iPhone talks break down in China

China Mobile terminates talks

15 January 2008 11:53 GMT / By Katie Scott

Reuters is reporting that China Mobile has called off its talks with Apple dashing speculation about a launch of the iPhone in the Republic.

Shares in Apple shot up more than 10% on 13 November, when it announced it was in discussions with China Mobile, which is the world's largest mobile phone operator with 350 million subscribers.

However talks, it seems, have now broken down over Apple's controversial revenue sharing policy, in which it takes a share of the revenue through an agreement with a specific operator in each country.

Analysts are claiming that they are not surprised.

Duncan Clark, chairman of BDA China, a Beijing-based telecoms research consultancy told Reuters: "It's not a surprise. China Mobile doesn't want to share its non-voice revenue. The two have very strong egos and, as in any relationship, that often doesn't work".

This model is also claimed to be a sticking point in discussions between Japan's top mobile operator NTT DoCoMo and the country's third place carrier Softbank on selling a 3G version of the iPhone in Japan, as we reported in December.

As well as issues with the revenue sharing model, analysts say that Apple could face a host of technical difficulties in China should it reach an agreement with China Mobile.

The iPhone might be incompatible with China because of its "locked" SIM card, which means that it would not be able to piggyback another operator's network.

Reuters says that China Mobile has not ruled out talks in the future while Apple is not commenting on the situation.

China Unicom, the smaller of China's two wireless carriers, said last year that it had no plans to bring the iPhone into the country, but was open to the idea.

Shares in China Mobile slid nearly 3% after the announcement that talks had been terminated.