ChinaWatch: iPhone Imminent?

Two of China's major operators are in the news today as speculation builds around the potential introduction of the iPhone into the world's largest mobile market, and China Telecom Corp. Ltd. (NYSE: CHA) unveils its financials for the first six months of the year.

Is Apple close to a deal?
The much anticipated announcement about the iPhone's entry into China could come as soon as this Friday, according to a report from Reuters.

The report cites an unidentified analyst who says a distribution agreement could be announced when China Unicom Ltd. (NYSE: CHU) announces its financial results for the first half of the year.

Unicom, long tipped to be Apple Inc. (Nasdaq: AAPL)'s handset partner in China, ended July with more than 141 million GSM customers and is currently building out its WCDMA-based 3G network. (See Unicom Enters Third Phase, An O for an I?, and China Unicom Plans Massive Capex Hike.)

Talk of the impending announcement comes as wireless industry analyst house Strand Consult publishes a report that suggests "the iPhone is not the customer magnet that many have been claiming."

China Telecom revenues boosted by mobile
China Telecom has reported revenues of 102.55 billion Yuan Renminbi (US$15 billion) for the first half of 2009, up 14.8 percent compared with a year ago. However, its net profit, at RMB8.4 billion ($1.23 billion), is down 27.5 percent.

The carrier ended June with 199.4 million fixed access lines, 9 million fewer than at the end of 2008, and just more than 49 million broadband customers, up nearly 4.8 million from six months ago.

It ended June with nearly 39.3 million mobile customers, having added nearly 11.4 million new CDMA lines during the first six months of the year. Mobile services accounted for revenues of RMB16 billion ($2.34 billion), or 15.6 percent of total sales, during the first half of 2009.

China Telecom, previously a fixed-line operator only, inherited China Unicom's CDMA business as part of last year's market restructuring, and has set itself a target of 100 million mobile customers by 2011, by which time it aims to generate 35 percent of its revenues from mobile services.

The operator says that, at the end of July, it had built out its CDMA EV-DO 3G network in 342 cities around China, and is focusing on new applications development to help stimulate mobile data and value-added services usage. It launched its 3G services in April and, according to this Reuters report, had signed up 1.3 million 3G customers by the end of June. (See China Telecom Offers 3G Video, Baidu Wins 3G Deal, Artificial Life Wins in China, and China Telecom Turns On EV-DO.)

Other recent news of note from China includes:

— Ray Le Maistre, International News Editor, Light Reading

digits 12/5/2012 | 3:57:49 PM
re: ChinaWatch: iPhone Imminent? Strand Consult certainly has an alternative take on the impact of the iPhone on the carriers that sell it (see reference in story). Does anyone else think the iPhone is undesirable from a carrier's perspective?
abashford 12/5/2012 | 3:57:48 PM
re: ChinaWatch: iPhone Imminent?

"Does anyone else think the iPhone is undesirable from a carrier's perspective?"


1) It certainly is undesirable for those carriers that do not get to sell it.

2) For those that do, it places a big load on their network.  The biggest driver for wireless network traffic growth are the wireless modems used with laptops.  Now that iPhone offers tethering (and iPhones are more common than purpose-built wireless modems) it is placing a big extra load on the carrier's network with no extra revenue associated with it.  Luckily, this is still a small % of users.

abashford 12/5/2012 | 3:57:46 PM
re: ChinaWatch: iPhone Imminent?

"I pay about $200/month for a pair of iPhones in my family.  What carrier would ignore that market by skimping on their wireless network?"

I never said they would.  I'm on the page that iPhone is a good thing for the carriers that choose to carry it, it just comes at some cost (beefing up the infrastructure).

tsat 12/5/2012 | 3:57:46 PM
re: ChinaWatch: iPhone Imminent?

Isn't wireless services the only real growth story carriers have right now? 


I pay about $200/month for a pair of iPhones in my family.  What carrier would ignore that market by skimping on their wireless network?


Gabriel Brown 12/5/2012 | 3:57:40 PM
re: ChinaWatch: iPhone Imminent?

iPhone has blown the mobile data market wide open, and crucially, is huge in America.

Whatever the misgivings or downsides, it has been massively positive for the mobile industry and, therefore, for mobile operators.

I don't even use an iPhone, but it's the best thing that could have happened for the sector.


^Eagle^ 12/5/2012 | 3:57:39 PM
re: ChinaWatch: iPhone Imminent?

Gabriel, iPhone has also started to have a huge impact in Europe.  the servers (iTunes servers, App store servers) in Germany have crashed several times due to the huge amount of downloads and web browsing and iTunes purchases and apps purchases in Germany.  Look in a few quarters how this affects revenue on the Germany carriers.  No one expected the uptake and demand to be so rapid.  It is now almost a default choice for business people in western europe.. either the high end Nokia with Symbian, or the Blackberry, or the iPhone.. with iPhone rapidly catching up to the dominate installed base of Symbian based smart phones.


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