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Apple CEO met China Mobile head, discussed cooperation

Apple Inc. CEO Tim Cook waves to the crowd during the Apple Worldwide Developers Conference (WWDC) 2013 in San Francisco, California June 10
Apple Inc. CEO Tim Cook waves to the crowd during the Apple Worldwide Developers Conference (WWDC) 2013 in San Francisco, California June 10

By Paul Carsten and Lee Chyen Yee

BEIJING/SINGAPORE (Reuters) - Apple Inc CEO Tim Cook on Tuesday met with the head of China Mobile Ltd, the world's largest mobile carrier by subscribers and the only Chinese carrier that doesn't offer iPhones and iPads.

The meeting with China Mobile Chairman Xi Guohua in Beijing was to discuss matters of cooperation, the Chinese firm told Reuters in an emailed statement. It gave no further details.

The talks could pave the way for a long-awaited deal for China Mobile to distribute Apple products on its vast network, benefiting both companies.

Cook's meeting with China Mobile follows a 43 percent slump in Apple's April-June sales in Greater China, which includes Taiwan and Hong Kong, as the technology gap with cheaper local rivals narrows.

Any deal between China Mobile and Apple, combined with the Chinese government issuing 4G licenses later this year, could turn around both companies' fortunes with wider product distribution and faster Internet speeds attracting new smartphone adopters.

China Mobile has seen its profit pressured by a low adoption of 3G as mobile users shift away from SMS messaging to data-reliant apps such as Tencent Holdings' WeChat, which now has more than 300 million users in China.

Fewer than a fifth of China Mobile's customers have adopted 3G, lagging rivals China Unicom's 38 percent and China Telecom Corp's 50 percent, according to data from the three carriers.

Analysts say China Mobile would attract higher-end 3G users if it strikes a deal to carry Apple's iPhone even though China Mobile's homegrown 3G technology - TD-SCDMA - is inferior to that offered by China Unicom and China Telecom, which is based on international 3G standards.

Cook also met with top executives from China Telecom, another large telecom provider, when he visited Beijing earlier this week, China Telecom said.

Cook had a meeting with China Telecom President Yang Jie and talked about cooperation on future products, but stopped short of giving any details of the next version of the iPhone, said a source at the company, who declined to be identified because the person was not authorized to speak to the media.

China Unicom declined comment. An Apple spokesman confirmed that Cook was in China for business meetings, noting that Greater China was Apple's second largest market. He declined to provide any details.

Greater China is an important market for Apple as it accounted for 13 percent of Apple's quarterly sales, or $5 billion, though it is down from nearly 19 percent in January-March.

Morgan Stanley estimates China's mobile Internet market could more than treble to around $30 billion by 2015, driven by a surge in demand for mobile gaming, advertising, and e-commerce.

Currently, 78.5 percent of Chinese Internet users access the Net through their mobile phones, according to data from the China Internet Network Information Centre. The total number of mobile netizens reached 464 million by the end of June, up 10 percent from the end of 2012.

Cook's visit also follows accusations in a China Labor Watch (CLW) report this week that Pegatron Corp, a Taiwanese firm that assembles iPads and iPhones in China, violates workers' rights in China.

Apple shares ended down 79 cents at $452.53 on Nasdaq on Wednesday.

(This story was fix to correct spell errors in paragraphs 9 and 11)

(Additional reporting by Poornima Gupta; Editing by Ian Geoghegan and Andrew Hay)

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