Apple-Handseeing-AUG. 5, 2010 • Apple Inc. was reported to be negotiating to acquire Handseeing Information Technology Co., Ltd. for as much as $150 million. The firm is a mobile Internet service provider and a mobile game developer in China. Such an acquisition would make sense given rampant speculation that substantial parts orders have been placed for a CDMA iPhone that would work with China Telecom’s network.

Impact: The rumor mill keeps on talking about Verizon as Apple’s next big iPhone play. We, on the other hand, see China Telecom as a key partner to watch. True, Verizon has more CDMA subscribers at close to 100 million than China Telecom’s 75 million. Yet the latter has been adding 3 million subscribers per month since last December, and that kind of growth is compelling. What’s more, Apple risks losing China to Google’s Android OS if it waits much longer to enter the country. Therefore, we see the time as ripe for Apple to make its move into China if it ever intends to.