China Telecom’s (HKEx: 728; NYSE: CHA) newly launched iPhone 4S has been hogging the headlines these last few days, with everyone scrambling to figure out if the debut of the popular smartphones by China’s third largest telco will be a success. The slew of media reports accompanying China Telecom’s iPhone launch on Friday, when it began taking orders for the 4S, seem to point to a modestly successful beginning. The company has offered a number of plans, each of which is priced about 100 yuan less than comparable ones offered by rival China Unicom (HKEx: 762; NYSE: CHU), the only other Chinese carrier with an Apple (Nasdaq: AAPL) tie-up which began selling the 4S in January. (English article) As to actual demand, media are looking at a number of angles, including online sales, store orders and comments from China Telecom itself to judge demand, as the iPhones themselves won’t become available until this Friday. The company itself is saying first-day sales exceeded its own expectations, though it isn’t giving any figures except to say orders in Beijing exceeded 10,000 units. (Chinese article) Meantime, another article is quoting China Telecom saying first-day online orders were strong, but there was no unusual activity at a China Telecom store also taking orders. On the whole, this looks like a relatively strong launch for China Telecom, which shouldn’t come as a surprise as many iPhone lovers are probably excited to finally have an alternative to Unicom, which had a monopoly on official iPhone sales in China since Apple launched the popular smartphones in 2007. I would expect China Telecom iPhones to see brisk sales when they officially become available on Friday, as consumers test the China Telecom service against Unicom’s. Word of mouth will be critical going forward, as I could easily see many iPhone users migrating to one service or the other in the months and years ahead depending on which telco gets the better reputation for iPhone service. Based on my limited knowledge, I wouldn’t be surprised to see China Telecom emerge as the early leader in the comparisons, in what would obviously be a major setback for an already-struggling Unicom. Meantime, China Mobile (HKEx: 941; NYSE: CHL), China’s only telco with no iPhone deal, is coming out with its own iPhone statistics, with Chairman Wang Jianzhou saying it has 15 million iPhone users. (Chinese article) Of course everyone knows that all of those users are unofficial, since China Mobile has no agreement with Apple, and all can only use their iPhones on China Mobile’s slower 2G network, since no iPhone is available to run on the homegrown technology in its 3G network. China Mobile at one point was talking to Apple about developing a 3G iPhone for its network, but those talks seem to have died a few months ago, meaning the company won’t have its own iPhone deal until 4G which is still at least 1 to 2 years off.
Bottom line: China Telecom is likely to emerge the victor in a looming iPhone war with Unicom by offering both better prices and service.
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