Apple Inc. (NASDAQ:AAPL) iPhone are now finally available on China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941) after six long years of negotiations. Apple Chief Executive Officer Tim Cook and carrier Chairman Xi Guohua gave away autographed iPhones to some of the customers at China Mobile’s headquarters store in Beijing, says a report from Bloomberg.
On being asked if Apple would offer a larger display phone to Chinese users, Cook replied, “We never talk about future things. We have great things we are working on but we want to keep them secret. That way you will be so much happier when you see it.”
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Apple – China Mobile deal after 6 years
Apple Inc. (NASDAQ:AAPL) and the Chinese firm have been in talks over the iPhone distribution since November 2007, which happens to be the same year Apple unveiled the devices. After years of talks, the two finally reached consensus last month, and on Dec. 25 the carrier started taking pre-orders for the iPhone online. The deal, which offers 763 million potential customers to the iPhone maker, would help the Apple to expand its share in the world’s biggest market. The minimum service plans offered by China Mobile offers a free device for 588 yuan ($97) a month for two years.
Cook said “Today is just the beginning of China Mobile and Apple coming together to deliver the best experience in the world.” A few days back, China Mobile signed a multiyear agreement with Apple Inc. (NASDAQ:AAPL) that has “broad potential” for future cooperation.
Profit for the carrier may decline
Other two Chinese carriers, China Unicom (nation’s second-largest carrier) and China Telecom are already offering the devices. China Unicom, the nation’s second-largest carrier, has been offering the iPhone since November 2009 while China Telecom picked up the device in March 2012. When Unicom started offering iPhones, China Mobile had a 72 percent share in the country’s wireless segment. In October, the figure was reduced to 62 percent.
China Mobile will surely be working to avoid the situation faced by China Telecom, which experienced a 10 percent decline in net income in the first year of offering the iPhone, owing to higher subsidies. Experts believe that China Mobile would focus more on premium users to minimize the effect of heavy subsidy spending. According to HSBC, the Chinese carrier may provide 50 billion yuan subsidies on the iPhone this year. According to a Bloomberg survey, China Mobile may experience a 2 percent decline in profit last year and 7 percent this year. It would be the first decline in the net income for the carrier, in last 14 years.