China Mobile Drops iPhone

China Mobile announced today that it is no longer negotiating with Apple to provide the world’s most populous nation with the popular iPhone. This opens the door for China’s number two mobile service provider, China Unicom, to talk with Apple.

“We can only say that negotiations have ended for now. We have no other news to report,” said Li Honghui, a spokeswoman for China Mobile Communications Corp., the parent of cell phone carrier China Mobile. She declined to comment further.

Rainie Lei, a spokeswoman for China Mobile, earlier Monday also declined to say why the talks ended.

“We have held talks with Apple to launch the iPhone device in China. However, those talks have ended,” she said

According to Dow Jones Newswires, an unnamed official at China Mobile said that China Mobile and Apple could not agree on revenue-sharing terms in preliminary discussions. The unnamed source said China Mobile was unwilling to pay between 20 and 30 percent of future user fees from the iPhone to Apple for the right to carry the device.

The break-down in talks leaves the door open for Apple to talk with China’s second largest mobile phone carrier, China Unicom. When the news broke last year that China Mobile was talking to Apple, China Unicom said it was interested in the iPhone but that the two companies hadn’t had any formal negotiations.

Eric Wen, an analyst at BNP Paribas, doesn’t think China Mobile will be hurt by not carrying the iPhone. Its market share in China is too large to have immediate repercussions. But Wen does think that China Unicom may jump at the opportunity to carry the iPhone and pay the large percentage of user fees back to Apple.