Analyst: Apple’s Partnership With China Mobile Is a ‘Significant Opportunity’

Source: China MobileCantor Fitzgerald analyst Brian White examined the impact of the iPhone’s official launch on China Mobile’s (NYSE:CHL) network in a recent note to investors. Although the iPhone 5S and iPhone 5C have been available for pre-registration through China Mobile’s website since December 25, the devices only became available in China Mobile retail stores and Apple (NASDAQ:AAPL) Stores across mainland China on Friday. White’s optimism about the long-term benefits of Apple’s partnership with China Mobile was made apparent by his research note title: “We’ve Only Just Begun.”

White noted that Apple and China Mobile have both made adequate preparations for the iPhone launch. According to the analyst’s checks, “nearly all the stores we researched [were] holding sufficient stock of all models, even gold iPhones.” As previously noted by many industry watchers, Apple’s gold iPhone 5S model has proven to be especially popular in Asian markets where the color has positive cultural connotations.

The analyst noted that China Mobile is the world’s largest carrier with 763.3 million subscribers, or 62 percent of the total mobile subscriber base in China. White estimated that there are already 35 to 40 million unlocked iPhones that are being used on China Mobile’s network. Until now, these iPhone users have been forced to use 2G or 2.5G service in order to use their iPhones on China Mobile’s network. This suggests that the iPhone has a special cachet with Chinese consumers that may translate into more sales now that the iPhone is compatible with the carrier’s 3G and 4G networks. Based on the size of China Mobile’s subscriber base and the strong appeal of Apple’s brand, White estimated that the California-based company would sell 20 to 24 million iPhones through China Mobile in 2014.

According to White’s checks, China Mobile’s prices for the iPhone 5S are slightly higher than the prices charged by rival carriers like China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA). White noted that China Mobile will charge approximately $907 for the 16GB iPhone 5S, $1,039 for the 32GB iPhone 5S, and $1,172 for the 64GB iPhone 5S.

However, the analyst pointed out that Chinese carriers use a different subsidy system than U.S. carriers. According to White a 16GB iPhone 5S with a two-year contract and no upfront payment would cost around $38 a month from China Mobile.

White also reiterated his belief that Apple would release a 4.7-inch and a 5.5-inch iPhone sometime during 2014. He noted that these large-screen iPhone models would likely boost Apple’s sales in China even further, since large-screen devices are particularly popular in China. White maintained a “Buy” rating and a $777 price target on Apple shares. Here’s how Apple has traded over the past five sessions.


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