China Mobile Ends Talks With Apple to Sell IPhone

January 14, 2008

Jan. 14 (Bloomberg) — China Mobile Ltd. said it ended talks to sell Apple Inc.’s IPhone in China, stalling Chief Executive Officer Steve Jobs’s plans to introduce the handset in the biggest market by users.

Rainie Lei, a Hong Kong-based spokeswoman for China Mobile, said she is unaware of any plans for further talks with Apple. She wouldn’t say why the discussions stopped. Jill Tan, a Hong Kong- based spokeswoman for Apple, declined to comment.

The negotiations ended because Apple wanted more revenue from game, music and video downloads than China Mobile would offer, the Sina.com Web site said today. Apple shares rose the most in more than a year in November after China Mobile Chairman Wang Jianzhou said the companies were in talks to sell the iPhone.

“It’s bad news for Apple,” said Johnny Yeh, an analyst at Quam Ltd. in Hong Kong, who rates China Mobile’s shares “buy.” “China Mobile would have helped immediately sell lots of iPhones because they have such a large user base; Apple entering China without China Mobile won’t be as substantial.”

China Mobile, which already has an agreement to sell Research in Motion Ltd.’s Blackberry handsets in China, added 6.5 million subscribers in November for a total of 362.8 million. The carrier doesn’t rule out future cooperation with Apple, Lei said.

China has more subscribers than the populations of the U.S., Japan, and the U.K. combined. The country was home to 539.4 million wireless-phone customers as of the end of November, according to government data.

Service Fees

Apple wanted 20 percent to 30 percent of fees from providing data services to iPhone users, Sina.com said, citing Gao Nianshu, director of China Mobile’s data services. China Mobile, the world’s biggest wireless-phone company by subscribers, charges users for downloading games, music and Web sites over its wireless network.

The companies will meet for another round of talks, today’s Sina.com report said, without providing details.

Sophia Tso, a Hong Kong-based spokeswoman for China Mobile’s smaller rival, China Unicom Ltd., declined to comment on whether the company had talked to Apple about selling the iPhone.

Unicom isn’t in talks with Apple about selling the handset in China, Li Zhengmao, a vice president at the Chinese company, said in Macau in November.

China Mobile’s shares fell 2.8 percent to HK$130.20 as of the end of trading in Hong Kong. Apple’s stock declined 3 percent, or $5.33, to $172.69 in New York on Jan. 11. The company’s shares traded in Germany rose 0.6 percent to 116.82 euros as of 11 a.m. local time.

To contact the reporter on this story: John Liu in Shanghai atjliu42@bloomberg.net

 Above news taken from Bloomberg.com

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