Bloomberg News

Telefonica Czech May Return to Apple After iPhone 4s Rejection

November 21, 2011

Nov. 18 (Bloomberg) -- Telefonica Czech Republic AS wants to continue selling products by Apple Inc. if the two sides can agree on business terms after the country’s largest phone operator declined to sell the new iPhone 4s model.

“The fact that Telefonica didn’t come to terms with Apple now when the company introduced the iPhone 4S to the market doesn’t mean that Telefonica won’t sell Apple products in the future,” Telefonica Czech spokesman Hany Farghali said in a phone interview. Farghali declined to provide details about the disagreement with Apple.

“It was purely a business decision,” Farghali said, noting that Czech customers prefer cheaper handsets and Apple’s iPhones represented only 1.9 percent of all devices operating in Telefonica Czech’s network now, compared with about 1 percent a year ago.

Telefonica Czech, the Prague-based unit of Spain’s largest telecommunications company, said on Oct. 27 it won’t sell the iPhone 4S and would end sales of all Apple models, citing Apple’s business terms. Czech units of Vodafone Group Plc and T- Mobile International AG, the other mobile operators in the country, began selling Apple’s latest phone in October.

Telefonica, which had 4.9 million subscribers for mobile services at the end of the third quarter, hopes to arrive at mutually “advantageous” conditions for selling new devices from the world’s-largest technology company, Farghali said. Apple’s media department didn’t immediately respond to e-mailed questions from Bloomberg.

Apple’s iPhone models in the past have been priced as high as 16,000 koruna ($843) with subsidies in the Czech market. Apple is now offering the iPhone4s on its Czech website for a base price of 14,490 koruna in an unlocked version that can be used on all networks.

Cheaper Handsets

Telefonica Czech’s most popular models are cheaper handsets that cost between 3,000 koruna and 5,000 koruna, without subsidies, according to Farghali. Best-selling models in the third quarter were Samsung Electronics Co. Ltd’s Galaxy Mini, ACE or Nokia Oyj’s C5, he said.

About 21 percent of Telefonica Czech mobile users have smartphones. In the third quarter 63 percent of all smartphones sold by the company were priced at less than 5,000 koruna, Farghali said.

“That’s a major difference between Western Europe and the U.S. where the iPhone is often perceived as a synonym for a smartphone,” he said.

Some 13.5 percent of smartphones operating in Telefonica Czech’s network are loaded with Nokia’s Symbian operating system. Google Inc.’s Android was second with 3.7 percent.

Telefonica SA said this month it aims to cut the range of handsets on offer to less than 100 from about 240 currently to boost earnings.

Android accounted for 52.5 percent of worldwide smartphone sales in the third quarter, more than doubling its share from a year earlier, researcher Gartner Inc. said in a report on Nov. 15, while Apple had 15 percent. Even as some consumers delayed purchases to wait for Apple Inc.’s latest iPhone and other models, smartphone sales by volume grew 42 percent.

Telefonica SA controls about 70 percent of the Czech telecommunication company, according to Bloomberg data.

--Editors: Douglas Lytle, Hellmuth Tromm

To contact the reporter on this story: Lenka Ponikelska in Prague at lponikelska1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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