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TMCNet:  China Unicom to Put iPhones up for Sale Next Month

[August 12, 2009]

China Unicom to Put iPhones up for Sale Next Month

GUANGZHOU, Aug 12, 2009 (SinoCast Daily Business Beat via COMTEX) -- China Unicom (Hong Kong) Limited (NYSE: CHU, HKSE: 0762, and SHSE: 600050) is scheduled to put the first batch of iPhones up for sale in Mainland China this September, disclosed Zhou Youmeng, deputy general manger for the China Unicom Guangdong branch, on August 11.

The long-expected products will be available in the new China Unicom outlets launched in the Carrefour Guangdong stores and some self-run outlets initially, according to Mr. Zhou.

The telecom operator has procured as many as 5 million WCDMA network-based iPhones from Apple Inc. (NASDAQ: AAPL) for CNY 2,000 each or CNY 10 billion in total, said sources familiar with the matter.

Notably, Apple gives up the revenue-sharing model when entering into an agreement with its Chinese cooperator over the deal, a move that market observers describe as a "compromise" made for an easier access to the world's most populous smartphone market. The US-based electronics giant usually asks for 20%-30% of the revenue generated from the iPhone users in markets out of China.

"The fact is that Apple get fat profits from iPhone sales, even if it does not share revenue with its new collaborator," said a source close to the original equipment manufacturer (OEM) for iPhone, explaining that the cost price of the bare product stands at CNY 1,000-1,100 each. Apple was reported to have selected China Unicom as the exclusive distributor for the sparkling iPhones on the mainland for three years.

As for China Unicom, the telecom operator expects to court for the numerous iPhone fans in the country to expand its 3G user base, pointed out market observers.

However, a spokesperson for China Unicom declined to make a comment on the aforesaid report, noting that there are uncertainties before a final agreement is signed.

The to-be-launched iPhone will be sold at a price not much higher than the procurement price, disclosed Yu Zaonan, manager for China Unicom Guangdong individual customer division, noting that the 8G version of iPhone will be priced at CNY 2,400 or so.

The China Unicom-Apple tie is likely to enable the telecom operator to catch up with China Mobile Limited (SEHK: 0941 and NYSE: CHL), its bigger rival in the country, in term of profits, predicted market observers. China Mobile kicked off talks with Apple over the iPhone deal earlier, but ended up with disagreement.

A failure in introducing iPhone to the mainland China will have little impact on China Mobile, a company with more than 450 million mobile phone users across the country, according to a market observer.

(USD 1 = CNY 6.83) Source: (August 12, 2009)

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