China Mobile accord a juicy deal for Apple

A customer considers an iPhone 5 in a shop in Xuchang, Henan province. China Mobile, together with two other Chinese carriers, received licenses on Wednesday to offer commercial 4G telecom services. [Photo / China Daily]

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, vice-president 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 FDD-LTE 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).