China Telecom may be in talks to offer iPhone-report
China Telecom (0728.HK), the smallest of China's three wireless carriers, may become the second Chinese operator to offer Apple's (AAPL.O) popular iPhone after an exclusive agreement with one of its rivals expires, local media reported on Friday.
Context & Ripple Effects
This is the second act of a negotiation that began in November 2007, when China Mobile was reported in talks with Apple to sell the iPhone — a deal that never produced an announced partnership, leaving the device tied exclusively to one rival carrier. The local-media report carried by Reuters now suggests the smallest of China's three operators may pick up the iPhone the moment that exclusivity lapses.
As of this report the talks are unconfirmed, and they matter because the iPhone arrives in a market where Bernstein Research has just documented extraordinary demand for Apple hardware — the iPad selling faster than any consumer electronics device ever launched. A second Chinese carrier carrying the iPhone would convert Apple's scarcity-by-exclusivity into a competitive bidding contest between state-owned operators.
First-order effects
- China Telecom, the smallest of the three carriers, gains a credible path to the most sought-after handset in its market, letting it compete on flagship devices rather than network size alone.
- Apple moves from a single-operator arrangement toward two-carrier distribution in China, widening its addressable subscriber base without changing the product.
Second-order effects
- The carrier holding the current exclusive deal loses a differentiator it paid for, forcing it to defend subscribers through pricing and subsidies instead of device access.
- China Mobile — which has pursued Apple since its 2007 talks — faces renewed pressure to close its own arrangement before both smaller rivals lock up iPhone distribution.
Third-order effects
- If exclusivity windows keep shortening as carriers bid for the same marquee handsets, smartphone competition in China shifts from 'who has the iPhone' to who subsidizes it most aggressively, structurally raising handset subsidy costs across all three operators.
- Multi-carrier availability would make the iPhone less a carrier-loyalty weapon and more a market-wide standard, weakening any single operator's ability to use device exclusivity to win switchers.
The trend: Chinese wireless carriers are moving from exclusive flagship-device deals toward contested multi-operator distribution, turning marquee smartphones like the iPhone into a subsidized battleground among state-owned rivals.