China Mobile Prepares for Apple


The inevitable union between Apple and China Mobile will open many doors for both companies. However, if there's one thing that history has shown, it's that iPhone users gobble up massive amounts of data.

You may remember when AT&T's networked strained for years under the load of all those iPhones when Ma Bell enjoyed its iPhone exclusivity. Consumers frequently derided the iPhone's data capabilities, and AT&T's network was the culprit because the carrier simply didn't know what it was getting itself into.

AT&T was then required to plunge billions of dollars over several years to beef up capacity. At this point, the data bottlenecks are mostly a thing of the past as other carriers now offer the iPhone, spreading out consumption over multiple networks.

That's a fate that China Mobile is looking to avoid, as Reuters reports the company is planning on investing up to $6.7 billion in its network this year. That will also be spent on developing its 4G network, while China is still in the midst of its transition to 3G. The country is expected to issue 4G operating licenses later this year.

China Mobile's network uses a unique time division standard, which has historically been a technical hurdle for carrying the iPhone. The newest iPhone 5 supports the standard, and future models are also expected to be TD-compatible. The largest Chinese carrier also said it was planning on spending $4.3 billion in device subsidies this year, an increase of 13% from last year.

Smaller rivals have continued to chip away at China Mobile's lead, particularly in the lucrative 3G-subscriber market. Getting the iPhone will help turn the tables. There are already 10 million iPhone users on China Mobile's network, but the aforementioned incompatibilities relegate them to 2G data speeds.

It would also give Apple access to the largest mobile subscriber base in the world, which now sits at 715 million as of the end of January. Beefing up the network in preparation of the iPhone is the right move to make.

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Fool contributor Evan Niu, CFA, 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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