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Apple nearing China iPhone deal

China Mobile, the world's largest wireless player, is said to be close to agreeing to sell a subsidized iPhone.

By Scott Moritz, writer
August 29, 2008: 2:49 PM EDT

A deal with China Mobile would give Apple access to 380 million potential customers.

NEW YORK (Fortune) -- After nearly a year of negotiations, recent rumblings from China signal that Apple is nearing an agreement with China Mobile to sell the iPhone.

The world's largest wireless player is said to be considering selling company-subsidized iPhones to subscribers. The report appeared under the heading of "rumor" on JLM Pacific Epoch, an online Chinese business news digest service. The Pacific Epoch report cited a story in China Communications, an industry publication, that based the information on a person close to China Mobile.

Apple representatives were unavailable for immediate comment. Analysts say a deal of some kind has been expected between Apple (AAPL, Fortune 500) and China's top wireless shop ever since Apple dropped its demands for a cut of monthly subscriber revenue. In June, China Mobile (CHL) said the big hurdle of revenue sharing had been cleared. At the time, Apple CEO Steve Jobs predicted that a deal with China Mobile would happen "later this year."

AT&T (T, Fortune 500) and Apple in July unveiled the new iPhone with a $199 price tag, about half the price of the original iPhone thanks to a hefty telco subsidy.

Despite security holes and spotty 3G connections, the iPhone has been a hot seller at its lower price, surpassing the 3 million sold mark in its first month. Expanding beyond the four initial countries has helped fuel iPhone sales. And obviously, landing a deal with China Mobile and its 380 million customers would be huge for Apple.

Apple this month added more than 20 new territories and is now selling the iPhone in 43 countries.

Tavis McCourt the Apple analyst with Morgan Keegan could offer no confirmation one way or another on the China Mobile agreement, but said that there would be little surprise to learn that the two companies have finally reached an agreement.

"Relative to the global expansion of the market for iPhone, this might not be as big as it was a year ago," says McCourt. To top of page

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