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Wednesday, March 04, 2009, 11:20 am PT (02:20 pm ET)

China Unicom confirms iPhone talks with Apple

Bolstering reports from last month, the chairman of China Unicom has confirmed negotiations with Apple to bring the iPhone 3G to China, but so far there's no indication that a deal is close to fruition.

Chairman Chang Xiaobing told reporters that China Unicom is in talks with Apple, according to Reuters.

"We are in talks with many handset suppliers, including Apple," he said.

Late last month a British consulting firm suggested Apple may have already reached an agreement with the carrier, which is in the process of rolling out a new 3G network. Chang predicts 20 percent of all mobile phone users in China will be on 3G in the next three years.

Early last month, rival China Mobile chairman Wang Jianzhou said his company has had three rounds of negotiations with the iPhone maker break down, most recently over China Mobile's insistence on co-management of the App Store, which is typically under Apple's sole control.

Wang said his company will continue to talk with Apple while declining to comment on any discussions between his rival China Unicom and the Cupertino-based iPhone maker.

Analysts who spoke to Reuters said iPhone knockoffs are available without long-term contracts in China, leading them to believe a deal to sell the smartphones there may not be a strong earnings catalyst. They added that the Apple brand doesn't enjoy the same positive status as it does elsewhere in global markets.

"iPhone is likely to be highly subsidized and China Unicom may give away large revenue share so earnings upside is possibly limited, in our view," the JP Morgan analysts wrote. "We think this is a reason why China Mobile has refused to sign with Apple to date."

Government-sponsored China Mobile is the largest mobile phone operator by subscriber count in the world with at least 415 million customers. China Unicom, meanwhile has 168 million customers, with 125 million on a GSM network and the rest on CDMA.