Apple's (Nasdaq: AAPL) iPhone does wonders for wireless carriers. Just ask AT&T how much it enjoyed iPhone exclusivity, while it lasted, in the device's formative years. It ain't cheap though, as carriers inevitably must make big sacrifices in margins through the form of pricey subsidies made payable to Apple.
Still, China Mobile (NYSE: CHL) desperately needs the iPhone, and Apple certainly needs China Mobile.
The three largest wireless carriers in China recently released their May subscriber figures, metrics I've also been tracking for some time. Topeka Capital Markets analyst Brian White makes a case that the largest of the bunch, China Mobile, continues to see weak 3G adoption. A compatible iPhone would surely be the panacea to that. White says that China Mobile is "in need of the iPhone."
Smaller rivals China Unicom (NYSE: CHU) and China Telecom (NYSE: CHA) continue to boast higher 3G subscribers, which tend to be more lucrative for carriers, in terms of both growth and overall penetration. White attributes this discrepancy to the lack of an iPhone, as the smaller players that carry the device continue to grow 3G subscribers faster.
Source: Company filings
You can see that this is not a new phenomenon; China Mobile's sequential month-over-month growth in 3G users has lagged its rivals for roughly a year. In fairness, the iPhone alone doesn't paint the entire picture. China Mobile's 3G network uses a unique homegrown standard that many device makers don't cater to, despite the carrier's massive subscriber base.
That explains why its overall 3G penetration significantly lags the others.
Source: Company filings
Total 3G penetration among all three carriers sits at 16.1%, far lower than in developed countries, representing massive growth opportunities for mobile gadget players looking to tap into the Chinese market.
Apple's next iPhone is also widely expected to support China Mobile's network thanks to Qualcomm's (Nasdaq: QCOM) newest baseband chip that supports just about every wireless standard on Earth.
Fortunately for China Mobile, it's just a matter of time.
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