China Telecom to sell Apple iPhones

Apple Inc has signed with China Telecom to sell its iPhone in China from next month as it looks to boost its flagging share of the world’s biggest mobile phone market. While Apple has now signed up with two of China’s big three carriers, the biggest, China Mobile, with more than 600 million subscribers, doesn’t yet have compatible technology. China Mobile has been aggressively negotiating with Apple to sell the iPhone, but it uses a home-grown proprietary 3G technology called TD-SCDMA that Apple doesn’t support. It is, however, trialling its 4G TD-LTE network, with a commercial launch expected late this year or early in 2013, which will serve as a precursor to a deal with Apple. Apple’s smartphone market share in China, where the number of mobile phone users will top 1 billion this year, has fallen in the last two quarters, and it ranked fifth in October-December with 7.5 per cent, overtaken by fast-growing local firm ZTE Corporation. “Apple’s iPhone market share in China will be quite steady after its deal with China Telecom,” said Jane Wang, an analyst with Ovum in Beijing. “The deal is bound to boost iPhone sales, but telecom operators won’t be giving up the mid-and low-tier smartphone market, and sales of those phones will still be quite strong.” China Telecom, valued at more than $46 billion but still ranked the smallest of China’s big three carriers, said on Tuesday it would take online applications for the iPhone 4S from March 2, and aimed to commence sales on March 9, bundling a phone with a service contract. It follows China Unicom in striking a deal to sell the popular iPhone in a mobile market where the total number of subscribers rose 1.2 per cent last month to 987.58 million. China Telecom said it would increase marketing following the launch of the iPhone 4S, which should boost its long-term sustainable growth, but could squeeze short-term profitability. In the first nine months of last year, China Telecom’s net profit rose 10 per cent to 13.86 billion yuan ($2.2 billion), beating China Unicom’s 0.28 per cent rise and China Mobile’s 5.4 per cent gain. Chinese firms such as ZTE and Huawei Technologies are gradually shifting up towards the higher end of the market, unveiling more feature-packed smartphones. “China Telecom will be doling out significant subsidies for such high-end handsets to boost sales, and this will have a lot of pressure on its profit this year,” said Kelvin Ho, an analyst at Yuanta Securities. “I expect the deal to have a positive impact on China Telecom’s financial results next year,” he added. China Telecom shares rose as much as 2.3 per cent, and last traded up 1.1 per cent at HK$4.47. outperforming the broader Hang Seng Index, which was down 0.4 per cent fall. Analysts predicted last week that China Telecom would sell about 1.4 million iPhones this year if it could reach a deal with Apple by May, rising to 2-4 million new iPhone users in 2013. “iPhone 4S has been an incredible hit with customers around the world. We’re thrilled to be launching iPhone 4S with China Telecom and can’t wait to get it into the hands of even more customers in China,” Apple spokeswoman Carolyn Wu said. Apple is also embroiled in a lawsuit in China with a local company over the iPad name and has had issues at suppliers’ factories over wages and working conditions. Apple’s oldest store in China was pelted with eggs from a crowd of customers on Jan.13 when the shop, in Beijing’s Sanlitun district, failed to open on the first day of sales for the iPhone 4S. After police sealed off the area to remove more than 500 people, Apple said it would suspend sales of iPhones at all its stores. Currently, iPhones are available in China through Apple’s online store, resellers and China Unicom. “IPhone 4S has been an incredible hit with customers around the world,” Carolyn Wu, a Beijing-based spokeswoman for Apple, said by phone. The company “can’t wait to get it into the hands of even more customers in China,” she said. China Mobile Ltd. (941), the world’s largest carrier by customers, is now the only Chinese wireless company not offering the iPhone with a service contract. The iPhone doesn’t support the provider’s third-generation network, based on a China-developed technology.