Ap­ple, the com­pany still would have the largest num­ber of iPhone users on its net­work in China, or about 25 mil­lion peo­ple,” said Wang with For­rester. But those iPhone users can only run their de­vices on China Mo­bile’s sec­ond-gen­er­a­tion wire­less net­work.

It is highly pos­si­ble that Ap­ple made com­pro­mises with China Mo­bile in ar­eas such as rev­enue shar­ing, Wang said.

Zhang said the com­pany reached the agree­ment with Ap­ple af­ter years of ne­go­ti­a­tion to over­come ob­sta­cles re­gard­ing tech­nol­ogy and busi­ness.

China Mo­bile will pur­sue a pru­dent and ra­tio­nal mo­bile phone sub­sidy pol­icy in 2014, Zhang said, but did not dis­close de­tails on spe­cific sub­si­dies for iPhones.


Cus­tomers choose iPhone hand­sets at a China Mo­bile Ltd branch in Hangzhou, Zhe­jiang prov­ince. China Mo­bile and Ap­ple Inc have signed a mul­ti­year agree­ment to bring the lat­est Ap­ple smart­phone mod­els to the main­land mar­ket.


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