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Apple wins China Mobile distribution deal in core market

The world’s most valuable technology company, Apple, has done a distribution deal with the world’s biggest mobile network operator (MNO), China Mobile, after overcoming connection compatibility problems.

The link-up could mean billions in extra revenue for Apple whose iPhones were previously not compatible with China Mobile’s government-mandated proprietary 3G connectivity standard. This technical issue has now been resolved, however, and the Chinese government has also allowed the internationally-compatible 4G standard to be rolled out across the country, and across all MNOs, paving the way for the distribution deal. The increasing adoption of mobile smartphones in China is expected to increase the uptake of mobile banking, payments and other financial and retail services in the country, especially as the faster 4G standard gains traction. Banks will have to work hard, however, to fight off the disintermediation threat from Isis and other such non-traditional rivals.

According to the ‘FT’, Apple’s iPhone 5s and 5c models will go on sale on 17 January 2014 in China Mobile’s retail stores across the country for the first time, alongside older models such as its original iPhone 5 launch. The news has lead to a 20% rally in Apple's share price this quarter in anticipation of the now confirmed China Mobile distribution deal.

China Mobile is the biggest mobile carrier in the world with more than 750m customers, with approximately 170m of them on the 3G network and millions expected to adopt 4G as it is rolled out across China. In comparison, the nearest international rival US MNO Verizon Wireless has only about 100m connections.

By Neil Ainger