China Mobile Ltd. (NYSE:CHL) (HKG:0941) is confident that it will be able to reach an iPhone deal with Apple Inc. (NASDAQ:AAPL) as indicated by Xi Guohua, chairman of the Chinese telecommunications carrier.
China Mobile and Apple’s deal sounded keen
Guohua said that the management of Apple Inc. (NASDAQ:AAPL) and China Mobile Ltd. (NYSE:CHL) (HKG:0941) “sounded keen” during their recent discussions regarding the possibility of signing an iPhone agreement.
“We are actively negotiating and both sides are keen. There are still some commercial and technology issues that need to be resolve,” said Guohua. There have been rumors that Apple Inc. (NASDAQ:AAPL)’s new devices will be launched as iPhone 5S or iPhone 5C early next month.
Reports suggested that the new iPhone devices will be integrated with chips from QUALCOMM, Inc. (NASDAQ:QCOM) the supports the TD-LTE, which is LTE standard in China. The chip also supports the global LTE standard known as FDD-LTE.
Reason behind the iPhone deal
Analysts at Goldman Sachs Equity Research opined that an iPhone agreement between Apple Inc. (NASDAQ:AAPL) and China Mobile Ltd (ADR) (NYSE:CHL) has been elusive partly because its network is incompatible with China Telecom Corporation Limited (NYSE:CHA) (HKG:0728) and China Unicom (Hong Kong) Limited (NYSE:CHU) (HKG:0762) . The two Chinese telecommunication carriers are already iPhone distributors in the country.
Goldman Sachs analysts also noted that China Mobile Ltd. (NYSE:CHL) (HKG:0941) was hesitant to commit to the marketing and subsidy costs related to the iPhone. The analysts believe that all Chinese carriers will carry the same standard with the TD-LTE upgrade.
In addition, Goldman Sachs analysts said, “It is expected that a China Mobile iPhone will become more likely as the carrier builds out its LTE infrastructure.”
Low-cost iPhones to boast Apple’s sales
Furthermore, the analysts opined that the low-cost iPhone will be a good fit for the subsidy-averse carrier once Apple Inc. (NASDAQ:AAPL) releases the device. According to them, the launching of the less expensive iPhone and an agreement with China Mobile Ltd. (NYSE:CHL) (HKG:0941) will accelerate the momentum of the Cupertino-based tech giant.
The stock price of Apple Inc. (NASDAQ:AAPL) ended the week at $502.33 per share, an increase of nearly 1%. The stock climbed to around $500 a share after Carl Icahn disclosed its large stake in the company and stated that the stock is significantly undervalued. He also recommended a bigger shares buy back to Apple Inc. (NASDAQ:AAPL) CEO, Tim Cook.