Rumor: Unicom to Sell RMB 5 Bln in iPhones Annually
Shanghai Securities News, 7/28/09
A senior figure at China Unicom (NYSE: CHU; 0762.HK; 600050.SH) has denied rumors that Unicom has already signed an exclusive 3-year sales contract with Apple for sale of the iPhone in China. According to the rumor, the contract will see Unicom begin bundled service sales of the 3G iPhone at the end of September. Sources say that Unicom made a number of concessions in order to cooperate with Apple, including subsidies for the cost of the phone, a promise to meet set sales quotas, and to pre-install Apple's App Store. However, the contract is rumored not to have yet stipulated a mode of profit share for service earnings. Unicom is to purchase the bare handsets from Apple for RMB 3,000 each, and promises annual sales of 1 to 2 mln units, for revenue of no lower than RMB 5 bln. In addition to handset sales, Apple will also earn revenue on value-added services for the iPhone. Unicom is likely to sell the phones bundled with service plans, at a retail price no higher than RMB 3,000.
The source who denied the rumor said that the companies are still currently in negotiation, but that a contract has not yet been reached. Another high-level source in Unicom revealed that "Unicom will definitely reach an agreement with Apple, but needs to wait until conditions are favorable to sign. The current rumors regarding terms of agreement are not certain, and specific details will be announced when the contract is signed."
Keywords: procurement WVAS 0762.HK 3G 600050.SH Apple China Unicom CHU iPhone wireless handset smartphone subsidy bundling pricing revenue share supply contract app store mobile data operator-customized handset