Talks to offer iPhone in China called off

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The Independent Online

Apple's long march to world domination suffered a temporary setback yesterday as China Mobile, the largest phone operator in the world's most populous country, pulled out of talks aimed at launching the iPhone for its 350 million subscribers.

The two sides had failed to agree on the sort of revenue sharing deal that Apple's chief executive, Steve Jobs, has tied up in countries such as the US and UK, where the phone-cum-music player has been on sale since last year.

The news is a blow to investors in both firms. Apple's shares had surged 10 per cent on a single day in November when news of the talks first leaked. China Mobile shares fell 3 per cent in Hong Kong trading yesterday.

"Our parent has terminated talks with Apple over the iPhone," a China Mobile spokeswoman said. She would not elaborate except to say that the company had not ruled out reviving discussions at some stage.

In the UK, the iPhone is available to customers of the O2 mobile network. In the US, Apple teamed up with AT&T, sparking criticism that Mr Jobs chose the network because they were offering the most lucrative financial agreement for Apple despite having a sub-par technology that means the iPhone is slower to connect to the internet than it would be on another network.

Financial considerations appeared to be at the heart of the disagreement in China. "China Mobile doesn't want to share its non-voice revenue," said Duncan Clark, chairman of BDA China.