China Mobile Could Really Use the iPhone

China's leading wireless carrier can use some new juice. 

Shares of China Mobile (NYSE: CHL  ) slipped 4% yesterday after posting poorly received quarterly results. The potential of the world's most populous market as it embraces wireless connectivity would seem to make China Mobile a no-brainer for growth stock investors, but the results aren't very encouraging. 

Operating revenue has climbed just 9% through the first nine months of the year as earnings and EBITDA declined slightly. Average revenue per user is not growing, and the average voice minutes per customer declined sequentially.

Cast against this backdrop, China Mobile remains the lone holdout among the country's three largest wireless carriers in not offering Apple's (NASDAQ: AAPL  ) iPhone. 

It's been widely rumored that China Mobile would join China Telecom (NYSE: CHA  ) and China Unicom (NYSE: CHU  ) in hopping on the iPhone bandwagon. A photo even leaked earlier this month, pointing to a Nov. 11 release of the iPhone 5c and iPhone 5s through China Mobile. 

This would be a pretty big deal. China Mobile is substantially larger than China Telecom and China Unicom, commanding more than double the market cap of its two nearest rivals combined. China Mobile closed out its latest quarter with 755.2 million customers, but just 169.5 million were 3G accounts.  

We still don't know if the iPhone's popularity peaked late last year when the iPhone 5 sold 2 million units in China during its debut weekend, largely through China Telecom and China Unicom. We don't know how many of the 9 million iPhone 5c and iPhone 5s devices sold during this generation's first weekend on the market went to China, again primarily through China Telecom and China Unicom. We may get some color on China when Apple reports next week. However, it's undeniable that being made officially available through China Mobile would help Apple's stance in a very significant market. Let's also not dismiss the potential for China Mobile's own business to pick up given the nature of iPhone users. There's no shortage of reports out there showing that iPhone users spend more on their devices and that advertisers are willing to pay more to reach them. Introducing the iPhone could get average revenue per user moving in the right direction.

Apple's iPhone 5c may be priced too dearly to become the iOS device for the masses in China, but getting China Mobile's marketing muscle behind the device and its hotter-selling sibling iPhone 5s -- whether or not that ultimately begins on Nov. 11 as reported -- will be a win-win at a time when China Mobile needs the growth and Apple would love the validation.

Interested in more tech stocks?
Our top technology analyst recently infiltrated one of Wall Street's most exclusive gatherings... and left with three incredible investment opportunities, straight from the CEOs. These are profit-building strategies Main Street isn't meant to hear about -- so you must act now before someone shuts us up. Click if you want "industry insider" earnings -- NOW!


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2693107, ~/Articles/ArticleHandler.aspx, 8/23/2014 1:22:42 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement