A shop worker holds the new Apple iPhone 3G S in Purley, England. The phone was launched in the UK on Friday. [Shanghai Daily]

China Unicom will sell licensed iPhones in the domestic market for the first time in the fourth quarter of this year through an agreement with Apple, Merrill Lynch & Co said in a report on Friday.

The Chinese telco and Apple are likely to have a two-year exclusive agreement and three iPhone models will be available in China, Sina.com reported, citing Merrill Lynch's report which didn't give more details.

Both Apple and China Unicom declined to comment on the report.

"The cooperation will open the door for Apple to enter the huge China market," said Sherrie Huang, an analyst at Ovum, a United Kingdom-based consulting firm.

"It also gives China Unicom a competitive weapon in the high-value subscriber segment," Huang added.

Apple's iPhone was previously set to debut officially in China in May. It's estimated there are 10 million users of overseas iPhones in the country, according to the report.

In May, a picture of an iPhone model was displayed on China Unicom's Shanghai branch Website as one of the 3G models it will launch. The carrier later deleted the link.

Last week, an iPhone was found to pass the wireless examination in China conducted by the State Radio Monitoring Center of China as posted on its Website.

The iPhone still has to pass tests conducted by the Ministry of Industry and Information Technology and industry insiders said it may face an obstacle because of its WiFi capability. WiFi is not allowed on licensed phones sold in the domestic market, they said.

Meanwhile, Apple is recruiting a project manager for the iPhone in China on its Website, and market observers said this could mean Apple will launch the model in China.

(Shanghai Daily June 20, 2009)