China Mobile said Monday it had broken off talks with Apple to offer the iPhone in China, in a move that could affect the US company’s plans to launch its popular device in the world’s biggest market by subscribers.
Wang Jianzhou, China Mobile’s chairman, announced the talks last November but a spokesman for China Mobile’s Hong Kong-listed unit said negotiations had “temporarily stopped”. She declined to elaborate or say whether they would resume.
Chinese media on Monday quoted Gao Nianshu, general manager of China Mobile’s data department, saying that Apple had given the impression it wanted to control the value chain and had pushed for up to 30 per cent of revenues generated by locally sold iPhones.
“Of course we could not agree,” Mr Gao told a gathering of local MBA students, according to the Sina website. China Mobile also doubted Apple’s prowess in communications technology, it quoted him as saying.
Contacted by the FT on Monday, Mr Gao declined to comment further, saying only that his remarks had been made at a private seminar and “contacts” with Apple were continuing.
Apple has insisted on adopting a revenue-sharing model when selling its popular iPhone to other markets. European mobile operators T-Mobile of Germany, Orange of France and O2 in the UK reportedly pay Apple 10 per cent of the revenue derived from calls and data transfers by customers over iPhones.
Apple has a global sales target of 10m iPhones in the first year and is in talks with carrier NTT DoCoMo to bring the iPhone to Japan.
China had 522m mobile phone subscribers at the end November, of which 363m subscribed to China Mobile.
China Mobile’s dominance of the world’s largest wireless market by number of subscribers gives it a strong position for negotiating with handset suppliers. Analysts say the state-controlled company is keen to ensure it remains in control of value-added services offered through its huge network.
However, Apple’s brand has strong appeal for some Chinese consumers, with grey-market imports of iPhones proving popular with some wealthy consumers.
China Unicom, China Mobile’s smaller rival, declined to comment on whether it was in talks with Apple to bring the iPhone to China.
A spokesperson for Apple in the US on Monday declined to comment.
