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Apple Finally Lands The China Mobile Deal

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Amazon has finally landed the last great mobile telecoms airtime provider that did not sell the iPhone, China Mobile. This is expected to have a significant impact upon Apples sales and profits which is why the stock has jumped today. There have been two long running reasons why the deal didn't happen earlier but obviously, both of these problems have now been solved. Here's Apple's press release:

Apple® and China Mobile today announced they have entered into a multi-year agreement to bring iPhone® to the world's largest mobile network. As part of the agreement, iPhone 5s and iPhone 5c will be available from China Mobile's expansive network of retail stores as well as Apple retail stores across mainland China beginning on Friday, January 17, 2014. iPhone 5s, the most forward-thinking smartphone in the world and iPhone 5c, the most colorful iPhone yet, will be available for pre-registration from China Mobile's official website (www.10086.cn) and customer service hotline "10086" beginning on Wednesday, December 25, 2013.

“Apple’s iPhone is very much loved by millions of customers around the world. We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile’s leading network. We are delighted that iPhone on China Mobile will support our 4G/TD-LTE and 3G/TD-SCDMA networks, providing customers with high-speed mobile service,” said Xi Guohua, China Mobile Chairman.

The two basic problems were that earlier versions of the iPhone simply would not have worked on China Mobile's network, it being based on that TD-SCDMA standard. This was solved with the launch of the iPhone 5, both versions of which have a variant that can indeed work on a network using that standard.

The other problem was that Apple insists that airtime providers provide substantial subsidies to purchasers of iPhones. Typically, some three or four hundred dollars per handset. The airtime provider then makes this back over time through the charges that they make for the airtime. It's long been known that China Mobile was unhappy with such high subsidies. Obviously, some agreement has been reached on that.

This opens up the entire 760 million customer strong China Mobile network to those iPhones: it's expected to have a substantial effect upon Apple's sales in these next two quarters.

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