China’s Unicom announces it reaches deal with Apple Inc. to sell iPhones in China

By Jeremiah Marquez, AP
Friday, August 28, 2009

China’s Unicom to sell Apple’s iPhones

HONG KONG — China Unicom Ltd. said Friday it will sell Apple Inc.’s iPhone in China this year, ending months of rumor about when the hit phone would make its long-delayed debut in the world’s most populous mobile market.

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The phones are expected to go on sale in the fourth quarter under a multiyear deal struck between the two companies, Unicom executives said in Hong Kong. They declined to give financial details or reveal how much the iPhone would cost, saying only that the price would be “competitive.”

Unicom, one of three major state-owned carriers, would be the first Chinese phone company to formally support the iPhone, though thousands of unlocked iPhones brought in from other markets are in use in China.

As the only company in China that supports the network standard needed for the iPhone, known as WCDMA, Unicom will be the sole company offering the phone for now, said Unicom chairman and CEO Chang Xiaobin.

China’s mobile market trails the United States, Japan and some others in financial size but it has 650 million mobile phone accounts and is seen as a major prize for foreign firms.

“This definitely opens up a a window for Apple to get into this tremendous market,” said Edward Yu, chief executive at Analysys International, a Beijing-based technology research firm. “But we still need to see the real product to determine whether this will play with the mainstream China population and how the market reacts.”

Apple, based in Cupertino, California, reported last month that the sales of the popular iPhone helped to boost its latest quarterly earnings by 15 percent to $1.2 billion despite the U.S. economic slowdown.

Chang said Chinese media reports that Unicom had secured a three-year exclusive deal to carry the iPhone and had agreed to buy 5 million handsets for 10 billion yuan ($1.5 billion) were false.

Apple’s talks with potential Chinese carriers had snagged on disagreements about how to share revenues, according to Chinese news reports. But Chang said the companies will not share revenues, with Unicom instead buying the phones in batches from iPhone and offering them with subsidies.

The iPhone — which also functions as a music player, camera and Internet browser — could help Unicom compete with giant China Mobile Ltd., which dominates the mainland’s mobile market.

Unicom says it had 133 million accounts as of Dec. 31, while China Mobile, the world’s biggest phone company by subscribers, says it has more than 450 million. The third competitor is China Telecom Ltd., with a small mobile unit.

Beijing rearranged its state-owned phone companies into those three groups last year to revive competition. They were awarded third-generation mobile licenses in January.

Apple spokesman Jill Tan in Hong Kong did not respond to an e-mail seeking comment.

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