Apple and China Mobile (CHL) have discontinued talks about bringing the iPhone to China, Reuters reports. Apple’s shares jumped 10% when the talks were reported in November. China Mobile’s stock is now down 3% in Hong Kong.
China Mobile, China’s leading wireless operator, has 350 million subscribers, more than five times the size of US Apple partner AT&T and 1.5 times the size of the whole US market. China Unicom, China’s other provider, has 155 million subscribers, and has said it would be open to the idea of selling the iPhone.
Analysts speculate that the talks failed based on Apple’s demand for a subscription-revenue share, which was initially predicted to be a hurdle. This suggests that Apple talks might proceed with China Unicom, although the public rejection of a deal by China Mobile won’t help Apple’s negotiating position. The Chinese government may also have had something to do with it.
Back in November, a China source of ours predicted that the Chinese government would likely block (or at least hinder) any iPhone deal: “Telco is still a tough/sensitive [industry]. They get ideas–and then get reigned in by central.” The same source bet us a steak dinner that the iPhone would not arrive in China (legally) in 2008 or 2009.
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