Please ensure Javascript is enabled for purposes of website accessibility

China Mobile and Apple: Could It Finally Be?

By Daniel Sparks - Sep 4, 2013 at 6:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Has the long-awaited deal finally been made?

Apple invitation for media event in Beijing on Sept. 11. Source: MacRumors.

China deserves its very own Apple (AAPL 2.62%) media event, apparently.

Nearly identical to the invitations sent out in the U.S., Apple has now sent out invitations in China for a second event, just nine hours after its U.S. event. The event will be hosted in Beijing at 10:00 a.m. local time.

Invitations for satellite Apple media events were sent out in Berlin and Tokyo, too. But its China's media event garnering the most attention, and likely the cause of this morning's rally in Apple stock. 

Why would investors care? Looming on the horizon is a great behemoth: China Mobile (CHL). A long-awaited arrangement with the world's largest carrier would certainly merit its own media event.

The opportunity
There's two ways to look at Apple's position in China.

  1. Investors could consider the Cupertino tech giant's paltry market share to be indicative of the company's unfortunate weakness in the region.
  2. Apple's paltry market share could be viewed as a massive opportunity in the world's most populous country.

With a rumored lower-cost iPhone on the horizon, the latter is the wiser approach. The same glass-half-full approach in analyzing the Apple's opportunity in China Mobile will lead investors to a similar conclusion: the opportunity is massive.

China Mobile boasts 744.9 million wireless subscribers. Peers China Unicom and China Telecom, together, don't even add up to half of China Mobile's subscriber base.

Even more, just about 20% of China Mobile's subscribers are 3G subscribers while China Unicom and China Telecom have a 3G penetration rates of 39% and 52%, respectively. 80% of China Mobile's 744.9 million subscribers aren't on 3G -- that's a huge market of potential first-time smartphone upgrades.

Could it be?
If there were any monumental moment for Apple to finally make an arrangement with China Mobile, this would be the time to make it happen. Apple's first lower-cost iPhone could help the company make inroads in the important Chinese smartphone market.

According to data from Canalys, Apple's share of shipments in China in the most recent quarter was a paltry 4.8%. Apple would undoubtedly like to tap into this massive opportunity.

The grape vine over at Reuters said in August that the talks between Apple and China Mobile were looking good. Maybe a China Mobile deal is the underlying premise behind this Beijing Apple media event.

Apple and China Mobile -- it might finally happen.

Fool contributor Daniel Sparks owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and China Mobile. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$169.24 (2.62%) $4.32
China Mobile Limited Stock Quote
China Mobile Limited
CHL
China Unicom (Hong Kong) Limited Stock Quote
China Unicom (Hong Kong) Limited
CHU
China Telecom Corporation Limited Stock Quote
China Telecom Corporation Limited
CHA

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.