China Mobile-Apple Rumors Inch Closer to Reality
The rumor mill has actively gossiped about a potential deal between Apple and China Mobile for years. Unfortunately, there's no causational relationship between rumors and deals. But even though the deal has never come to fruition despite numerous rumors over the years, there's no reason to give up on the possibility -- especially given the recent sharp rise in related chatter.
If you haven't followed the latest word on the block regarding a potential Apple and China Mobile deal, you've been missing out.
- Rumors started getting serious again when China Mobile Chairman Xi Guohua expressed positivity about a potential deal between the two companies to Reuters back in August.
- The likelihood of a deal really heated up when The Wall Street Journal cited people familiar with the matter saying that Apple is preparing to ship iPhones to China Mobile.
- Then Apple's new iPhone models launched with LTE band support compatible with China Mobile's network.
- A day after Apple's iPhone event, The Wall Street Journal reported that a Chinese regulatory body gave Apple the final license needed to launch the iPhone on China Mobile's wireless standard.
- And now Unwired View points out a leaked poster that suggests China Mobile will use the launch of the new iPhones to promote its next-generation network launch.
Apple's biggest catalyst?
A deal between Apple and China Mobile could be the company's largest potential catalyst in sight. China itself is a crucial market for the company. Not only is it the world's largest smartphone market, but the 3G penetration for the country overall is still just around 30%. Even more, IDC still has big expectations for the Chinese smartphone market, expecting shipments to increase from an estimated 360 million in 2013 to exceed 450 million in 2014.
But there's more to the story specifically related to China Mobile. First of all, there's the in-your-face big number of 750.4 million -- China Mobile's subscriber base. And a closer look at the company's subscriber base reveals an even greater reason for a huge potential catalyst. China Mobile's 3G penetration is just 21% -- much lower than the 3G penetration levels of its smaller peers China Telecom and China Unicom. China Mobile's potential market of first-time iPhone buyers is enormous.
Since Apple's iPhone sales account for more than half of its revenue, any major catalyst for the company's iPhone segment is also a major driver for the business as a whole. In July, I highlighted China Mobile as one of two potential growth drivers that could help Apple return to earnings growth. With China mobile rumors inching closer to reality, this major growth driver may soon finally deliver.
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The article China Mobile-Apple Rumors Inch Closer to Reality originally appeared on Fool.com.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.
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