China's largest cell phone operator, China Mobile, said yesterday that 3 million users were likely to subscribe to its third generation (3G) service by year-end and that the company was still in talks with Apple Inc to sell iPhones in the world's largest mobile phone market.

Wang Jianzhou, chairman of China Mobile, said in Hong Kong that the company expected 3 million subscribers to use its TD-SCDMA service by next month, nearly double the 1.66 million users it had in September.

He said China Mobile's 3G network was expected to expand to 238 cities by the end of this year, covering 70 percent of the country's area.

On the sidelines of a conference yesterday, Wang also confirmed that the company was still in talks with Apple to sell the iPhone in China, although its rival China Unicom, which launched its WCDMA-based 3G service one month ago, had already started shipping the popular smartphone in the country.

"We would like to make the (handset) market more diversified and encourage all handset vendors to sell more models," he said, according to a report in the Wall Street Journal.

China Unicom has been criticized for selling the smartphone at an unreasonably high price. The company reportedly sold only 5,000 iPhones during the first weekend of debut.

But the company's chairman Chang Xiaobing told reporters on Tuesday he expected the device to become the country's top-selling smartphone.

Ever since the Chinese government gave out the long-awaited 3G licenses this year, China Mobile, China Unicom and China Telecom have been actively deploying their 3G networks, in hopes that the new service, which enable data-heavy applications such as mobile Internet, online games and mobile TV, could help compensate declining revenue from their traditional voice services.

Chang from China Unicom told reporters yesterday that the average revenue per user for its 3G service was touching the 100-yuan ($14.65) mark, more than double that of its GSM service.

"We recognize clearly that it is difficult or even impossible to boost per-unit spending in the voice market," Reuters reported Chang as saying.

According to figures from the National Bureau of Statistics, China's mobile subscribers surpassed 710 million by August, with China Mobile taking up over 70 percent of the market share.

Experts said China Mobile's dominant position is expected to be challenged by its two smaller rivals in the 3G era, as the company was ordered to adopt the homegrown TD-SCDMA standard, a less mature technology, for its 3G network.

Wang from China Mobile said yesterday that the company has invested 80 million yuan in handset subsidies last year and the number was expected to touch 120 million yuan this year as mobile phone vendors lacked incentives to develop a handset based on its TD-SCDMA standard.

Michael O'Hara, chief marketing officer of the GSM Association, told Reuters in an interview yesterday that China Mobile was expected to accelerate the deployment of fourth-generation mobile technology, long term evolution (LTE).

"China Mobile will be an early adapter. We expect China Mobile to do (LTE) trials in 2010, and deployment in 2011," he said.

China Mobile has previously confirmed that it would build an LTE network in Shanghai when the World Expo takes place there next year.