Apple and China Mobile edge closer to partnership [Cape Argus (South Africa)]
(Cape Argus (South Africa) Via Acquire Media NewsEdge) SINGAPORE/HONG KONG: The stars may be aligning for a long-awaited deal between Apple Inc and China Mobile Ltd, the world's biggest mobile carrier, that could help the iPhone maker claw back lost ground in its most important growth market.
Apple is expected to unveil its redesigned iPhone next month and may also release a cheaper, emerging market smartphone. Crucially, it also now has Qualcomm Inc chips that can operate even on China's obscure networks. At the same time, Beijing is expected to grant 4G licences by the year-end that favour the biggest of its domestic mobile operators.
Apple has so far ducked a deal with China Mobile as this would have required a redesign inside the iPhone to work on the operator's inferior TD-SCDMA 3G technology. China Mobile has been reluctant to commit to the huge cost of marketing and subsidising sales of the expensive iPhone.
By offering a mid-market Apple smartphone, China Mobile, which has 740 million users, could draw in more sophisticated, data-crunching subscribers to grow net profit that last year was only 15 percent higher than in 2008, when Apple opened its first store in China.
While the 4G licences are expected to be based on TD-LTE technology, rather than the more widely used FDD-LTE, the new Qualcomm chips can handle both systems, saving Apple from a major redesign.
"The circumstances and the issues that were a hindrance in the past seem to be getting resolved. So I think there's a higher probability that potentially there's something in the works," said Anand Ramachandran, a telecoms analyst at Barclays in Singapore.
Apple chief executive Tim Cook met China Mobile chairman Xi Guohua in Beijing last month, his second China visit this year, prompting speculation a deal could be edging closer.
"We are actively negotiating and both sides are keen," Xi said yesterday. "There are still some commercial and technology issues that need time to resolve." Apple may be keener now to partner with China Mobile as its sales in Greater China slumped 43 percent in April-June from the previous quarter, under pressure from mid-tier domestic suppliers.
The California-based firm's China smartphone market share has almost halved since last year to below 5 percent - well behind market leader Samsung Electronics. The smaller China Unicom, which signed with Apple in 2009, has seen annual net profits slide, largely due to the high cost of subsidising iPhone sales - but more recently its growth has outstripped its rivals as it trims subsidies this year.
January to June net profit jumped 55 percent to 5.3 billion yuan (R8.63bn).
Third-ranked China Telecom Corp Ltd entered a deal with Apple last year and, like Unicom, has seen net profit |fall in recent quarters because of rising handset subsidies, although it expects profitability to improve in the long term. China Unicom and Telecom |do not detail handset subsidies for iPhones. China Mobile posted April-June net profit of 35.2 billion yuan (R50.7bn) yesterday, up two percent on last year. - Reuters
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