* China Telecom may introduce iPhone in November - source
* Analysts say move will help expand base of 3G users
* Shares up more than 5 percent, outpacing Hang Seng Index
* China Telecom president Shang Bing resigns to become
(Adds quotes, details)
By Lee Chyen Yee and Huang Yuntao
HONG KONG, July 13 China Telecom Corp Ltd
(0728.HK) plans to offer its 106 million subscribers the Apple
Inc (AAPL.O) iPhone by the end of 2011, sources said on
Wednesday, which would make it the second operator to do so in
the world's largest mobile phone market.
The move would help China Telecom, the smallest of the
country's three telecommunications operators, cement more
high-end 3G users in a competitive market in which handset
subsidies offered by carriers are squeezing margins. China
Telecom operates the country's largest fixed-line network and is
a relative newcomer to the mobile market.
"The reason telecom operators are fighting for the iPhone
business is because everybody is trying to grab as many 3G users
as possible," said Jane Wang, an analyst at UK-based research
firm Ovum. "The only way to keep costs down is to build up such
a user base."
China Telecom's shares, which have risen by about a fifth
this year, extended earlier gains after Reuters exclusively
reported the plan, rising as much as 5.5 percent to an intraday
high of HK$4.95 and outperforming the Hang Seng Index's .HSI 1
Separately on Wednesday, China Telecom said in a statement
that its president and chief operating officer, Shang Bing, had
resigned to become deputy minister of the Ministry of Industry
and Information Technology. [ID:nL3E7ID0VR]
China mobile phone users r.reuters.com/zec32s
China Telecom in touch with Apple on iPhone [ID:nL4E7GK0MA]
China has 896 million mobile phone users -- bigger than the
entire population of Europe. Its three telecommunications
operators are China Mobile Ltd (0941.HK), China Unicom (0762.HK)
(CHU.N) and China Telecom.
So far, China Unicom is the only operator to offer the
iPhone after signing a three-year agreement with Apple in 2009.
Its deal with Apple is not based on a revenue-sharing scheme,
unlike some operators in other countries. For example, in the
United States, Apple has a revenue-sharing agreement with AT&T
Inc (T.N) on iPhone sales.
"Unicom is selling iPhones, but there was no particular
boost to their earnings from that," said Patrick Yiu, director
at CASH Asset Management. "Even if China Telecom gets the iPhone
deal, it will still depend on whether their system can support
it and on the details of the contract."
In May, China Telecom's chairman, Wang Xiaochu, told a news
conference that the carrier had contacted Apple to launch the
iPhone based on CDMA (code division multiple access) technology.
"It's expected to happen this year. China Telecom already
has the required technology and it all hinges on the content of
the agreement. As we all know, it's not easy to negotiate with
Apple," a source close to the company, speaking on condition of
anonymity, told Reuters.
China Telecom is expected to introduce the iPhone in
November, said another source, declining to be identified
because he was not authorised to speak to the media.
Officials with China Telecom declined to comment, while
Apple officials were not immediately available for comment.
In June, a media report said bigger rival China Mobile could
offer iPhones from September, although analysts said it was
unlikely that Apple would support the carrier's TD-SCDMA (time
division synchronous code division multiple access) technology.
A more likely scenario was for Apple to support China
Mobile's 4G LTE (long-term evolution) technology, which would
only be available either in late 2012 or 2013, they said.
If that is the case, China Telecom would be next in line to
"Widening its user base by developing 3G is China Telecom's
top priority," said Kevin Tian at Analysys International.
"However, its costs might be higher than China Unicom's and if
it brings in the iPhone, its sales and marketing expenditure
will not be low."
($1 = 7.795 Hong Kong dollars)
(Editing by Chris Lewis and Matt Driskill)
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