Apple CEO met China Mobile head, discussed cooperation

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, benefitting both companies.

Apple said last week that its April-June sales in Greater China, which includes Taiwan and Hong Kong, slumped 43 percent from the previous quarter. Greater China accounted for 13 percent of Apple's quarterly sales, or $5 billion, down from nearly 19 percent in January-March.

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.

Low 3G adoption crimps China Mobile's profits 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.

China Mobile's homegrown 3G technology - TD-SCDMA - is inferior to what is offered by China Unicom and China Telecom, which are based on international 3G standards.

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.

Apple was not immediately available for comment.

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 it 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.

© Thomson Reuters 2013