iPhone deal to cost China Mobile: analysts

Dylan Bushell-Embling
06 Jan 2014

China Mobile's long-anticipated deal to carry the iPhone is likely to add to the margin pressure facing the world's largest mobile operator by subscribers, financial analysts believe.

China Mobile finally reached an agreement late last year to sell iPhones to subscribers of its new commercial TD-LTE network. The network launched in three cities in December, and is being rolled out nationwide.

But expensive iPhone subsidies and the substantial capex costs involved in the commercial rollout will squeeze the operator's bottom line.

Analysts are already expecting China Mobile to report its first profit decline since 1999 for 2013 due largely to its “trial” LTE rollout costs, the Wall Street Journalreports. Now some analysts believe the company's profit could slump by as much as 10% for the coming year.

The Chinese government also recently mandated a cut in mobile interconnection fees, compounding the problem for the operator.

Analyst firm Wedge Partners last month estimated that China Mobile registered 100,000 iPhone 5S/5C pre-orders on its first two days of taking orders. This compares to 150,000 for China Telecom and 120,000 for China Unicom during their first two days of orders back in September.

While the initial figures seem underwhelming considering China Mobile's scale compared to its rivals, the pace of sales could well increase as the 4G rollout spreads to more areas.

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