Apple’s China Partner Squabbles with Nigeria

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.

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Reader Comments

coole

February 18, 2010 11:21 PM

If China Unicom denied the allegation, i will surely say it's there way, my company officially introduce mobile satelite networking to them sometimes last year and there reply wasn't attractive, if today they stand on bidder list then they are to pay lot's as per fine.

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February 19, 2010 08:51 AM

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zerubbabel olu-adeyemi

February 19, 2010 10:33 AM

if Unicom is truly investing in Nigeria,its a welcome development.it simply shows the Chinese knows the place where the next phase of development is about to happen.Never minding foreign media perception of the country with her attendant myriad of unresolved issues.This development should not affect Apple's sales of the iphone,Nigeria too could be a ready market for the much touted iphones.
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Xiang Yu

February 22, 2010 10:04 AM

I didn't know that China Unicom is involved in fruit business, did Unicom also sell orange?

KenC

February 25, 2010 08:08 PM

Weirdest story I've read in a long time. I mean, the crux of the story is about China Unicom and Nigerian Telecom, right? What does this have to do with Apple? Why does the story devolve into one about iPhones? Weird.

Maybe the Nigerian gov't was sending out a 419 letter:

Dear China Unicom,
You are the preferred responsible entity that we have selected from Businessweek's 100 Best Company list. We want to give you Billions of dollars, but first you must send us $2.5B to our private Swiss Bank account. Once those funds have been received, expect to receive our billions shortly.

Prince Ray

February 25, 2010 11:44 PM

Hello:

I too do not understand the overlapping story about Apple and the Unicom synergy?
In regards to Unicom investing in Nigeria, I say Good Luck with that, for all the Scams coming out of Nigeria you'll surly need Lots of Luck.......

Norma

March 7, 2010 10:13 PM

I doubt (correct me if I'm wrong) phones sold by HK distributors are locked. Parallel imports from other markets may be different.

Bobby

March 11, 2010 02:37 PM

KenC- It is an awful thing to talk about another country's government like you did, when your own government has the worst dirty laundry than others.

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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.

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