Apple's (AAPL) iPhone 5 doesn't Support 3G or 4G on China Mobile Network

Contrary to some media reports, the initial version of Apple's (AAPL) iPhone 5 does not work on TD-LTE, the technology that supports 4G on China Mobile (NYSE: CHL). In other words, iPhone 5 users will not have an ideal data usage experience on China Mobile's system. As a result, analyst Danny Chu of Nomura thinks China Mobile is reluctant to commit to an iPhone partnership agreement.

If China Mobil signs a deal with Apple, a potentially lucrative score for the Tim Cook & Co. given handset subsides and China Mobil's huge user base, the phone would only support 2G technology and would be slower than the current 3G technology such as WCDMA.

"Until Apple launches an iPhone that is compatible with TD-SCDMA and TD-LTE, we continue to believe China Mobile is reluctant to commit to an iPhone partnership agreement," said Chu.

However, Chu thinks that China Mobile will continue to attract users who purchase iPhones without bundled contracts from Apple's stores or grey markets onto its EDGE network (2.75G).

"In our view, the benefits of this strategy for China Mobile are that: 1) it has no need to offer an iPhone handset subsidy; 2) it has no need to incur iPhone advertising expenses; and 3) the move should generate usage behaviour among China Mobile’s subscribers so that they use more mobile data services."

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