Will the iPhone help the world’s largest mobile phone carrier get its groove back?

China Mobile thinks the iPhone will help to repair its image among customers.
China Mobile thinks the iPhone will help to repair its image among customers.
Image: Reuters/Carlos Barria
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China Mobile, the world’s largest cell phone carrier with over 700 million subscribers, is in something of a slump. Last year, net profits at the state-owned company grew at the slowest pace in three years, at 2.7%. Its subscriber base expanded by 9.3% (pdf, p. 22) in 2012, well below the rates recorded by rivals China Unicom (20%) and China Telecom (27%).

But China Mobile’s fortunes could improve if, or when, a deal with Apple to sell iPhones on a new 4G network finally happens. China Mobile, one of the few major telecom companies that does not support iPhones, denied recent reports that the two companies have signed a long anticipated tie-up, but industry observers still expect cooperation at some point.

The oft-cited reason for a deal is that Apple needs a to sell phones with China Mobile to ramp up its sales in China, which have lagged behind competitors like Samsung. A less-explored reason, though, is that China Mobile needs Apple just as much, if not more. China Unicom and China Telecom have offered the iPhone since 2009 and 2012, respectively.

China Mobile’s rivals have been signing up new users at a faster rate in large part because of their better, faster 3G networks,which support iPhones. China Unicom has 40% percent of its users on 3G, and 52% of China Telecom users are on it as well. China Mobile, on the other hand, uses a homegrown standard called “TD-SCDMA”—policymakers thought it would make China less dependent on overseas technology—and as a result only 20% of its users on 3G. A deal with Apple—in addition to a new license to run a 4G network—could put the carrier back on a more equal footing with its main rivals.

China Mobile’s main challenge, then, will be convincing millions of cell phone users who have defected to other carriers to return to the fold. Commenting on the report of a tie-up with Apple, one blogger said (registration required) on Sina Weibo, “Finally! But I’ve already signed a contract with China Unicom for two years. Why should I have waited for you?”