BEIJING--A Chinese regulator gave the final license necessary
for Apple Inc.'s (AAPL) iPhone to run on China Mobile Ltd.'s (CHL)
mobile network, another indication the world's largest wireless
operator will soon be releasing an iPhone for the first time.
The approval marks the imminent opening of a massive new market
for Apple. China Mobile, which has more than seven times the
subscriber base of the U.S.'s largest wireless operator Verizon
Wireless with 700 million users, has been unable to officially sell
the iPhone in the past due to a proprietary network standard in
China.
According to the website of China's Telecom Equipment
Certification Center Wednesday, Apple received what's called a
"network access license" for a handset resembling the iPhone that
runs on the mobile standards used by China Mobile for third and
fourth generation cellular services. Other licenses were given to
Apple for handsets running the technology used by both China Unicom
(Hong Kong) Ltd. (0762.HK) and China Telecom Corp. (0728.HK).
Vendors in China often start selling new handsets within weeks
of approval by the regulator. Apple said during the release of the
new iPhones on Tuesday that the products would go on sale in China
on Sept. 20, the same time they do in the U.S. Analysts expect the
phones to be supported by China Unicom and China Telecom, but there
has been no word from Apple as to whether China Mobile would offer
the new iphones.
Apple and China Mobile weren't immediately reachable for
comment.
People familiar with the matter told The Wall Street Journal
last week that Apple is scheduled to ship a cheaper iPhone to China
Mobile.
A deal between China Mobile and Apple would cap years of
negotiations between the two companies. Due to China Mobile's
rarely used mobile standard, Apple has declined to make an iPhone
that is compatible with China Mobile's third-generation network,
which offers speedy wireless download rates. Though some customers
have nonetheless bought the phone and used it with the company's
second-generation cell network, many others have opted for phones
that work better with China Mobile's services.
"Apple carries enormous cache in China and the bulk of these
high-end subscribers remain on China Mobile due to the lack of
mobile number portability," HSBC analyst Tucker Grinnan wrote in a
Tuesday note, adding that the iPhone will allow China Mobile to
raise revenue and retain high-end customers.
In some major cities like Beijing and Shanghai, China Mobile's
rivals have seen an upswing in customers thanks in part to their
ability to offer the iPhone. But China Mobile remains the titan of
China's carriers, and has massive sway in second-tier cities.
Apple's sales in Greater China fell 14% from a year earlier to
$4.6 billion during its fiscal third quarter ended June 29. In the
June quarter, Apple's China market share fell to 5%, ranking it
seventh behind market leader Samsung, which had 18%, and a cluster
of domestic manufacturers such as Lenovo Group Ltd. and Huawei
Technologies Co., according to data from research firm Canalys.
China represents a significant growth opportunity for Apple, a
comment Chief Executive Tim Cook made in April citing the large
number of potential first-time smartphone buyers there. At the
time, Apple has also pledged to double the 11 stores it has there
in less than two years.
Analysts say that releasing the iPhone through China Mobile will
help Apple gain back some market share.
In the past, the Chinese regulatory approval has not come until
more than a month after the global release of the new iPhones. The
speedy approval process for the new phones is a tentative
indication of improved relations between the company and the
government. Earlier this year, Apple was criticized by state-run
media for its after sales policies, ultimately leading Chief
Executive Tim Cook to issue an apology letter to customers in
China.
The regulator also announced licenses for the iPhone on
technology supported by China's two other major carriers, China
Unicom and China Telecom, marking the first time in China that all
three major carriers will be able to offer the iPhone on their
disparate networks.
Write to Paul Mozur at Paul.Mozur@wsj.com
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