China Mobile, Apple Ink an iPhone Deal
It appears that the deal is all but official between Apple (NASDAQ: AAPL) and China Mobile (NYSE: CHL). The Wall Street Journal reported that China Mobile signed a deal with Apple to bring iPhones to its soon-to-rollout high speed 4G network.
There’s no official word from Apple or China Mobile, but the report says that the deal was inked.
As we reported earlier this week, China Mobile appears to be preparing for the launch. Images of leaked signage and other promotional materials have already made it to the web and plenty of “off the record” comments from officials in the know have appeared in print.
China Mobile is expected to announce its iPhone availability at a December 18 event in conjunction with its 4G network—technology that will replace its currently unreliable 3G network. This unreliability issue is likely what kept Apple from aggressively courting China Mobile and it’s 755 million subscribers. China’s Ministry of Industry and Information Technology said Wednesday that it granted licenses to China Mobile and it s competitors to operate high-speed mobile networks.
If the deal really is official, that’s great news for Apple. China Mobile’s subscriber base is seven times the size of Verizon’s and it’s third largest market behind the United States and Europe.
But Apple’s top-tier business model has struggled to attract the attention of Chinese customers as a whole. Samsung (OTC: SSNLF) holds a 21 percent market share in China compared to Apple’s six percent. Worldwide, Samsung shipped 32.1 percent of smartphones in the third quarter compared to Apple’s 12.1 percent.
Still, that doesn’t mean that high-end smartphones won’t attract Chinese customers. According to the Journal, research firm Trefis believes that China Mobile can put iPhones into the hands of about 1.5 million people per month—about 20 million additional activations in 2014 alone. That’s a 17 percent increase in iPhone unit sales over the past fiscal year that ended September 28.
Marvin Lo of Miziho Securities said that China Mobile holds the country’s wealthiest subscriber base with at least 10 percent of the company’s subscriber base being potential iPhone customers. 75.5 million iPhones would be well worth the wait to investors.
Disclosure: At the time of this writing, Tim Parker was long Apple.
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