Apple nails down China Mobile deal

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Apple nails down China Mobile deal

Apple, ending six years of negotiations, struck a deal to sell the iPhone through China Mobile, giving both companies a means to fight declining share in the market of 1.2 billion wireless subscribers.

China Mobile will sell the iPhone 5S and 5C models in its retail stores starting Jan. 17, the companies said in a statement that provided no financial terms. The phones for China Mobile’s network will also be available in Apple’s retail stores in China under the multiyear accord.

The agreement means Apple now has access to all carriers in the world’s biggest handset market, where Samsung Electronics leads and smartphones using Google’s Android operating system dominate sales. For China Mobile, which has 763 million users, the deal may help draw high-end subscribers to its new fourth-generation network as the company faces its first annual profit decline in more than a decade.

“The China Mobile deal will significantly help Apple’s position in China,” Bryan Wang, principal analyst and country manager in China for Forrester Research, said today. “China Mobile will use the iPhone to win back some high-end subscribers who chose to defect to other carriers because of the iPhone.”

Shares of China Mobile rose as much as 1.7 percent, headed for the biggest gain in five weeks, before trading 1.1 percent higher as of 10:28 a.m. in Hong Kong. The stock has fallen 10 percent this year compared with a 1.4 percent advance in the benchmark Hang Seng index.

China Mobile may add 12 million new iPhone sales for Apple in 2014, Katy Huberty, an analyst with Morgan Stanley, wrote in a Dec. 16 report. The company sold 150 million last year.

Pre-registration for China Mobile will start Dec. 25 with pricing and availability to be announced at a later date, according to the statement. Apple declined to comment further.

China Unicom (Hong Kong), the nation’s second-largest carrier, began offering the iPhone in November 2009 and third- ranked China Telecom Corporation followed in March 2012.

“It’s the last big gap in distribution” for the iPhone, Benedict Evans, an analyst with Enders Analysis in London, said after the announcement.

China Mobile had 62 percent of China’s total mobile subscribers at the end of October, down from 64 percent a year earlier and 67 percent at the same time in 2011, according to company data.

“IPhone still matters a lot for high-end customers,” Tucker Grinnan, a Hong Kong-based analyst at HSBC Holdings, said by phone before the announcement. “One of the main reasons China Mobile is in the position that it is today, in terms of growing revenue at a much slower pace than its competitors, is because they have been waiting for an iPhone deal.”

Samsung led the China market in the third quarter, followed by Lenovo Group, China Wireless Technologies, and Huawei Technologies, according to Canalys, a technology research company.

Bloomberg

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