China Mobile revs up 4G expansion with long-awaited iPhone pact

Smartphone to be made available to customers of mainland network from next month, with hopes high that deal will boost sales of both firms

PUBLISHED : Monday, 23 December, 2013, 9:50am
UPDATED : Tuesday, 24 December, 2013, 4:15am

China Mobile expects to get more high-end data users, while helping fuel Apple's sales expansion on the mainland, after the two companies forged a multiyear deal to bring the iPhone to the world's largest mobile network from January 17.

Apple shares rose in New York yesterday. The stock jumped 3 per cent to US$565.24 in the early session in anticipation of more sales.

The iPhone 5s and iPhone 5c models will be available for pre-registration on China Mobile's website from tomorrow - Christmas Day - and feature on the operator's new "and!" brand campaign for its 4G services.

China Mobile joins China Unicom and China Telecom as Apple's carrier-partners for the iPhone on the mainland, which is the technology giant's second-biggest market after the United States. At the end of November, the mainland had a total of 1.23 billion mobile subscribers.

Frank Gillett, a vice-president and principal analyst at Forrester Research, yesterday said: "The China Mobile deal boosts Apple's chances of making the iPhone the best-selling 4G smartphone next year."

He pointed out that the size of China Mobile's subscriber base, which was 763.3 million at the end of last month, "makes it likely that Apple will sell millions of additional iPhones in 2014. I've heard estimates as high as 24 million, which would be a big jump in iPhone sales".

Before yesterday's announcement of Apple's China Mobile deal, Barclays forecast global iPhone shipments to reach 180.47 million units next year, up from an estimated 157.42 million this year.

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In a statement, China Mobile chairman Xi Guohua said: "We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile's leading network."

The network operator has estimated that more than 45 million iPhones, bought from either the grey market or overseas, are used by subscribers on its 2G network.

IDC data showed that Samsung Electronics was the mainland's top smartphone supplier in the third quarter, followed by Lenovo, Yulong Computer Telecommunication Scientific (Shenzhen) and Huawei Technologies. Apple overtook ZTE to take fifth place.

Apple chief executive Tim Cook said iPhone customers on the mainland "are an enthusiastic and rapidly growing group, and we can't think of a better way to welcome in the Chinese New Year than getting an iPhone into the hands of every China Mobile customer who wants one."

In a research note, Barclays said: "It makes sense for China Mobile to use iPhones to win back some high-end subscribers that it lost to China Unicom and China Telecom with the launch of 3G."

China Mobile's 3G network, which had 181.12 million subscribers last month, was built on the mainland-developed standard called time division synchronous code division multiple access, which the iPhone does not support. More high-data users, as a result, were on the 3G networks of Unicom and China Telecom.

Early this month, Beijing issued 4G licences to all three nationwide telecommunications network operators. China Mobile was the first off the blocks with the roll-out of its 4G network based on the mainland-developed time division long-term evolution (TD-LTE) standard, which the new iPhone models support.

Barclays, however, also indicated that China Mobile may see "no incentive to focus on profit growth" because of Beijing's mandate to aggressively grow 4G TD-LTE adoption. "The threats to China Mobile's profitability only rise from here," it said.

At the firm's Global Partner Conference last week, China Mobile forecast its combined 3G and 4G smartphone sales to reach between 190 million and 220 million units next year.

It also announced competitive monthly 4G data packages from 50 yuan to 180 yuan. By the end of next year, China Mobile plans to complete the roll-out of more than 500,000 4G base stations, which will cover about 340 cities with 4G service.

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