Reuters reports that Apple and China Mobile have come to terms regarding the iPhone and will begin offering the handset by the end of this year. Buyers so far in the 1.4 billion people market have been limited to iPhone availability on the China Unicom network, the country’s second-largest carrier. State-owned China Telecom is the largest fixed line service and third-largest mobile telecommunication provider in the People’s Republic of China, which in itself is the world’s largest mobile phone market with an astounding 896 million mobile phone users. China Telecom employed 312,520 people as of 2010 and had a whopping 106 million subscribers as of May. Yet, they are the country’s smallest wireless operator. Ovum analyst Jane Want told the news gathering organization:
The reason telecom operators are fighting for the iPhone business is because everybody is trying to grab as many 3G users as possible. The only way to keep costs down is to build up such a user base.
Reuters also reported in May that China Telecom’s chairman Wang Xiaochu contacted Apple about bringing iPhone 4 to their CDMA network. “We’re not denying that we’re in touch with iPhone (Apple), but I cannot comment on the progress”, he told reporters.
Barron’s quotes a Ticonderoga analyst Brian White who thinks the deal could present Apple with an $8 billion to $9 billion opportunity:
However, if we look at China Telecom’s current 3G user base or even the carrier’s entire wireless subscriber base, the opportunity is much larger. For example, if we assumed China Telecom’s entire 3G subscriber base could afford an iPhone, we estimate this represents a $12 billion revenue opportunity for the iPhone. If we assumed China Telecom’s entire subscriber base of 105.7 million users could afford an iPhone, we estimate the iPhone opportunity at $66 billion.
Apple is also rumored to be close to cutting a landmark deal with China Mobile and Tim Cook has been recently photographed visiting their headquarters. The wireless operator allegedly wants Apple to engineer an iPhone version compatible with their TD-LTE network in time for a September launch. The also run a TD-SCDMA network which is not compatible with the current CDMA version of iPhone 4 for the Verizon network in the US. However, it is more likely that Apple will give them 4G LTE iPhone sometime in late 2012, when carriers in the US are also expected to finalize commercial deployment of 4G LTE networks. State-owned China Mobile is the #1 wireless operator in the country, also the most valuable and the largest mobile telecommunications company in the world with over 611 million subscribers as of March 2011. That said, cutting a deal with that company is the #1 priority which will crack open the Chinese market to Apple’s handset and help slow down the Android momentum.