Apple moves closer to offering iPhone for China Telecom

BEIJING / HONG KONG - Apple Inc moved a step closer to accessing 33 million potential iPhone customers in China, as regulators approved specifications for a device that would run on the network of China Telecom Corp.

The China Radio Management Office granted Apple's application for a handset that operates on the CDMA2000 network standard, the regulator said in a statement posted on its website this week.

The wireless standard is the third-generation (3G) network technology used by the Hong Kong-listed China Telecom, China's third-largest carrier.

Adding the standard would almost double Apple's access to existing mobile services subscribers able to get the iPhone through a contract with a Chinese carrier.

Apple will still need to get a license from China's Telecommunications Equipment and Certification Center before it can sell the device.

"This is good for Apple as it means they'll have a new market for the product," said Tam Tsz-wang, who rates China Telecom shares "buy" at DBS Vickers Securities in Hong Kong.

The iPhone is now available with a service contract only through China Unicom (Hong Kong) Ltd, the nation's second-largest carrier, which had 36.5 million 3G subscribers at the end of November.

China Telecom had 33.4 million 3G mobile subscribers in the same period.

Retail network

The iPhone model for China Telecom would probably be based on technology similar to the iPhone version for Verizon Wireless users in the United States, Tam said.

Shares of China Telecom rose 2.4 percent to HK$4.31 (55 US cents) as of 2:59 pm in Hong Kong trading, while the city's benchmark Hang Seng Index gained 0.7 percent. The stock has climbed 4.1 percent in the past 12 months.

Shares of China Unicom fell 2 percent to HK$16.38.

Carolyn Wu, a Beijing-based spokeswoman for Apple, and Jacky Yung, a Hong Kong-based spokesman for China Telecom, both declined to comment on the timeline for the carrier's introduction of the iPhone.

More than 2.2 million iPhones were shipped in China in the quarter ended Sept 30, compared with 300,000 a year earlier, according to the research company Gartner Inc.

Apple ranked third in China's smartphone market in the three-month period, trailing Nokia Oyj and Samsung Electronics Co, according to Gartner.

Sales of iPhones through unauthorized channels, or the so-called gray market, in China have dropped as Apple expanded its local retail network, according to Sandy Shen, an analyst at Gartner in Shanghai.

Apple has a network of more than 200 "Apple Premium Resellers" in the country that are focused on the company's products, Chief Executive Officer Tim Cook said in October.

Combined with other types of resellers and China Unicom, there are 7,000 points of sale for the iPhone in China, he said.

Bloomberg News