Posted by: Bruce Einhorn on February 18, 2010
Is China Unicom, the company that Apple chose to be its iPhone partner in the Chinese market, bidding for Nigerian Telecom or not? Depends who you ask. Nigeria’s government on Feb. 16 announced that a group led by Unicom, China’s second-largest cellular operator, was the preferred bidder for Nigerian Telecommunications (Nitel). The Unicom-led group had offered $2.5 billion for the operator, the government said. Two days later, though, a Hong Kong-based spokeswoman for Unicom said the government was wrong, Unicom had not participated in the bid for Nitel. A spokesman for the Nigerian government insists that Unicom is indeed bidding; Joseph Anichebe, a spokesman for the Bureau of Public Enterprises in the Nigerian capital of Abuja, told Bloomberg News on Feb. 19 that the bureau has a letter from a China Unicom office in Europe confirming its role in the Nitel bid. “We are standing by our announcement.”
What’s behind this strange case of he said, she said? Maybe it’s just bad timing. The Nigerians announced the news in the middle of Chinese New Year. Offices Hong Kong opened on Wednesday, while in Beijing, where Unicom’s parent has its headquarters, the holiday lasts the whole week. So there could be a communication breakdown between the two. But Unicom isn’t the only company denying interest in Nitel. Bloomberg News also reports two other operators that the Nigerian government says had put in Nitel bids - Telecom Corp of New Zealand and Telkom South Africa - deny participating. Nitel’s statement “is completely devoid of truth,” Naas Fourie, chief of strategy at Telkom South Africa, told Bloomberg.
It’s certainly plausible that Unicom would be interested in Nitel. The Chinese government is keen to see state-owned companies go abroad, especially to resource-rich Africa, where Beijing is eager to deepen political ties.
Unicom’s top priority, though, is improving its position at home, where it lags far behind market leader China Mobile. That’s where Apple comes in: Unicom has exclusive rights to sell the iPhone in China. Sales, which started last fall, were disappointing at first, in part because Unicom’s version of the iPhone came without WiFi and there were already some 2 million gray-market iPhones (most of them originally purchased in Hong Kong, unlocked, and sold without Apple’s authorization) in the market. However, there is “room for significant iPhone growth in China, contrary to consensus belief,” Morgan Stanley analysts Katy L. Huberty and Matthew Schneider wrote in a Jan. 29 research report. They see a market of 50 million customers in China “with strong interest in smartphones and the Apple brand” and argue Apple has the potential to sell 4-5 million handsets in China. If Unicom can help Apple achieve that potential, few investors will care whether the Chinese company is also expanding in Nigeria.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.