The Apple - China Mobile Deal By The Numbers

The Apple AAPL rumor mill has China Mobile CHL on the brain right now and based on the advertisements that were leaked, it appears that China Mobile customers will have access to the iPhone very soon. The launch date is rumored to be December 18—the date the company is set to activate its 4G LTE network.

Assuming the leaks are true, investors want to know how the numbers work out for Apple. Amit Daryanani of RBC Capital Markets did some number crunching to come up with the answer.

China Mobile currently has about 755 million subscribers. Of those, 170 million are currently high-speed data customers. In comparison, China Unicom and China Telecom, the next two largest carriers in the country have 454 million subscribers combined.

Comparing to U.S. carriers, Verizon has 119 million subscribers while AT&T has 107 million. If Apple can sell 17 million iPhones to China Mobile customers, that could produce $9 billion to $10 billion in annual revenue or $3 per share. That’s assuming an average purchase price of $560 and margins of about 30 percent.

Daryanani thinks that a China Mobile deal could increase Apple’s China market share by up to 1.8 times and that the number of customers taking advantage of data features on smartphones is rising rapidly—about 16 percent in the September quarter alone.

Related: iPhone Pre-Orders May Finally, Quietly Begin Taking Hold with China Mobile

Despite a Dow that was down nearly 100 points and an S&P that was down about five points, Apple ended the day 2.7 percent higher reaching a 2013 high of $566.32. That represents a gain of 44 percent since its $393 low in June. As people try to figure out why the stock continues to move higher, many are speculating that the China Mobile deal is being priced in.

But don’t forget that while the China Mobile deal is looking promising, it’s still a rumor. When asked, China Mobile would only say that it has nothing to announce at this time. The deal could be non-existent, the December 18 date could be inaccurate, or there could be some other aspect of it that makes it far less exciting than investors expect. If you’re putting money to work on the back of a rumor, be careful.

Disclosure: At the time of this writing, Tim Parker was a long-term holder of Apple.