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iPhone 5C sales may affect China Mobile deal -- analyst

Weaker-than-expected demand for the lower-cost iPhone may be throwing a monkey wrench in an agreement between Apple and China's largest carrier.

Apple's iPhone 5C lineup.
Apple's iPhone 5C lineup.

Apple and China Mobile are close to signing a deal to launch the iPhone, says analyst Ming-Chi Kuo, but sluggish sales of the iPhone 5C may alter the terms.

Speculation has run rampant that the two companies had already inked a deal, especially after the iPhone 5S and 5C appeared on preorder pages for China Mobile. But the carrier's chairman, Xi Guohua, said this week that nothing has been finalized though the two have been talking about a partnership.

That deal is close to being signed, KGI Securities analyst Ming-Chi Kuo said yesterday in an investors report obtained by AppleInsider and other sources. However, sales of the 5C may be a stumbling block.

"We believe that weak sales of iPhone 5C may trigger a re-negotiation of the Apple-China Mobile partnership," Kuo said. "However, the indications are that the deal is nearing an end. While recent market speculation calls for the deal to boost 1Q14 iPhone shipments to 45-50mn units, we think this is overly optimistic."

Interest in the 5C among China Mobile subscribers has waned, according to the analysts, replaced by demand for the more expensive 5S. As such, Apple may be forced to revise its terms in order to convince the carrier to sell the cheaper 5C.

Due to the underwhelming 5C demand, Kuo belives that shipments of the TD-LTE version will range between 1 million and 1.5 million this quarter and just under 1 million next quarter, way below Apple's initial projections.