The expansion of the smartphone market in China has been fast and furious, both for Google’s (GOOG) Android operating system and for Apple’s (AAPL) iPhone.
Currently, the iPhone is available from China Unicorn, the largest of three telecom companies in the country, but now China Telecom is in talks with Apple to bring a CDMA version of the phone to the country as well, according to a story from Reuters.
China Telecom is the smallest of the three carriers in the country. China Unicorn has an exclusive agreement with Apple right now, much like Apple and AT&T (T) had, but it expires this year, so China Telecom has begun negotiations with Apple to offer the phone when it becomes available. The company’s chairman, Wang Xiaochu, confirmed that talks were happening after a shareholders’ meeting, but he wouldn’t go into further detail.
“We’re not denying that we’re in touch with iPhone (Apple), but I cannot comment on the progress,” Wang told reporters.
During the meeting, shareholders approved a bond issue of about $14 billion, with some of that money going toward developing the CDMA iPhone in China. The Verizon (VZ) iPhone also uses CDMA radio technology, which is a different chipset than that of the AT&T iPhone, to make the phone compatible with Verizon’s network. Apple already has the CDMA version of the iPhone 4, so it seems plausible that it wouldn’t take much work to bring the phone to China Telecom.
“From what we see now, we’ll need money to acquire our parent’s CDMA network. But other than that, we won’t need to issue a huge amount of bonds,” Wang said.
The iPhone’s expansion in China might be part of the reason that Apple is holding back on the iPhone 5 this summer, and potentially releasing a more incremental improvement called the iPhone 4S, rather than a fully new iPhone 5. Dropping the iPhone 4S, which is basically the iPhone 4 but which would include the iPad 2’s A5 dual-core processor (which itself would be a pretty solid improvement), wouldn’t hurt Apple too badly even though it might annoy its large customer base, the thinking goes. That’s because Apple will be easily making up any losses of iPhone upgrade it would normally get with the iPhone 5 by adding the iPhone 4 to more markets in China.
China Telecom has about 103 million mobile subscribers, but only about 17.84 million are 3G subscribers, according to Reuters. Still, that’s another large market to pull the iPhone into, and it’s unlikely that Apple will stop with China Telecom when it could also negotiate with China Mobile, the other carrier in the country.
According to DigiTimes, the number of 3G customers in China is expected to break 62 million, with about 27 million of them carried by China Mobile.
