China Unicom Confirms Apple iPhone Talks

Apple is in iPhone distribution talks with China Unicom, the latest sign negotiations with the nation’s largest mobile carrier may have hit a snag. Tuesday’s comments by the chairman of China’s second largest cellular carrier confirms similar February reports.

“We are in talks with many handset suppliers, including Apple,” Reuters quoted China Unicom chairman Chang Xiaobing. China Mobile, the country’s No. 1 mobile carrier, refused comment on the report.

While Xiaobing did not mention a date when any agreement with Apple might materialize, in February, Fortune reported a deal with China Unicom could be signed May 17.

There appears to be several reasons why talks between China Mobile and Apple have slowed while discussion between the Cupertino, Calif.-based company and China Unicom have gathered steam.

One analyst reasoned China Mobile may have to heavily subsidize the iPhone in order for Apple to gain marketshare against existing touchscreen knock-offs.

“We think this is a reason why China Mobile has refused to sign with Apple to date,” JP Morgan analysts Jimmy Cheong and Tim Storey said.

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Another possible complication is that Chinese mobile users already can buy an iPhone copy (known as a Hi-Phone) which eliminates the need for a costly service contract. Chinese cell phone owners have also been able to obtain iPhones purchased outside the country, according to the report.

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