Apple Inc. (NASDAQ:AAPL) has been focusing a significant amount of effort on China, and data from the nation’s three largest carriers suggest that Apple is succeeding. All three Chinese carriers reported their operational results from April overnight. In a report dated May 20, 2014, Stifel analyst Aaron C. Rakers and his team try to extract Apple’s share of the smartphone market in China from the carriers’ overall results.
China ends April with 1.257 billion mobile subscribers
According to the reports, the nearly 1.3 billion total mobile phone subscribers in China include 474.2 million subscribers with either 3G or 4G service. That means about 38% of China’s mobile subscribers are on 3G or 4G. The nation’s carriers are currently in the process of rolling out 4G LTE service. China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941) aims to have more 4G LTE service rolled out to more than 340 cities by the end of the current calendar year. At the end of the March quarter, the carrier had the service in 16 cities.
China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941) said in its April results that it had about 784.6 million mobile subscribers, a slight increase from 781.1 million in the previous month and 730.6 million in April 2013. The carrier said it had about 4.8 million 4G subscribers, an increase of about 2 million month over month. China Mobile ended the month with 236.7 million 3G and 4G subscribers.
What China’s mobile numbers mean for Apple
The Stifel team notes that it is extremely difficult to pull Apple Inc. (NASDAQ:AAPL)’s iPhone sales out of China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941)’s subscriber numbers. However, they think the company still enjoys a “relatively high share” of TD-LTE subscribers. They also point to a report from Sino, which estimated that Apple’s share of China’s 4G smartphone market for January through February was about 59%.
Apple Inc. (NASDAQ:AAPL) did report record revenue for Greater China during the most recently completed quarter. The company also saw record iPhone sales in the region, primarily due to the addition of China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941) and also the low cost of the iPhone 4S.
Ramping up iPhone sales in China
The analysts now expect the second half of the current calendar year to be more heavily weighted in terms of iPhone ramp-up in China. They note that the iPhone 6 is expected to have a larger display and believe that this will create opportunity for Apple Inc. (NASDAQ:AAPL) in China, where larger screen smartphones are preferred by many consumers.
They believe if Apple Inc. (NASDAQ:AAPL)’s iPhone 6 features about a 5-inch display, compared to the 4-inch display on the 5S and 5C and the 3.5-inch iPhone 4S, Apple will see a significant benefit. The Stifel team reports to estimates from Canalys which suggest that during the March quarter, smartphones with at least a 5-inch screen made up about 39% of smartphone shipments in China. Canalys also said Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) continues to lead the big-screen smartphone market, holding a 44% share of the big-screen segment. In addition, the firm said smartphones with a display of at least 5 inches or greater made up 47% of the smartphones priced over $500 unlocked. It stated that the iPhone made up 46% of overall smartphone shipments priced over $500 unlocked.