AAPL takes heat on missing China Mobile deal, talks still underway

By , Dec 18, 2013

china mobile 1

The Wall Street Journal earlier this month asserted that China Mobile and Apple had finally cut a lucrative distribution agreement that would put the iconic smartphone on the world’s largest mobile network with more than 759 million subscribers, or more than twice the U.S. population.

China Mobile Shanghai’s website has even offered iPhone 5s/5c pre-orders as the giant wireless operator is gearing up to launch its new 4G TD-LTE mobile network in the 1.33 billion people country, Apple’s second-largest market by revenue.

But alas, the deal hasn’t materialized although the WSJ story suggested that Apple and China Mobile would announce the iPhone agreement “around December 18″.

With no deal in sight, shares of Apple dropped nearly two percent in early trading Wednesday, with the carrier confirming to Reuters that it’s still in talks with Apple. And so the cat-and-mouse game continues…

Chairman Xi Guohua told reporters this morning that China Mobile had no announcement to make.

Reuters added:

China Mobile Ltd said it’s still in talks with Apple Inc to sell iPhones amid mounting industry speculation that the pair are about to announce a deal to net the technology giant hundreds of millions of potential new customers.

The New York Times corroborated Reuters’ report.

WSJ reporter Lorraine Luk today said the carrier is being “coy” about the deal.

“Talks between China Mobile and Apple on cooperation are still going on and we currently do not have anything to announce,” the carrier’s spokeswoman Rainie Lei last week told the Agence France Presse.

A deal with China Mobile could add about 38 million units to Apple’s total iPhone sales in 2014, and that’s a conservative estimate. The carrier plans to sell between 190 and 220 million handsets next year.

“We hope to offer iPhones on the company’s network soon,” CEO Li Yue told WSJ on the sidelines of China Mobile’s global partner conference. The carrier will flip the switch on commercial 4G services in 16 cities by the end of this year, including major markets like Beijing and Shanghai.

China Mobile’s TD-LTE service will expand to more than 340 cities by the end of 2014.

Since China Mobile Beijing launched a pre-sale of the 4G TD-LTE iPhone on its website last week, over 10,000 customers have made reservations. The carrier back in October received a regulatory license from the country’s Ministry of Industry and Information Technology (MIIT) to operate on the TD-LTE network.

china mobile 5s

The main point of contention isn’t technology, it’s business terms.

For starters, the carrier is reluctant to share revenue with Apple and has repeatedly demanded that the iPhone maker share a portion of revenue from app sales in China.

Moreover, China Mobile wouldn’t agree to Apple’s crazy sales volume guarantees, with the amount of subsidy offered to China Mobile subscribers who wish to purchase an iPhone being another key hurdle to the deal.

Those differences may have finally been resolved, with Sophia Song of the International Business Times reporting that an unnamed China Mobile official told her that the big picture has been settled now, “and only details are still under negotiation”.

Rival China Unicom has offered iPhones since 2009 and China Telecom began selling iPhones in 2012. That being said, whatever negotiations are being conducted behind closed doors, the two parties better reach an amicable solution because Chinese New Year is looming on the horizon.

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  • chumawumba

    That’s what happens when people hype on rumors with no credibility.

  • iDavici

    I still use China Unicom..