Market Overview

Did China Mobile Just Secure Apple's iPhone 5C?

Apple's (NASDAQ: AAPL) might be headed to China Mobile.

In addition to China Telecom (NYSE: CHA) and China Unicom (NYSE: CHU), Apple is largely expected to sign a deal with China Mobile (NYSE: CHL).

That latter deal was thought to be held up by the iPhone's high subsidies. More often than not, cellular carriers pay for the majority of the device's cost in exchange for a two-year contract. This can be a profitable deal for carriers that are able to keep a customer for two years. Those who leave -- even at the cost of a contract termination fee -- could hurt a carrier's bottom line.

The iPhone 5C (which is expected to be a low-cost, cheaper-to-produce iPhone) might finally change that. While Apple is unlikely to give up on profitability, and while carriers are unlikely to give up on their restrictive two-year contract policies, the iPhone 5C is expected to eliminate a number of obstacles.

This is especially true for China, where consumers are less likely to finance the cost of an expensive smartphone by agreeing to a two-year contract.

According to The Wall Street Journal, the iPhone 5C is indeed heading to China Mobile.

The report did not state if China Mobile will also carry the high-end iPhone 5S, but it is hard to believe that the carrier would miss out on the opportunity to sell the more expensive model. While it may not be as attractive as the low-cost iPhone, the iPhone 5S has the potential to reach several hundred thousand (if not several million) different customers.

Related: Apple Cannot Afford To "Degrade Its Premium Pricing Status" With iPhone 5C

Thus far, Apple has had a rough road in China. The company set a new record when it sold two million handsets in one weekend when the iPhone 5 was released in China last year. Most recently, however, iPhone popularity has declined in China.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Posted-In: Apple china mobile China Telecom china unicom iPhone 5News Rumors Tech Best of Benzinga

 

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