Just days before Apple Inc. (NASDAQ:AAPL) unveiled the two new iPhone models this year, there were hints that the company was close to a deal with China Mobile Ltd. (NYSE:CHL) (HKG:941), but nothing official has materialized yet. Many investors are hoping that a deal will be struck by the time Chinese New Year rolls round early next year, but as of right now, we just don’t know.
Stifel analysts have run the numbers on China Mobile and provided us with an update on what a deal with China Mobile would mean to Apple Inc. (NASDAQ:AAPL).
Apple’s new iPhones support China Mobile’s network
Aaron C. Rakers and the rest of his team at Stifel note that teardowns of the new iPhone 5S and 5C models show that they use Qualcomm’s MDM9615 baseband processor. This processor supports China Mobile’s TD-SCDMA 3G / TD-LTE 4G network.
Earlier this month, there were reports that Apple received a network access license from regulators for what looked like an iPhone. The company did announce a deal with Japan’s biggest carrier, NTT DoCoMo, along with the new iPhones, and a deal with China Mobile was also expected, but it did not materialize. The only question now is, what are the two companies waiting for?
What China Mobile means to Apple
Stifel analysts say China alone now has 1.199 billion mobile subscribers. Of those subscribers, 359.9 million of them are 3G subscribers, which adds up to about a 30 percent penetration. China Mobile Ltd. (NYSE:CHL) (HKG:941) alone had about 750.4 million total mobile subscribers at the end of August. Of those subscribers, 158.7 million of them were on 3G, which is about 21 percent of the company’s total installed base.
In August, China Mobile took about 63 percent of the total 3G subscriber additions, which means a deal with the carrier could add up to major revenue for Apple Inc. (NASDAQ:AAPL). The company set a new record for its iPhone launch weekend, selling 9 million handsets in just three days. New carriers like NTT DoCoMo probably account for a chunk of this, so the addition of China Mobile is a golden opportunity Apple Inc. (NASDAQ:AAPL) really doesn’t want to miss.
